Israeli Tech Sector Raises $7.6 Billion in First Half of 2026 Amid Geopolitical Challenges

The Israeli high-tech industry has demonstrated resilience despite ongoing geopolitical instability, raising $7.6 billion in capital during the first half of 2026. This marks a 52% increase compared to the same period last year, according to preliminary data from the Tech Review report by LeumiTech, Bank Leumi's high-tech banking arm, and research firm IVC. Quarterly trends over the past two years show a steady rise in fundraising capacity, with the last three quarters averaging $3.8 billion per quarter, up from a previous steady rate of about $3 billion. The second quarter of 2026 was a record, with $4.2 billion raised, exceeding the 2020 quarterly average of $2.68 billion by over 50%.

The report also notes that when including undisclosed or stealth funding rounds, there were 205 rounds raising approximately $4.9 billion in the first half of the year. Despite the surge in total capital, the number of deals has declined, with an average of 97 rounds in Q2 2026 compared to about 105 in 2023 and roughly 140 per quarter in 2019-2020. This indicates that growth is driven by larger deals benefiting fewer companies. Sector-wise, cybersecurity remains dominant, securing $2.57 billion (33.8% of total funding) in the first half of 2026, continuing its strong performance from previous years. Defense tech, space, and quantum computing sectors are also accelerating, raising $846 million in six months, nearing their 2025 full-year total of $948 million.

A methodological change in measuring artificial intelligence investments now focuses on companies with AI as a core product (CoreAI), rather than just generative AI. CoreAI companies raised $1.6 billion in the first half of 2026, following $3.1 billion in 2025 and $3 billion in 2024. Late-stage companies saw a 70% increase in fundraising compared to the previous quarter, showing better resilience to dollar depreciation and rising wages, while early-stage companies faced declines. Foreign investors remain highly engaged, accounting for 69.1% of active investors in the first half of 2026, slightly up from 68.4% in 2025.

Maya Eisen-Tzafrir, CEO of LeumiTech, highlighted the ongoing decline in deal numbers despite encouraging capital growth, attributing it to global trends and noting that entrepreneurs are actively managing financial risks amid dollar weakness. Guy Holtzman, Chairman and CEO of IVC, emphasized that despite geopolitical tensions, war, and currency challenges, foreign investor interest remains strong, and continued geopolitical improvements and dollar strength could lead to an exceptionally successful year for Israel's tech ecosystem.