An Increase in the Number of New Startups Established in the Past Two Years
Since 2014, a persistent global decline has been recorded in the number of startups established each year, a trend also evident in Israel. During the past 2 years, we see for the first time, an increase in the number of startups established in Israel. Based on experience of retrospective data coming to light, the number of new companies is expected to stand at 775 companies, compared to 750 in 2024 and 743 in 2023.1The forecast is based on the ratio between the number of companies identified at the end of each year and the number of companies for which data on their establishment that year was only revealed retrospectively.
Enterprise Software and Cybersecurity Continue to Lead in Establishment of New Companies
Newly established companies’ areas of activity remained highly concentrated in 2024-2025. Enterprise software remained the leading segment in the establishment of new high-tech companies although its share declined from 23.4% in 2024 to 21.9% in 2025. Cybersecurity also maintained a prominent position, though its share declined from 11.2% to 9.4%.
Alongside the relative decline in the leading segments’ share, several others strengthened in 2025: The Defense and Space segments increased from 1.4% to 5.9%, while Quantum and Infrastructure rose from 2.5% to 4%. Medical Devices and Energy also maintained a relatively significant share among newly established companies.
Overall, the data indicates the continued dominance of the software and cybersecurity segments, alongside signs of increasing diversification in the sectoral composition of companies established in 2025, particularly toward hardware-oriented companies.
Increase in Total Fundraising by Israeli High-Tech Companies Alongside a Decline in the Number of Funding Rounds
In 2025, the total capital raised by Israeli technology companies increased to USD 14.6 billion, up from the previous two years. This reflects a growth of approximately 30% compared to 2024 and was the highest annual figure recorded since the peak years of 2021-2022.
At the same time, a downward trend in the number of funding rounds has been observed since 2023. The number of funding rounds in 2023-2025 was lower than the average recorded between 2014-2022, even excluding the peak years of 2020-2022.
This development indicates a shift in investment composition, reflected in an increase in the share of large funding rounds and in the concentration of capital among fewer companies.
Stability in Startups’ Fundraising Continues into Early 2026
After the first quarter of 2025 was characterized by fundraising levels similar to those recorded during the second half of 2024, an increase was recorded in the second quarter, reaching a peak of USD 5 billion (including an exceptional USD 2 billion funding round raised by a single company). In the third quarter, alongside Operation ‘Rising Lion’, total capital raised declined to USD 2.8 billion. Toward the end of the year, total fundraising increased again to USD 4 billion, following the signing of the ceasefire agreement during the fourth quarter. This data indicates that the market maintained its resilience despite the dynamic security environment.
First-quarter 2026 figures also appear relatively high. It is important to emphasize that due to delays in the reporting of fundraising data, quarterly figures are expected to be revised upward – potentially significantly. This indicates continued stability of the local market at the beginning of 2026.
Continued Decline in the Number of Small Funding Rounds Alongside Growth in Large Funding Rounds
The distribution of funding rounds in 2025 indicates significant polarization in the Israeli fundraising market. While the number of small funding rounds – up to USD 10 million – declined sharply and reached its lowest level in the past decade with only 301 rounds, the number of large funding rounds totaled 52, compared to 33 rounds in the previous year.
This trend reveals that the rise in the scope of investments this year was driven primarily by growth-stage companies, while early-stage companies faced increasing difficulty accessing capital.
The increase in the number of large funding rounds exceeding USD 50 million was also reflected in their share of total capital raised. The total capital raised in large funding rounds increased by USD 2.8 billion, rising from USD 5.6 billion in 2024 to USD 8.4 billion in 2025.
Israel Is the Fourth-Largest Global Hub in Startup Fundraising
The decline in investments during 2023-2024, alongside the recovery recorded in 2025, was not unique to Israel. Throughout this period, Israel consistently ranked between fourth and sixth place globally in total capital raised by technology companies. In 2025, Israel ranked as the fourth-largest fundraising hub worldwide and the leading hub outside the United States (surpassing even Los Angeles).
The hubs selected for comparison are leading countries or global technology innovation metropolitans, that are comparable to Israel in macroeconomic indicators and that represent a broad geographic distribution.
Israel Ranked Fifth in the Growth Rate of High-Tech Fundraising in 2025 Compared to Other Leading Tech Hubs
In terms of the investment volume growth rate, Israel ranked as the fifth-largest hub with a 33% increase in capital raised by technology companies compared to 2024. At the same time, Silicon Valley, which has consistently led global investment volumes, continues to increase its advantage over other hubs, primarily due to massive investments in Artificial Intelligence companies based there.
In recent years, Israel’s fundraising volumes were similar to those recorded in London, however, the growth rate in Israel in 2025 led to higher fundraising volumes.
