Israeli tech firms raise $11.9bn in 2025 despite war and deal slowdown

Israeli high-tech companies raised $11.9 billion over the first three quarters of 2025 as the technology sector continues to thrive despite Israel’s two-year-old war against Hamas militants in Gaza.

Funding was 13 per cent higher than in January to September 2024, the nonprofit Startup Nation Central said this week. It noted that the volume of funding, which was led by cybersecurity firms, rose despite a 22 per cent decline in the number of deals to 569.

At the same time, mergers and acquisitions reached a record $71 billion so far in 2025, nearly five times higher than the same period in 2024, and largely driven by Alphabet’s (GOOGL.O) $32 billion acquisition of cyber firm Wiz and Palo Alto Networks’ (PANW.O) $25 billion purchase of CyberArk (CYBG.F).

The tech sector is a driver of Israel’s economy, accounting for about 20 per cent of GDP, 15 per cent of jobs and more than 50 per cent of exports.

In the third quarter, Israeli tech firms raised $2.4 billion, up 9 per cent from the same period in 2024 but down 50 per cent from the second quarter. The number of deals contracted to 141, down 24 per cent from the second quarter and 38 per cent year over year. M&A in the quarter reached nearly $32 billion due to the Palo Alto-CyberArk deal.

“The third quarter of 2025 highlighted a market in transition. While funding slowed and investors became more selective, M&A activity reached historic highs,” said Avi Hasson, CEO of Startup Nation Central.

“We are seeing fewer rounds, but at record sizes, signaling confidence in scale-ready companies. At the same time, global buyers are making some of the boldest bets we’ve ever seen on Israeli tech, especially in cybersecurity.”