Israeli Tech Sector Raises $11 Billion in Nine Months, Cyber Dominates Funding

Israeli technology companies raised approximately $3.6 billion in the third quarter of 2026, bringing the year-to-date total to over $11 billion. This figure represents a 53% increase compared to the same period in 2025. However, the distribution of these funds reveals a significant concentration, with nearly 40% of all capital raised this year going to cybersecurity firms.

While the overall amount raised is substantial, the third quarter saw a slight slowdown of about 7% in funding volume compared to the first half of the year. This dip is attributed to fewer working days due to summer and holiday vacations, a pattern observed in seven of the last ten years. Initial figures for the third quarter indicated 91 deals, but broader estimates suggest around 225 transactions totaling approximately $4.3 billion, narrowing the gap with the first half's average to about 2% in value and 6% in deal count.

Cybersecurity continues to be the primary draw for investors, attracting about $4.3 billion year-to-date, or 38% of the total. Enterprise software also showed strength, capturing nearly 30% of the capital raised, a level not seen since around 2020. Together, these two sectors accounted for over 70% of investments in the first quarter, with large deals comprising more than half of the total funding.

In contrast, sectors like defense, space, and quantum computing saw a decline, raising approximately $170 million in the third quarter. While these areas attracted over $800 million in the first half, their cumulative share this year is nearing 10% of all investments.

Funding is also increasingly concentrated in later-stage companies. Growth-stage firms secured about $1.8 billion in the third quarter, nearly half of all funds raised. Early-stage startups (pre-seed to Series A) attracted around $1 billion, while mature companies raised approximately $840 million, or 23% of the total.

Foreign investors remain a crucial component of the market, with approximately 66% of active venture capital funds being foreign, contributing over 70% of investment amounts. The third quarter saw the addition of about 110 foreign funds and 60 Israeli funds to the active investor pool. This trend indicates a market with more capital than in 2025, but with a growing concentration, where established companies, particularly in cybersecurity and software, find larger pools of capital, while younger startups face increased competition for fewer, larger investments.