Inside BAE Systems’ Playbook for Israeli Defense Tech Founders

Sara Scharf, Director of External Innovation and Technology Scouting at BAE Systems, brings a career spanning government research, defense laboratories, and startup business development. In a recent conversation with Scott Cohen, Co-Founder of the CET Sandbox, she shared how BAE Systems approaches innovation, partners with startups, and connects emerging technologies to long-term defense needs.

Overview
BAE Systems’ innovation strategy is built around early awareness and sustained collaboration rather than short-term transactions. Technology scouting plays a critical role in identifying capabilities that may not yet align with active programs but could shape future missions. The objective is simple: understand what technologies exist, connect them internally at the right moment, and build partnerships that strengthen outcomes for government customers.

How Innovation Is Organized at BAE Systems
BAE Systems operates globally, with its U.S. business structured across four sectors: Platforms & Services, Intelligence & Security, Space Mission Systems, and Electronic Systems. Technology scouting sits primarily within FAST Labs, the company’s R&D organization focused on next-generation innovation.

FAST Labs is organized around several research areas, including sensing technologies, autonomy and AI/ML, RF cyber and electronic warfare, and microelectronics. Tech scouting works across these groups while also connecting startups directly to business areas when technologies are closer to application. This structure allows promising ideas to gain visibility well before formal opportunities emerge.

Why Regional Presence Matters
Austin, Texas has become a meaningful hub for defense innovation, driven by the presence of Army, Air Force, Marine Corps, and joint innovation organizations, alongside accelerators like Capital Factory. This concentration of activity makes the region particularly valuable for identifying early-stage companies and building relationships.

While based in Texas, tech scouting responsibilities extend across the Midwest and West Coast. Regional proximity enables earlier engagement, more trust-based relationships, and better insight into emerging technologies than purely centralized approaches.

Technology Focus Areas
Within the Electronic Systems sector, areas of interest include advanced sensing and photonics, edge-focused cyber and electronic warfare, autonomy and AI-enabled data processing, and microelectronics. BAE Systems also operates its own foundry, supporting innovation in specialized semiconductor technologies.

These focus areas are intentionally flexible. Some of the most impactful engagements come from technologies that fall outside established roadmaps, highlighting the importance of discovery alongside defined priorities.

Working with Startups
BAE Systems does not operate a U.S. venture capital arm and does not take equity positions in startups. Engagements are partnership-based, often centered on collaborative R&D or participation in government programs where startups serve as subcontractors.

What Successful Engagement Looks Like
Many successful partnerships begin when startups proactively identify opportunities and approach BAE Systems with a clear value proposition. Support may include letters of support for SBIR submissions, subcontracting roles, or collaborative technical development. These partnerships often strengthen bids by demonstrating the collaboration and agility government customers increasingly expect.

For founders looking to engage, BAE’s current tech-scouting priorities are publicly available here. 

Guidance for Israeli and International Founders
For international startups, particularly Israeli companies, establishing a U.S. presence significantly improves engagement opportunities. Regulatory constraints, including ITAR, can limit collaboration without a domestic entity. Targeted innovation events and focused forums are often more effective than large trade shows for building meaningful relationships.

Key Takeaways:

• BAE Systems prioritizes partnerships over equity investments.
• Tech scouting emphasizes early awareness and long-term alignment
• Early-stage technologies can engage before programs are defined.

• Regional innovation hubs play a growing role in defense technology.

• A U.S. presence is critical for international startups entering the U.S. defense market.

Conclusion
BAE Systems’ approach to technology scouting reflects a broader shift in defense innovation—one that values early engagement, collaboration, and diverse sources of technology. By connecting startups with internal R&D teams and business areas, leaders like Sara Scharf help ensure future defense capabilities are shaped by both established primes and the agility of emerging innovators.