Major Investments Flow Back into Israeli Startups

Start-up

After two years of severe turbulence, Israel’s technology ecosystem is showing clear signs of a rebound in 2025. This is the key finding of the early release of the first figures from Startup Nation Central’s Annual Report 2025. The nonprofit organization, which promotes Israeli innovation internationally, bases its analysis on data from the Startup Nation Finder platform as of December 17, 2025. The report portrays a year marked by a strong return of capital flows, alongside a profound transformation in investment strategies.

According to these estimates, private funding in Israel reached $15.6 billion in 2025, confirming a sharp recovery after a period of high volatility. At the same time, the number of funding rounds fell to 717, its lowest level in a decade. This contrast is telling: investors are completing fewer deals, but committing significantly larger amounts. The median size of private deals reached a record $10 million, up 67% year over year.

“2025 did not represent a simple return to normal, but rather a shift toward high-conviction investing,” said Avi Hasson, CEO of Startup Nation Central. “When global giants such as Nvidia expand their human and industrial footprint in Israel, and we see a record $74.3 billion in mergers and acquisitions, it confirms that Israel is no longer just an idea factory, but a global pillar for critical technologies such as AI and cybersecurity.”

This shift is also reflected in the allocation of capital across stages. Seed and early-stage funding rebounded to $3.9 billion, despite a decline in the number of rounds, indicating more demanding entry criteria. Mid-stage funding rose to $5.2 billion, driven by larger Series B and C rounds. By contrast, late-stage funding declined to $2.5 billion, signaling greater selectivity at the top of the pyramid. Mega-rounds alone accounted for nearly 50% of total private funding.

“We are seeing a growing gap between public discourse and companies’ strategic decisions,” said Yariv Lotan, Vice President of Product and Data at Startup Nation Central. “While young founders face more challenging funding conditions, multinational corporations are accelerating their investments. The record level of acquisitions reflects a strategic imperative to secure key innovations. Where the market perceives risk, strategic buyers see opportunities they cannot afford to ignore.”

From a sectoral perspective, enterprise software led private funding with $4.5 billion, followed closely by cybersecurity at $4.1 billion. Cybersecurity stands out with a median deal size of $20 million—double that of enterprise software.

The number of active investors narrowed to 592, yet international players still accounted for 60% of the total, underscoring sustained global confidence in Israel’s tech ecosystem.

Above all, 2025 will be remembered for an exceptional level of mergers and acquisitions. Total M&A value reached $74.3 billion across 150 transactions, driven primarily by Google’s $32 billion acquisition of Wiz and Palo Alto Networks’ $25 billion purchase of CyberArk. Even excluding these two landmark deals, total M&A value rose 12% compared with 2024.

At the same time, funding for publicly traded companies increased sharply to $10.3 billion, supported by major transactions in U.S. capital markets, notably involving Navan, eToro, and Via, as well as strong activity in PIPEs and convertible bonds.

Ultimately, these preliminary figures point to a central conclusion: many of the largest transactions completed in 2025 are not merely the result of a cyclical rebound, but of long-term investment and acquisition processes, in some cases initiated several years earlier.

In a period of heightened uncertainty, investors and international groups chose to finalize deals of unprecedented scale—signaling not the absence of risk, but a deep confidence in Israel’s technologies, talent, and the ability of its companies to create value even in a challenging environment.

Caroline Haïat