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As 2025 draws to a close, Israel’s technology sector is finishing the year with results that look stronger than many expected. This is notable given the backdrop: a year marked by prolonged conflict and a mid-year economic shutdown during the Twelve-Day War with Iran. Despite these pressures, fundraising and exit activity point to a market that has stabilized and, in some areas, regained momentum.
According to preliminary figures, Israeli startups raised $15.6 billion during 2025, while exits reached a combined value of $74 billion. Fundraising slightly exceeded 2022 levels, though it remained well below the peak of 2021. Exit activity was particularly robust, and figures may still rise before year-end, with several large transactions under negotiation as of mid-December.
The more interesting story, however, lies beneath the headline numbers. Investment behavior shifted sharply during the year. The total number of funding rounds fell to 717, the lowest level in a decade. At the same time, capital became far more concentrated. Half of all funds raised went into rounds larger than $100 million, a dramatic increase compared with previous years. The median round size climbed to $10 million, up 67% from 2024, reflecting investors’ preference for fewer, larger bets on companies seen as category leaders.
Artificial intelligence played a central role in this shift. Enterprise software companies, many focused on AI applications, led fundraising with $4.5 billion. Cybersecurity followed closely with $4.1 billion, and stood out for its median deal size of $20 million—double that of enterprise software. Healthcare also emerged as a bright spot by deal count, recording a record 152 funding rounds, driven in part by renewed interest in AI-enabled medical technologies.
While defense technology attracted lower volumes than AI and cyber, it remained one of the sectors that stood out during the year. The continued flow of capital into cyber and defense-adjacent technologies reflects sustained demand for solutions tied to security, resilience, and national infrastructure—areas that remain highly relevant in Israel’s current environment.
On the capital markets side, 2025 marked a return of large IPOs (initial public offerings) for the first time since 2021, alongside significant convertible bond offerings. Even excluding exceptional mega-rounds above $200 million, total capital raised grew by 18%, as opposed to 2024.
As 2025 closes, Israeli tech appears more concentrated, more selective, and increasingly shaped by AI and cybersecurity—signaling a market that has adjusted to new realities rather than retreating from them.
