Israeli High-Tech AI Sector Dominates Funding, Attracting 89% of Capital

Companies operating in the artificial intelligence (AI) sector attracted approximately 89% of all capital raised by Israeli technology firms in 2025, according to a new annual report by the innovation community DatA-IL, in collaboration with research firm IVC. This marks a significant increase from the previous year, when AI companies accounted for 58% of the funding.

In total, Israeli AI companies secured about $11.8 billion across 499 funding rounds in 2025. This compares to approximately $7 billion raised in 530 rounds in 2024. AI companies were also responsible for 56% of all funding rounds within Israel's high-tech industry.

The report defines AI companies broadly, encompassing those that develop their own models and foundational technologies, as well as those where AI plays a significant role in their products. Out of 2,948 such companies identified in Israel, representing about a third of the local tech sector, only 364 are categorized as "Core AI", directly creating AI models, infrastructure, or foundational technologies. These Core AI firms raised $3.2 billion, or roughly 24% of the total capital received by the Israeli high-tech sector.

This high concentration of investment aligns with a notable concentration of AI talent. A report by the Israel Innovation Authority indicates that Israel leads the world in AI talent density. However, the absolute number of specialists remains relatively small, posing a risk of losing its competitive edge amidst global competition for researchers. DatA-IL operates with the participation of the Ministry of Economy, the Innovation Authority, the National Digital Directorate, and the SFI group.