Israeli tech funding jumps 52% despite geopolitical turmoil

Israeli technology companies raised $7.6 billion (£5.5bn) during the first six months of 2026, marking a 52% increase on the same period last year despite ongoing geopolitical uncertainty.

The figures, released in preliminary findings from the latest Israeli Tech Review by research firm IVC and LeumiTech, Bank Leumi’s high-tech banking arm, suggest Israel’s technology sector has returned to fundraising levels last seen during the investment boom of 2020. Companies raised $4.2bn in the second quarter alone.

While the total amount invested rose sharply, the number of funding rounds continued to decline, with an average of 97 deals completed during the quarter, reflecting a broader global trend of larger investments flowing into fewer companies.

Cybersecurity remained the dominant sector, attracting $2.57bn during the first half of the year, accounting for almost 34% of all capital raised.

Defence technology, quantum computing and space technology also gathered momentum, collectively securing $846m in funding during the first six months of 2026 – a figure approaching the total raised by those sectors during the whole of 2025.

The report also adopted a broader measure of artificial intelligence, focusing on companies where AI sits at the core of their products and technology rather than businesses simply using AI tools.

These “CoreAI” companies attracted $1.6bn during the first half of the year, underlining AI’s growing role across Israel’s technology ecosystem.

Despite concerns that the ongoing conflict and wider geopolitical tensions could deter overseas investors, foreign venture capital firms maintained a strong presence.

International funds accounted for 69.1% of all active venture capital and corporate venture capital investors during the first half of 2026, broadly unchanged from 68.4% in 2025, suggesting Israeli technology companies continue to attract significant international backing.

The report also highlighted a growing divide between early-stage startups and more established businesses.

Later-stage companies raised 70% more capital than in the previous quarter, helping offset the impact of the weaker US dollar and rising salary costs. By contrast, funding for early-stage companies fell sharply to $719m in the second quarter, down from more than $1bn in each of the previous three quarters.

Maya Eisen-Zafrir, chief executive of LeumiTech, said the figures painted a mixed picture.

“On the one hand, we are seeing very encouraging growth in fundraising volumes. On the other, the decline in the overall number of investment rounds continues, reflecting the broader global trend.

“Following the weakening of the US dollar, we are seeing entrepreneurs manage their financial operations more closely, focusing on reducing uncertainty around exchange-rate fluctuations through scenario planning, operational adjustments and a broader range of financial tools.”

Guy Holzman, chairman and chief executive of IVC, said: “Over the past period, Israeli high-tech has experienced geopolitical tensions, war, a significant erosion in the purchasing power of the dollar and a decline in the number of funding rounds.

“Despite this, interest from foreign investors has not diminished and the amount of capital flowing into companies continues to rise.

“If efforts to improve the geopolitical environment continue alongside a strengthening US dollar, the Israeli technology ecosystem will be well positioned for a successful year.”