OPINION: Investments in Israeli high-tech will soar this year
Jon Medved, the chief executive of Israel's most active investor, expects Israel to excel in the areas of cyber security and defense technology compared to its global peers
2025 will be a boom year for Israel and its high-tech economy. As the conflict in Gaza and Lebanon recedes, and the administration of US President Donald Trump seeks to cement the landmark achievements of the Abraham Accords with a historic rapprochement between Israel and Saudi Arabia, I expect investment in Israel’s world-beating technology startups to soar.
As the CEO of OurCrowd, ranked in a recent independent report as Israel’s most active investor for the 12th straight year, I am excited about the opportunities in 2025.
Some were expecting Israel’s tech ecosystem to fall apart, but it never happened. Even while the fighting raged, Israel’s economy remained remarkably resilient, confounding the doomsayers who predicted we would buckle under the pressure of 15 months of conflict, constant rocket barrages, forced evacuation, dwindling tourism, and mass military mobilisation.
Despite these challenges, Israeli tech companies raised at least $12.2 billion in 2024, a 31% increase over the previous year, and on track to surpass the pre-pandemic fundraising record to become the third most successful year in Israel’s investment history. Meanwhile, the benchmark TA-35 stock index has risen more than 5% since the start of the year and has soared more than 37% since its peak on the eve of the Hamas attack on October 7, 2023.
Israel’s economic success is now largely driven by its technology sector, which accounts for 53% of the country’s export earnings, 24% of its tax revenue and 20% of its GDP. Despite its tiny size, Israel is home to 10% of the world’s unicorns – billion-dollar startups still in private hands.
If Israel’s economy can thrive under the wartime conditions of the past 15 months, just imagine how much more it can achieve in peacetime.
Its demonstrated prowess in key fields such as cyber, AI and quantum suggests that Israeli startups will be able to attract record sums of investment. Battle-proven defense systems are already attracting unprecedented levels of finance.
In addition, we have a new US administration that is vociferously pro-business. The Dow Jones NYSE Index has risen 5% since the start of January and 16% in the past year. That boosts confidence and puts more money in the hands of global investors. Additionally, more private startups will be seeking to float their shares in this bullish market through initial public offerings. The re-opening of the IPO window after a disappointing year will provide liquidity for investors who will then be looking for new startup investment opportunities.
We expect the global venture community to be much more active in 2025, and VC investing in the Israeli high-tech sector is likely to follow a similar pattern.
President Trump is also committed to completing the regional peace plan he launched with the Abraham Accords in 2020. This time round, the major blockage to regional cooperation – the corrosive, violent and destabilizing influence of Iran – has been largely defanged due to Israel’s military victories against Hamas and Hezbollah, and the fall of the brutal pro-Iranian regime of Bashar Assad in Syria.
The Abraham Accords led to more than $3.3 billion in trade between Israel and the UAE in less than four years from a standing start. If President Trump can extend the Abraham Accords to Saudi Arabia, ushering in a period of unprecedented cooperation between Israel and its neighbours, the sky’s the limit.
In its most recent report, Startup Nation Central named OurCrowd as Israel’s most active venture investor in 2024, with more than twice as many investments as the next on the list. OurCrowd has been recognized as the most active investor in Israel’s venture community every year since we were founded in 2013. So we are encouraged by the prospect of this new year.
As AI-driven innovations continue to grow, we see opportunities for Israeli tech to play a key role. With the growth of AI, new ways to conserve energy and generate energy from sustainable sources will see an increase in activity worldwide and also in Israel. We expect to see opportunities around energy-efficient data center processing and cooling, as well as opportunities around renewable energy including nuclear energy and grid management.
Two areas in which we expect Israel to excel compared to its global peers are cybersecurity and DefenseTech. Gen AI’s advancements are spawning significant new cyber threats which require a constant flow of new innovations to solve them, and Israeli cybersecurity companies will continue to develop technology advances to counter the threats. DefenseTech is also evolving into a robust ecosystem with Israeli tech leading the way.
Even in the first few weeks of January, we have seen the number of new active investors joining our platform soar by more than 65% compared to the same period last year, and a 35% year-on-year increase in the amount invested across all the startup deals we are currently offering.
Israeli readiness to embrace innovation, even when it seems somewhat risky, is a long-standing trait that is key to the sector thriving even in wartime – and crucial to its flourishing in the years to come. The fact that Israel grows, and it continues to grow its tech sector during war, is a core element of who we are, and our commitment to supporting Israel’s tech ecosystem remains rock solid.
Jon Medved is the CEO and founder of OurCrowd, the venture investment platform based in Jerusalem
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