More Than Half the High-Tech Investments in Israel in 2025 Were Concentrated in Cyber, Enterprise Software, and Fintech
Investments in the cyber, enterprise software, and fintech segments remained the most dominant, accounting for more than 60% of the capital raised by Israeli high-tech companies in 2025. The enterprise software segment increased its share from 21% of capital raised in 2024 to 26.5%, due to the exceptional USD 2 billion funding round raised by Safe Superintelligence (SSI). Without this round, the segment’s share would have declined to 16%, while cyber would have increased to 30%.
Further growth was recorded in the quantum segment, which tripled its share of total fundraising from 0.9% in 2024 to 2.8% in 2025.
By contrast, the shares of digital health and medical devices sectors in total capital raised declined in 2025 by 3 and 4 percentage points, respectively, compared to 2024. This reflects a 50% decline in the share of the digital health segment and a 70% decline in the share of the medical device segment in the capital raised by Israeli high-tech companies.
Fundraising by companies attributed to multiple segments is included in each of the relevant segments; therefore, some funding is counted more than once.
35% of Fundraising in 2025 Was Conducted by AI Companies
The use of Artificial Intelligence technology is not limited to a specific segment and can serve as a component of technological solutions across a wide range of fields. The analysis in this chart presents the share of investments in companies developing foundational AI capabilities – core AI companies (language models, infrastructure, or enabling technologies in the field, such as computing infrastructure and chips), rather than companies that merely incorporate AI tool capabilities in their products.
The significant increase in fundraising by Israeli AI companies over the past four years reflects the development of capabilities in this field within the Israeli ecosystem and the confidence investors are placing in these companies.
If fundraising by core AI companies was included in a comparison of fundraising in 2025, it would have been the largest segment in terms of fundraising.
Record Year for Exits in 2025: Approximately USD 84 Billion in Mergers, Acquisitions, and IPO Value
2025 data indicates an increase in both the number of exits and the acquisition value of Israeli companies. 198 exits were recorded during the year, including 189 mergers and acquisitions totaling USD 18.5 billion – a 12% increase in acquisition value compared to 2024. At the same time, IPO value surged by 319%, rising from USD 0.39 billion (across 6 IPOs) in 2024 to USD 1.6 billion (across 8 IPOs) in 2025.
When taking into account the Wiz, CyberArk, and Armis deals announced during 2025 (and approved only in 2026), the total value of exits in 2025 reaches approximately USD 84 billion.
This data indicates the resilience of Israeli high-tech even under conditions of high uncertainty.
49% of Israeli High-Tech Companies Sold in 2025 Were Acquired By Other Israeli Companies
Between 2016-2022, an average of 43% of Israeli high-tech companies sold were acquired by other Israeli companies, while the remainder were acquired by foreign companies. This figure reflects the maturity of the local industry, as measured by the number of growth companies capable of expanding their operations through acquisitions, alongside the attractiveness of the Israeli market.
In 2023-2024, this share declined to 32%, possibly due to geopolitical instability and a decline in the capital available to Israeli high-tech. In 2025, this share increased again, to 49% of companies sold, aligning with other indicators that point to a recovery in the local industry.
In 2025, Israeli Companies Acquired 81 Foreign Companies at a Total Value of USD 1.6 Billion
As the Israeli high-tech ecosystem matures, recent years have seen an increase in the number of acquisitions carried out by Israeli high-tech companies. This trend has been particularly noticeable since 2021, indicating that companies are growing not only organically, but also through acquisitions of additional operations both in Israel and abroad.
In particular, the increasing trend of Israeli companies acquiring foreign high-tech companies reached a peak in 2021, with 97 such deals totaling USD 6.8 billion. Following a sharp decline in both the number and value of acquisitions in 2023, a recovery in the number of transactions was recorded during 2024-2025, though without a parallel increase in their total value. 64 foreign companies were acquired in 2024 in deals totaling USD 1.3 billion; in 2025, the number of acquired companies rose to 81, however the total value of these deals stood at only USD 1.6 billion.
This gap, between the consistent increase in the number of acquisitions and their relatively low value indicates a change in the composition of transactions, with a growing focus on the acquisition of smaller companies on average.
Since 2000, More Than 500 Multinational Companies Have Begun Operating in Israel
In 2025, an additional 35 multinational companies joined Israel’s high-tech ecosystem – bringing the total number of multinational companies operating in Israel since 2000 up to 511.
The data points to a consistent increase in the activity of multinational companies over the past two decades, with an average rate of approximately 32 new companies joining each year. 2021 was a record year for the high-tech sector, during which 67 new multinational companies began operating in Israel.
