Opinion
The next front: Israel’s economic battle for global confidence
"After two years of hardship and uncertainty, Israel now requires a nationwide image campaign to demonstrate to the world that its economy is thriving once again and that security and stability have returned," writes Ron Abelski, partner at Epstein Rosenblum Maoz.
The end of the war, the safe return of the surviving hostages, and the renewed sense of unity within Israeli society not only mark the close of a challenging chapter but also signal the dawn of a new and promising era. After a prolonged period of conflict, uncertainty, and declining foreign investment, Israel now faces a significant window of opportunity. The shadow that once loomed over economic certainty, grounded flights, and suspended business delegations is gradually lifting. With the war's end, Israel is presented with a critical national challenge: to attract foreign investors back and restore the flow of international capital.
While the government was preoccupied with urgent wartime matters, Israel’s high-tech sector continued to operate and innovate, albeit at a reduced scale. Over the past two years, the local mergers and acquisitions market has relied primarily on Israeli investors, as American and European investors significantly curtailed their activity.
The withdrawal of investors from Israel is driven not only by economic and political uncertainty but also by a troubling trend of delegitimization—a modern form of antisemitism. A historical paradox is unfolding before our eyes: Jews were once scorned for being stateless, defenseless, and without an army; today, Israel is criticized by some for being “too strong.” The global media narrative has transformed Israel’s success into a double-edged sword, with its technological and military strength now serving as grounds for criticism. In response, Israel must launch a resolute and assertive public diplomacy campaign to clearly communicate the justice of its cause.
A striking example of this occurred recently when Norway’s sovereign wealth fund, one of the largest in the world, decided to significantly reduce its investments in Israeli companies due to the war in Gaza. This underscores that the battle for public perception is as crucial as the one fought on the battlefield. Israel stands at the forefront of the Western world’s struggle against terrorism and extremism; therefore, effective public diplomacy is not merely a matter of image but a strategic imperative.
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The latest Startup Nation Central report presents an inspiring yet complex picture. In the third quarter of 2025, Israeli startups raised $2.4 billion, marking a 38% decline from the previous quarter, with the number of funding deals falling by 24%. Meanwhile, the report highlights a significant increase in mergers and acquisitions, which reached a record $31.8 billion for the quarter. This surge was fueled by the landmark deals of Wiz and CyberArk, which together were sold for approximately $57 billion.
Behind these impressive figures lies a more nuanced reality: the two largest deals account for the majority of this year’s mergers and acquisitions total, while overall market activity remains subdued. An examination of the total number of transactions reveals a gradual decline, with fewer than 100 deals completed this year compared to an annual average of more than 140 between 2015 and 2022. Nevertheless, these figures also highlight significant growth potential as conditions stabilize, underscoring the critical importance of carefully cultivating investor confidence.
If the government aims to attract foreign investors back to Israel in large numbers, it must recognize that the market does not lack advanced technology, but rather certainty and stability. The government should present a clear, long-term economic policy to the world, demonstrating a commitment to maintaining predictable, consistent regulation. Sudden changes in investment regulations risk signaling instability and undermining credibility.
Investor relations should be managed as a national strategy rather than as a one-time marketing initiative. Israel must revitalize its innovation diplomacy by dispatching official delegations abroad, hosting international conferences in Jerusalem and Tel Aviv, and promoting close coordination among the Ministries of Foreign Affairs, Economy, and the Innovation Authority. These measures can send strong signals to investors. At the same time, Israel should develop targeted incentives for foreign investors, such as an accelerated regulatory track, relaxed requirements for mergers involving foreign buyers, and a government-backed fund that co-invests alongside international partners.
As with any meaningful relationship, trust with investors is built gradually but can erode quickly. After two years of hardship and uncertainty, Israel now requires a nationwide image campaign to demonstrate to the world that its economy is thriving once again and that security and stability have returned. With the renewal of direct flight routes, the encouragement of business delegations, and streamlined bureaucratic processes, the current renewed interest can develop into a genuine wave of investment.
Throughout its history, Israel has demonstrated an exceptional ability to transform challenges into opportunities. If the government can demonstrate stability and act with determination and long-term vision, the emerging wave of opportunity will become more than a passing trend—it will serve as the foundation for a new decade of trust, stability, and sustainable growth. In doing so, Israel will once again prove that it is not only the “Startup Nation,” but also a beacon of resilience and democratic values—a strategic asset the Western world cannot afford to lose.
Ron Abelski is a partner in the Corporate and Mergers & Acquisitions Department at Epstein Rosenblum Maoz (ERM).
