Israeli Tech Bounces Back Thanks to Cyber and AI Deals

The growth is due to fewer but much larger investments.

By Shula Rosen

Israel’s tech sector is experiencing a major comeback.

After a few challenging years, the first half of 2025 marked the strongest six months for the tech sector since the 2021 boom, with startups raising a remarkable $9.3 billion in private funding, a 54% jump from late 2024.

The growth is due to fewer but much larger investments. While the number of deals fell from 214 to 151 in the second quarter, big funding rounds more than compensated for the number of investors.

For example, Safe Superintelligence closed a massive $2 billion deal, one of the largest in Israeli history. And AI21 Labs and Cyera raised $300 million and $540 million, respectively.

Leading the sector were cybersecurity and AI startups, which accounted for nearly 85% of all Q2 funding, according to the Israeli Tech Review by IVC and LeumiTech.

Enterprise software were also attractive investments, while defense-tech has quietly been gaining ground amid growing security concerns.

“This is a pivotal time for Israeli tech,” said Avi Hasson, CEO of Startup Nation Central. “Even amid a complex security reality… entrepreneurs are still building and investors still remain confident.”

M&A (mergers and acquisitions) activity also hit a historic high with $39.2 billion in just six months largely due to Google’s $32 billion purchase of cybersecurity firm Wiz.

IPOs made a comeback too, with eToro’s public debut gaining over 30% in early trading.

But it’s not all smooth sailing. Maya Eisen-Zafrir, CEO of LeumiTech, cautioned that fewer early-stage companies are getting funded. “It’s encouraging to see growth in cybersecurity, AI, and defense-tech… but we must focus on nurturing the next generation of startups,” she told The Jerusalem Post.

Despite the challenges, the message is clear: Israeli tech is back—and it’s doubling down on what it does best: bold innovation, global ambition, and resilience.