77 Years of Innovation
How Israel's Startup Ecosystem is Defying Gravity in 2025 + Top 10 Startups to watch
Welcome to TJ’s Innovation Zone 💡
Swadika 🙏 from Thailand
Still on family vacation, but I just couldn’t ignore Israel’s 77th birthday.
So…to mark this special day, I prepared a special breakdown of Israel’s startups ecosystem, it’s resilience, and it’s impressive comeback in 2025.
Enjoy…
In a world where economic uncertainty has become the new normal and venture capital money is hard to get, Israel's startup ecosystem just delivered a masterclass in resilience.
First, I’ll let 2024 numbers speak for themselves:
Over $12 billion raised in private funding
$15.8 billion in M&A activity (a 49% year-over-year increase)
104 M&A deals completed
Over 6,500 active startups in a country of 10 million people
And this isn't happening in some economic utopia.
This happens in a nation that is facing regional conflicts, on-going war, credit rating challenges, and global market turbulence.
So… what's the secret sauce?
How has Israel's startup nation not only survived but thrived during these challenging times? Let’s dive in and try to find out…
The Pre-Seed Powerhouse
When most people think about startup success, they picture unicorns and massive funding rounds. But the real story of Israel's continued dominance begins at the pre-seed level – the earliest, riskiest stage of company building.
It starts with an idea and a vision.
And we got plenty of visionaries in Israel.
Looking at the 2024 pre-seed data (published by
, the funding landscape has shown remarkable strength with significant investment growth. The ecosystem has demonstrated exceptional resilience with pre-seed startups securing institutional backing at impressive rates.But here's what's truly remarkable:
Despite global uncertainties, Israeli startups continue to move from pre-seed to institutional rounds more efficiently than global averages.
If you've been in the startup world for any length of time, you know how extraordinary this statistic is - Nearly half of the earliest-stage companies are successfully moving to the next funding milestone in an environment where most global VCs have tightened their belts.
The Great Recalibration
The journey hasn't been without challenges.
2024 saw a dramatic shift in investor expectations and startup valuations.
Many deals in 2024 closed at valuations between $2-5 million, with the average post-money valuation sitting at $6.45 million. While this represents a significant drop from the heady days of 2021-2022, it created something else…
Something much more valuable….
A sustainable business model for startups.
What changed in how founders approached building?
1. Validation Before Fundraising
The days of raising millions on a pitch deck alone have disappeared.
Due to the uncertainty in the region (and politics of course) most foreign investors were much more selective with their investments in 2024.
Only 37% of VCs would invest at the idea stage (down from 46% the previous year),
MVP requirements increased fivefold.
Israeli founders had to adapt… and fast.
The weight turned from vision and promising potential to tangible results.
Tangible validation metrics before approaching investors.
Early-stage startup founders built minimum viable products, secured unpaid pilots, and demonstrated clear problem-solution fit before asking for capital.
2. Strategic SAFE Adoption
As in all over the world, the Simple Agreement for Future Equity (SAFE) became the dominant investment vehicle, with over half of VCs investing exclusively via post-money SAFE in 2024, up from 42% in 2023.
That made things much easier for investors and founders.
3. Sector-Specific AI Focus
While AI dominated globally, Israeli founders distinguished themselves by focusing on application-focused AI solutions rather than general-purpose tools.
In 2024, 56% of investors backed AI-powered vertical tools and platforms, while only 10% invested in general AI infrastructure. This focus on specialized, high-value applications allowed Israeli startups to stand out in an increasingly crowded market.
Beyond AI - Sectors Driving the Next Wave
In recent years over 60% of total funding now goes to DeepTech companies – those solving fundamental scientific and engineering challenges.
The most significant investments have flowed into:
Quantum Computing ($380 million)
Advanced Materials ($210 million)
Biotechnology ($1.2 billion)
This isn't just about building apps anymore. Israel is positioning itself at the forefront of frontier technologies that will define the next decades.
Here are just a few examples of startups aiming to disrupt the way we live:
Classiq: A startup in the Quantum computing space, developing a platform to make it accessible to mainstream software developers
UBQ Materials: Converting unsorted household waste into a climate-positive thermoplastic. Their material is used by companies like Mercedes-Benz and McDonald's
Remilk: Operates in Biotechnology, specifically using precision fermentation to produce real milk proteins without animals
Strategic Corporate Investment
Global tech giants aren't just watching – they're actively participating in Israel's innovation ecosystem. Several tech giants made significant acquisitions of Israeli startups or companies with strong Israeli roots/operations during the 2024-2025 timeframe.
Here are some key examples found in the search results:
Google (Alphabet):
Wiz: Acquired in March 2025 for approximately $32 billion. This landmark deal for the Israeli-founded cloud security unicorn was Google's largest acquisition ever and significantly impacted the Israeli tech M&A landscape.
Nvidia:
Run:ai: Acquired in 2024 (deal announced April, closed later in the year/early 2025) for an estimated $700-$800 million. Run:ai develops software to orchestrate and optimize AI computing resources, particularly Nvidia GPUs.
Deci: Acquired in April 2024 for approximately $300 million. Deci specializes in AI model optimization, helping to make deep learning models more efficient.
Salesforce:
Own (formerly OwnBackup): Acquired in 2024 for a reported $1.9 billion. While having global operations (including a large presence in the US), Own is a data protection platform with strong Israeli roots and significant operations there.
Zoomin: Acquired in 2024 for approximately $450 million. Zoomin is an Israeli startup focused on enterprise content management and documentation solutions.
This corporate attention provides not just capital but also strategic partnerships, market access, and acquisition opportunities for founders.
Geographic Diversification
While Tel Aviv has traditionally dominated Israel's startup landscape, 2024-2025 showed an interesting and a very significant shift.
Tel Aviv's share of pre-seed deals decreased from 85% to 72%, with Jerusalem, Haifa, and Beer Sheva collectively capturing 28%.
This geographic distribution isn't just good for regional development. It represents a booming entrepreneurship environment that’s creating new innovation clusters with unique specializations and talent pools.
The Startup Nation Mindset
What can entrepreneurs everywhere learn from Israel's continued success amid challenges?
1. Validation Trumps Valuation
The focus has shifted decisively from "how much can we raise?" to "what can we prove?" Israeli founders are succeeding by demonstrating clear evidence of product-market fit before seeking significant capital.
2. Full Commitment Matters
The data shows that 66% of VCs and 69% of angels expect founding teams to be fully dedicated before investment. Lack of full-time commitment has become a common deal-breaker. The side-hustle startup approach is increasingly unviable.
3. Think Vertically, Not Horizontally
The most successful Israeli startups aren't trying to build general-purpose platforms. They're developing deep, specialized solutions for specific industries or use cases. This vertical focus allows for clearer differentiation and more defensible positions.
4. Build International from Day One
According to Fusion’s Pre-Seed report, 36% of pre-seed startups in Israel already had international customers at funding in 2025. This global perspective from inception helps avoid the common trap of building for a limited local market.
Looking Ahead: The Path Forward
Just before Israel’s 77th Independence Day, Calcalist (one of Israel’s leading financial magazines) published its annual list of the “50 Most Promising Startups for 2025”.
Here are the top 9:
Decart: The first real-time Generative AI open world model.
Quantum Machines: A leading company in quantum computing, transitioning the field from academic theory to industrial application.
Buildots: Addresses delays in construction projects using technology developed by founders from Israel’s elite Talpiot military program.
Fetcherr: Creates AI-based forecasting tools for businesses, founded by fathers who met at their children's kindergarten.
qbiq: Develops a platform for automated architectural design, disrupting the traditional real estate sector with rapid planning solutions.
Kela: An emerging defense tech startup developing military systems, founded by cybersecurity experts with battlefield experience.
Spines: Aims to revolutionize the publishing industry with a platform inspired by the founder's own experience publishing a book.
Blockaid: Provides a security platform to protect digital assets and users in the crypto world from fraud and attacks.
Agora: Offers an innovative fintech platform for managing real estate investments, growing despite slowdowns in the U.S. market.
Finout: Provides solutions for managing and optimizing cloud expenses, aiming to become the standard platform for FinOps.
77 Years of Innovation Isn’t Luck
In Jewish Gematria, the number 77 corresponds to 'Mazal' (מזל), the Hebrew word for luck. However, Israel's remarkable resilience and innovative spirit clearly stem from hard work and ingenuity, not mere good fortune.
If you're building a company (regardless of where you're located) the broader lesson from Israel's continued success is clear:
challenging times don't have to mean diminished opportunity. With the right approach, constraints can become catalysts for innovation.
Are you seeing similar trends in your startup ecosystem?
I'd love to hear your perspective on how these insights compare to what you're experiencing. Leave a comment below or connect with me on LinkedIn to continue the conversation.
Yom Haazmaut Sameah!
