One Israeli cyber startup funded every three days in 2025

A new report shows more than $4 billion flowing into the sector this year as international capital signals a new phase of growth

One Israeli cyber startup was funded every three days in 2025 as total investment reached $4.4 billion, a milestone year that also saw overseas venture capital overtake Israeli investors at every stage of funding for the first time.

The findings, from YL Ventures’ tenth annual State of the Cyber Nation report, underline the rapid internationalisation and growing maturity of Israel’s cybersecurity industry.

YL Ventures is a venture capital firm focussed exclusively on cybersecurity.

“This year’s data tells a compelling story of maturation and ambition,” said Or Salom, analyst at YL Ventures and author of the report.

“Israeli cybersecurity entrepreneurs are no longer just building great technology; the ecosystem is now consistently producing category-leading companies at global scale.”

A total of 130 funding rounds were completed across 2025. US-based funds led more seed rounds than Israeli investors, while a growing number of deals were co-led by both, reflecting what the report describes as a “split-seed” strategy, combining Israeli cybersecurity expertise with the scale and global reach of US capital. Major global firms including Sequoia, Greylock, Mayfield and General Catalyst all increased their exposure to Israeli cyber this year.

YL Ventures managing partner Yoav Leitersdorf said the shift reflects a fundamental change in the market. “After a decade of analysing every funding round and exit in this ecosystem, the trajectory in 2025 is unmistakable,” he said. “Israeli cybersecurity now operates at a scale, pace and level of consistency that surpasses anything we’ve seen. The question is no longer how much Israeli cybersecurity companies can scale, but how fast.”

Early-stage activity surged sharply, with seed funding nearly doubling compared with two years ago and strong growth also recorded at Series A and B. The report says this reflects founders entering the market with more mature strategies and a reduced focus on rapid exits.

Salom added: “Founders are entering with more developed business models, and investors are increasingly comfortable backing them earlier and at greater scale.”

The past decade shows just how far the sector has come. Since 2015, total funding into Israeli cybersecurity has grown more than fivefold, the average seed round has more than tripled, and the annual number of funding rounds has increased by over 80 per cent.

2025 also marked a turning point in domestic consolidation, with Israeli cybersecurity companies acquiring a record number of Israeli startups, signalling the emergence of homegrown platform builders rather than companies built solely for overseas sale. At the top end of the market, mega-rounds for Cyera, Armis, Cato Networks and Island, alongside Dream Security reaching unicorn status, created a new tier of Israeli cyber heavyweights.

Investment flowed most strongly into security for AI, vulnerability and risk management, and endpoint protection, while global exits, including Wiz’s sale to Google and CyberArk’s acquisition by Palo Alto Networks, further cemented Israel’s position at the heart of the international cybersecurity industry.

The full report will be published in January.