Israeli High-Tech Fundraising Surges 52% in First Half of 2026 Despite Startup Struggles

Israeli high-tech companies raised a total of 7.6 billion shekels in the first half of 2026, marking a 52% increase compared to the same period in 2025, according to the Tech Review report by LOMITEC and IVC published on Thursday. This fundraising volume matches the total capital raised in 2020 and has already surpassed the entire 2023 fundraising amount of approximately 7.3 billion shekels within just six months. The second quarter accounted for the majority of the funds raised, totaling 4.2 billion shekels, despite a rising trend of layoffs in the sector, which employers attribute mainly to the strengthening of the shekel against the dollar.

The cybersecurity sector led the fundraising efforts, securing 2.57 billion shekels in the first half of the year, representing about one-third (33.8%) of total capital raised. This continues the strong investment trend seen over the past two years, with cybersecurity companies raising 4.82 billion shekels in 2025 and 3.62 billion shekels in 2024. Defense technology, space, and quantum computing companies also saw increased investments, collectively raising 846 million shekels, which is about 89% of their total 2025 fundraising.

Investment in Israeli innovation remains broad-based, leveraging the country's strengths, even as global investors focus heavily on artificial intelligence. International investments surged by approximately 150% in the first quarter of 2026, reaching around 330 billion shekels, driven by ten funding rounds each exceeding 2 billion shekels, contributing over 206 billion shekels to global investments.

Foreign investors continue to dominate Israeli high-tech funding, accounting for 69.1% of total investments, slightly up from 68.4% last year but down from an average of 74% between 2016 and 2023. The increase in total fundraising is believed to reflect growing investments from local investors. Most funds were directed toward mature, growth-stage companies, which accounted for 83% of total fundraising, compared to about 60% in the first quarter. Early-stage startups remain cash-strapped, largely due to the stronger shekel increasing their cash burn rate and investment risk.

There are doubts about whether the current government plan to support the high-tech sector will adequately address these challenges. Without solutions from the capital markets and government to counteract the erosion of capital for seed and pre-seed entrepreneurs, the Israeli high-tech industry risks developing a strong top tier but losing the foundational startups that fuel future growth.