Israel’s tech industry raised $2.72 billion in Q2 2025, marking the strongest quarterly fundraising in a year, according to preliminary data from the *Israeli Tech Review* by LeumiTech and IVC. This represents a 20% increase from Q1 2025 but is still 10% lower than the same period last year.
Two major mega-rounds marked the quarter, Cyera’s $540 million and AI21 Labs’ $300 million, accounting for approximately 30% of the total capital raised. Even excluding rounds exceeding $200 million, the market demonstrated positive growth, with capital raised increasing by 9% year-over-year and 8% from the previous quarter.
Cybersecurity and Generative AI dominated investments, with 37 funding rounds attracting nearly 85% of all capital in the quarter. Defense-tech companies are also gaining momentum, partly due to the ongoing security situation, with investment in defense-related technologies rising steadily over the past two quarters.
Maya Eisen-Zafrir, CEO of LeumiTech, stated that Israel’s technological strength, highlighted during the recent Iran campaign, and signs of geopolitical stability, “provide investors with optimism about the country’s ability to remain a global innovation hub.” She added, “It’s encouraging to see growth in cybersecurity, AI, and defense-tech. However, fundraising by new companies is declining, an issue that needs attention and coordinated efforts to preserve Israel’s status as the ‘Startup Nation.’”
According to IVC data as of June 30, 90 funding rounds were publicly known in Q2; however, the actual number could be around 190 when including stealth rounds or undisclosed deals. While capital raised grew, the number of deals fell by 12% compared to Q1. These figures provide an early market snapshot, with full data and analysis to be released in July.
Guy Holzman, IVC Chairman, highlighted the increasing focus of Israeli tech funding: “About 85% of Q2 funds went into cybersecurity and Generative AI, showing a sharp emphasis on these areas. This trend mirrors the U.S. market, where AI draws significant interest, and cybersecurity remains a key innovation front. These figures indicate a reliance on a few verticals, reducing diversification.”
The quarterly report is the result of a long-standing collaboration between IVC and LeumiTech. Founded in 1997, IVC provides data, research, and business intelligence on Israel’s tech scene, covering over 9,350 startups, investors, and innovation hubs. Its insights support strategic decisions and help clients stay competitive.
LeumiTech, the banking arm of Bank Leumi, established in 2014, serves Israel’s innovation economy, offering tailored financial solutions to startups, growth-stage companies, and global tech firms. Its partnerships with local and international investors facilitate business growth. The Israeli Tech Review Q2/2025 provides insights into current trends and includes a detailed analysis of investments, M&A, and public markets, based on real-time IVC data, reflecting activity by Israeli and Israeli-affiliated tech firms.