Opinion
The ceasefire - An opportunity to cement Israel’s status as a deep tech nation for the next two decades
"Deep Tech is not a luxury - it is a vital element of Israel’s long-term competitiveness," writes Shmuel Kedmi is CEO of NetZero Tech Ventures.
Israel’s high-tech industry serves as a cornerstone of national economic growth, with the Deep Tech sector standing out as a particularly potent force within it. This sector encompasses companies engaged in the research and development of complex technologies that demand significant capital investment, patience, and a highly educated and skilled workforce. Deep Tech creates substantial added value for the Israeli economy and has become an inseparable part of it.
The Israel Innovation Authority’s 2025 Deep Tech Report highlights the sector’s strength: since 2019, Israeli Deep Tech companies have raised more than $28 billion - over one-third of all high-tech funding in the country. In the first eight months of 2025 alone, they raised $2.2 billion, reflecting recovery and renewed growth even after a global slowdown, and underscoring the sector’s economic and innovative potential.
Israel’s Deep Tech strengths span Medical Devices, Artificial Intelligence, Biotech, Pharmaceuticals, verticals in CyberSecurity, EnergyTech, AgTech, and Foodtech. These successes are driven by long-term investments, a vibrant entrepreneurial culture, and proactive government policies.
Israel leads the OECD in R&D investment as a percentage of GDP - exceeding even South Korea and the United States. Its entrepreneurial spirit is recognized worldwide: two Israeli universities recently ranked among the top 10 global institutions by number of alumni founders, the only non-U.S. institutions on the list. Israeli entrepreneurs also ranked second among foreign founders of unicorn companies in the U.S.
When it comes to supporting Deep Tech young companies, the government plays a crucial and often catalytic role. