Israeli High-Tech Raises $7.6 Billion in First Half of 2026 Amid Fewer Funding Rounds

Israeli technology companies raised a total of $7.6 billion in the first six months of 2026, marking a 52% increase compared to the same period in 2025, according to preliminary data from the Hi-Tech Report published by LOMITEC and IVC. The second quarter alone accounted for $4.2 billion in funding. Despite this growth in capital raised, the number of funding rounds continued to decline, with only 97 deals in Q2. Since 2023, the average quarterly funding rounds have hovered just above 100, down from about 140 per quarter during 2019-2020. This indicates that more money is concentrated in fewer transactions and companies, a trend also seen globally in venture capital markets.

Cybersecurity remained the leading sector, attracting $2.57 billion or roughly 34% of total investments, maintaining its top position for the third consecutive year. Defense technology, space, and quantum computing sectors also showed strong growth, collectively raising $846 million in the first half of 2026, nearly matching their total funding for all of 2025. The report updated its methodology for measuring artificial intelligence companies, now including those with AI core to their products or technology, not just generative AI firms. Under this new definition, core AI companies raised $1.6 billion, though there is overlap with other sectors, especially cybersecurity.

A widening gap was observed between mature companies and startups, with growth and late-stage firms capturing about 83% of total funding in Q2. Early-stage companies raised only $719 million, down from over $1 billion in each of the previous three quarters. This shift is partly attributed to macroeconomic factors: Israeli firms raise capital in dollars but incur most expenses, particularly salaries, in shekels. The strengthening shekel and rising wages erode the purchasing power of funding, posing challenges especially for younger companies with limited revenue and financial flexibility. Conversely, mature companies have adapted better and significantly increased their fundraising.

Foreign investors remained a stable presence, accounting for 69.1% of all venture capital and investment arms active in Israel during the first half of 2026. This underscores Israel's continued status as a key global technology investment destination despite ongoing security and economic challenges.