In 2024, the startup ecosystem in Israel mostly followed global private and public investment trends, a significant achievement given the ongoing war on multiple fronts throughout the year. In 2025, the incredibly resilient Israeli entrepreneurial spirit will produce a startup baby boom—many new company creations, some related to technologies emerging from the war, including new ventures of “retired” successful entrepreneurs.
“We’re going to see a lot of new company creation after the war, assuming that we are indeed in a de-escalation mode,” says Avi Hasson, CEO of Startup Nation Central, a non-profit providing access for investors and companies to Israel’s tech economy. “There are reasons to believe that 2025 is going to be a good year for the tech sector and tech investments,” Hasson adds.
One reason for cautious optimism is the sector’s performance over the last year. It mirrored the somewhat subdued investment environment in the U.S. and did slightly better than Europe’s. Moreover, regardless of the war, 2024 has been a record year for Israel in terms of mergers and acquisitions. “The leading companies in the world, such as Nvidia, showed their confidence in Israeli tech by spending hundreds of millions of dollars to acquire Israeli startups,” says Hasson.
Private companies (e.g., Boomi acquiring data integration startup Rivery) and private equity investors also demonstrated their confidence in Israeli startups. Hasson highlights the acquisition by Blackstone of a majority stake in Priority Software for $800 million. Priority derives 80% of its revenues from the Israeli market and Blackstone’s investment will help it expand to other markets worldwide.
In addition, Israeli companies showed their confidence in Israeli tech by acquiring Israeli startups, a trend that has accelerated in 2024. “It shows that when these companies think about growing and diversifying and scaling, they see Israel as a key part of their growth strategy,” says Hasson.
In 2025, AI will continue to attract top investment dollars worldwide, benefiting Israel due to its strong position in this sector. From 2014 to 2023, top multinational corporations acquired one Israeli AI startup for every four American AI acquisitions, showcasing Israel’s strong global appeal. “A key metric that sets Israel apart is its focus on applied AI solutions in areas like cybersecurity, health tech, and agriculture, which positions it as a leader in practical AI applications,” wrote Arik Kol, Head of Nvidia Inception Startups Program at Nvidia Israel, in the recent Startup Nation Central report on Israeli AI.
The defense tech sector is expected to grow rapidly next year, driven by global geopolitical tensions. In Israel, it is driven by necessity and a strong, battle-proven foundation. Earlier this year, Startup Nation Central launched Israel’s first Defense Tech landscape map featuring over 160 companies. Israeli innovators are pioneering technologies that address critical challenges in air defense, homeland security, aviation, dual-use applications, space technologies and more. Startup Nation Central is about to publish an updated version of the map which will include about 300 companies, Hasson reports.
Another area in which necessity drives innovation in Israel and war-related experience leads to successful commercial applications is health tech. “In the battlefield and in the hospitals we’ve seen some amazing technologies being applied in terms of rehabilitation, trauma and mental health to mention a few,” says Hasson. For example, psychiatrists at Israel’s Sheba Medical Center have developed “Liv,” an LLM-based platform that offers an interactive interface, and a personalized patient experience with voice and written communications. The application has been launched commercially by an independent startup with the promise to improve the productivity of mental health professionals while addressing acute understaffing worldwide.
“Venture capitalists have been playing defense for the past 24 months,” says Hasson. He sees this changing in the coming year. “Seed activity will go up a notch because you can’t play defense for three years.” In Israel, “we’re going to see high-quality entrepreneurs going back into the game with good ideas and good teams. And the money will follow.”
Consider, for example, Elad Schulman. After selling his cybersecurity startup in 2019, he settled into the comfortable life of an angel investor. The new market opportunity presented by the arrival of GenAI, however, took him out of “retirement” and with three former colleagues he established Lasso, focused on cybersecurity for generative AI.
The tech sector is “basically the business plan of the country and the reason the Israeli economy came into the war so strong,” says Hasson. “It’s also the source of capital for Israel to fund the growing defense budget in the next decade” and to fund the recovery of the North and South of Israel after the war ends.
