#Israel #Tel Aviv #Enterprise Software #Startup Nation Central #Israeli tech

Israeli Tech Funding Shows Strong Growth in Early 2025

Overview

In a significant rebound, Israel's tech funding landscape has witnessed an impressive surge in the first half of 2025, marking the strongest six-month period since 2021. According to a mid-year analysis from Startup Nation Central, a nonprofit focused on promoting Israel's innovation ecosystem, private capital raised reached approximately $9.3 billion, reflecting a notable 54% increase from the second half of 2024. This analysis draws on data from the Finder business platform and reveals key insights into sector performance, deal volume, and investor sentiment in an increasingly complex landscape.

Key Findings

The funding recovery, which started gaining momentum in late 2024, accelerated sharply in the second quarter of 2025. The data indicate a rise in funding from $3.3 billion in Q1 to $6 billion in Q2, which is particularly notable in the context of falling deal rounds—from 214 to 151. Larger funding rounds exceeding $50 million have become more frequent, with the count rising from 20 to 32 during this period. Among these, Safe Superintelligence made headlines with a staggering $2 billion Series B, one of the largest private tech funding rounds in Israel's history.

Sector Performance

Breaking down the sector performance, enterprise software led the pack, securing $3.19 billion across 71 rounds, followed by cybersecurity at $1.98 billion via 56 deals. Interestingly, had it not been for the SSI mega round, cybersecurity would have outpaced enterprise software. Fintech also made its mark, with $751 million raised across 29 rounds, highlighted by a $500 million raise from Rapyd. The health tech sector, while securing a total of $623 million, displayed the highest number of rounds at 69, indicating robust early-stage activity.

Early Stage Investments

Early-stage investments have shown signs of recovery, with funding for pre-seed and seed startups increasing by 50% to $607 million. Furthermore, mid-stage rounds (Series B and C) experienced a remarkable 60% growth, further showcasing investor confidence in emerging firms. Despite the slight reduction in overall deal numbers, the median round size soared by 28% to $9 million, underscoring a shift towards larger and more concentrated investments.

M&A Activity

In parallel to funding developments, mergers and acquisitions (M&A) activity has also set a new record, totaling $39.2 billion in the first half of 2025, largely driven by major players such as Google's acquisition of Wiz for $32 billion. Despite the dynamic nature of the market, even excluding the Wiz transaction, M&A valuations remained stable at $7.2 billion. The first half of this year saw 60 first-time acquisitions, with a significant portion (51%) led by global strategic buyers, while 42% were local firms.

Public Funding

Public funding demonstrated encouraging growth, with 13 transactions worth $1.6 billion, a drastic increase from just $200 million in the latter half of 2024. Notably, eToro's IPO on Nasdaq, the first major tech IPO in several years, received a warm reception from investors, with shares skyrocketing by over 30%.

Investor Landscape

In total, 447 investors engaged with Israeli startups in the initial half of 2025, representing a 12% decrease from the previous six months. However, global investor participation remains strong, accounting for 62% of investments. The engagement from global players has increased significantly, rising from 61% to 69% of rounds.

Conclusion

According to Avi Hasson, CEO of Startup Nation Central, this performance reflects a complex yet optimistic outlook for Israeli tech, attributed to a robust currency, positive market indicators, and strong activity among global venture capitalists and strategic buyers. The upward trend in funding and mergers & acquisitions demonstrates that Israeli technology, characterized by its unique capabilities, continues to hold significant value in the global market, even in challenging conditions.

The comprehensive report detailing deeper sector trends and insights from Israel's tech ecosystem will be released in mid-July, offering more data and analysis to guide investors and stakeholders alike.