Despite war, tech investments soar 45% in Israel, reports find
*Preliminary data shows capital injections for last quarter of 2025 at highest level in years, led by cyber and AI, with fewer deals but higher dollar amounts
Investment in Israeli startups and tech firms spiked sharply toward the end of the year, fueled by major funding injections into cyber and AI startups, according to a report published Monday, marking the strongest quarterly results for Israeli tech since the first three months of 2022.
Preliminary data compiled by research center IVC and LeumiTech, a Bank Leumi arm that specializes in tech companies, showed that Israeli tech startups raised $3.43 billion in capital from investors from October through mid-December across 94 funding rounds.
The investment totals were 45 percent higher than those over the previous three months, when the war in Gaza was still in full swing, dampening investors’ appetite to sink money into Israel-based firms.
A US-brokered ceasefire entered into effect in Gaza on October 10, halting two years of war that began with a devastating Hamas-led attack on Israel two years earlier.
The volume of capital raised in the last quarter of the year was up 37 percent from the fourth quarter of 2024, a period that saw Israel at war with Hamas in Gaza and embroiled in intense fighting against the Hezbollah terror group in Lebanon and in heightened hostilities with Iran.
“The past year reflects the strength and continued growth of Israeli tech, despite a prolonged period of uncertainty and upheaval in the local and global arena,” said LeumiTech CEO Maya Eisen-Zafrir.
Funding difficulties hampering the local tech industry due to the fighting on multiple fronts started to recede in late 2024, with the sector’s recovery gaining steam this year.
A separate report by Startup Nation Central found that Israeli tech startups and firms raised $15.6 billion in private capital from investors this year through December 17, a 24% increase compared to 2024 and a 68% leap compared to 2023.
After two volatile war years, Israeli tech funding rebounded in 2025, “marked by a sharp return of capital, alongside a fundamental shift in how and where that capital is deployed,” read the preliminary annual report from Startup Nation Central, which tracks the local tech ecosystem.
IVC and LeumiTech, which do not include funding rounds that have not yet been fully published and those of newly founded startups, reported slightly lower numbers of $11.1 billion across 418 funding deals, still a 15% increase in capital compared to 2024.
Both reports noted that investors closed fewer deals, but committed significantly more capital to each one.
According to Startup Nation Central, deal volume in 2025 declined to 717 founding rounds, the lowest in the last decade. Yet, the median funding deal size reached a record $10 million, up 67% year over year, and the highest since 2019.
“We are seeing a growing gap between public sentiment and corporate behavior,” said Yariv Lotan, VP of Product and Data at Startup Nation Central. “While early-stage founders face tougher funding conditions, global corporations are moving decisively in the opposite direction.”
The IVC report noted several larger deals that led capital-raising rounds over the past three months, with four transactions above $200 million.
In November, Israeli-founded cybersecurity unicorn Armis Security nabbed $435 million in fresh capital from investors and is reportedly in advanced talks to be acquired by US software company ServiceNow Inc. in a deal that could be worth up to $7 billion.
Israeli-founded Cyera, a developer of an AI-powered data security platform, is raising $400 million in a funding round led by New York-based alternative asset manager Blackstone that values the company at $9 billion, according to reports this month.
Over the course of 2025, investments in cyber and AI-related companies accounted for 70% of the total capital raised, according to data presented in the IVC report.
LeumiTech’s Eisen-Zafrir noted that “the capabilities and reputation that were built up in recent decades in the field of cyber, together with the leadership we see in the field of AI, constitute a force multiplier and a strategic asset for Israel.”
“The AI revolution is not only driving the market but is also creating new needs in the fields of information protection and privacy,” Eisen-Zafrir added.
International investors maintained their dominant role in the Israeli tech ecosystem in 2025, accounting for 60% of total number of investors, according to data compiled by Startup Nation Central.
“2025 was not about a return to business as usual; it was a pivot toward high-conviction maturity,” said Startup Nation Central CEO Avi Hasson. “Israel isn’t just a source of innovation, it is the global anchor for critical technologies like AI and cybersecurity.”
-Times of Israel (ToI)
