Colugo Systems, an Israeli company specializing in electric drones, has raised US$8.5 million in its initial funding round.

Led by Ayalon Insurance and Finance, this investment values the company at US$65 million pre-funding.

Founded in 2018, Colugo has primarily generated revenue through sales without external investment.

Its drones are used by the Israel Defense Forces and other security agencies, and are increasingly adopted in civilian sectors, especially in electric vertical takeoff and landing (eVTOL) applications.

Colugo reported US$4 million in revenue in 2024, with drones used for surveillance, logistics, emergency response, and delivery.

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🔗 Source: Calcalist

🧠 Food for thought

1️⃣ Israeli drone companies follow proven defense-to-civilian commercialization path

Colugo Systems represents a recurring pattern in Israel’s technology ecosystem where defense-focused startups eventually expand to civilian markets after establishing military credibility.

The company followed the classic Israeli tech trajectory by bootstrapping through defense sales since its 2018 founding before seeking venture capital to scale beyond military applications 1.

This approach mirrors successful Israeli defense tech companies that first develop advanced technologies for military use, perfect them in demanding security environments, and then adapt them for commercial applications.

Colugo’s $4 million in 2024 revenue came primarily from defense contracts, providing stable income while developing its technology for broader applications 2.

The company’s leadership team, including a retired IDF brigadier general as CEO and a former drone squadron pilot as CTO, demonstrates how military expertise translates to technological innovation and operational discipline in Israel’s defense tech sector.

2️⃣ eVTOL market diversifies with specialized technological approaches

While major eVTOL players like Joby Aviation and Archer focus on air taxi applications with 100+ mile ranges, Colugo differentiates through its Adaptive Wing Technology designed for stability in adverse conditions 1.

This technological diversification reflects the broader eVTOL market’s evolution, where companies are developing specialized solutions for different use cases rather than one-size-fits-all approaches.

The global eVTOL market, currently valued at $0.76 billion, is projected to reach $4.67 billion by 2030 at a 35.3% CAGR, creating space for companies with unique technological advantages 3.

Industry competition has intensified with over 250 companies now developing eVTOL technology, each seeking differentiation through range, payload capacity, operational reliability, or specialized applications 4.

Colugo’s military-first approach differs from consumer-focused competitors, highlighting how the industry supports multiple parallel development paths addressing different market needs.

3️⃣ Strategic first funding rounds reveal market expansion opportunities

Colugo’s decision to seek external funding after years of bootstrapping signals a strategic inflection point as the company looks to scale beyond its defense roots.

The $65 million valuation achieved despite generating only $4 million in revenue suggests investors see significant potential in the company’s proprietary technology and intellectual property 2.

This investment pattern parallels the broader eVTOL market, which is attracting substantial venture capital as the industry transitions from research and development to commercialization and scaling.

The timing aligns with projections showing the Advanced Air Mobility industry growing from $1.2 billion currently to potentially $20 billion by 2030, indicating investors are positioning for this anticipated market expansion 4.

Colugo’s success in securing funding demonstrates how proven technology and existing revenue streams make hardware startups more attractive to investors, especially when expanding from defense into larger civilian markets.

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