Israeli high-tech funding and M&A gain in 2025 despite ongoing Gaza war

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By Steven Scheer

JERUSALEM (Reuters) -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% higher than in January to September 2024, the nonprofit Startup Nation Central said on Tuesday. It noted that the volume of funding, which was led by cybersecurity firms, rose despite a 22% 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 $32 billion acquisition of cyber firm Wiz and Palo Alto Networks’ $25 billion purchase of CyberArk.

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

In the third quarter, Israeli tech firms raised $2.4 billion, up 9% from the same period in 2024 but down 50% from the second quarter. The number of deals contracted to 141, down 24% from the second quarter and 38% 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.” 

(Reporting by Steven Scheer; Editing by Kevin Liffey)