Israel Maintains Strong Fundraising and Tech Venture Capital Performance

The Israeli tech ecosystem showed improved funding indicators in the first quarter of 2026. According to preliminary data published by IVC and LeumiTech, Israeli tech startups raised $3.1 billion, a 34% year-over-year increase.

However, the volume of deals remained stable (98 funding rounds), reflecting an increase in the average deal size. The top 10% of deals accounted for 51% of the total capital allocated, indicating a concentration of funds towards a limited number of players with already advanced development.

Foreign investors remain the majority, accounting for 65.9% of the funding, but a gradual increase in the share of local funds in early rounds is observable. Finally, it is worth noting that funding rounds in March (i.e., entirely within the context of the war) reached $1.2 billion, seemingly confirming investor confidence despite the deteriorating geopolitical and security environment.

The sectoral structure of funding allocations reflects a preference for segments with high international visibility.

Cybersecurity accounts for 40% of the funds raised, driven by several significant deals, while generative AI represents 16% of the flow, in line with the average of approximately 20% observed since 2023. Conversely, the DefenseTech segment is experiencing a marked contraction in its relative share, falling from 8% in 2025 to less than 1% in the first quarter of 2026.

This sectoral reallocation suggests a shift in investor preferences towards segments with global commercial potential and less geopolitical exposure.

The dynamics of the funding stages reveal a structural imbalance to the detriment of growth-stage companies.

Early-stage investments (from Pre-Seed to Series A) have increased by 164% since the end of 2023, reaching USD 1.3 billion, representing over 42% of total capital raised. Meanwhile, mid-stage Series B and C rounds have contracted to 29% of total funding, which could limit the ecosystem’s capacity to develop mature companies.

While these aggregate figures for the quarter seem to demonstrate the sector’s resilience despite the wartime context, several factors suggest a more nuanced interpretation.

A significant portion of the amounts recorded in the first quarter of 2026 correspond to investment decisions made prior to the reference period, as the time between closing a deal and its public disclosure can range from several weeks to several months. Furthermore, seasonality plays a significant role: the concentration of announcements at the beginning of the year traditionally coincides with the RSA Conference, a strategic showcase for cybersecurity fundraising.

Finally, a survey conducted by the Innovation Authority in March 2026 documents the real impact of the war on financing processes: 71% of Israeli technology companies report that the security situation has affected their ability to raise capital, resulting in process delays for 37% of them, postponements of investment decisions for 23%, and cancellations of procedures for 11%.

These disruptions are more pronounced for companies located in the northern and southern regions of the country, as well as for companies with fewer than 50 employees.

Source: French Embassy in Tel Aviv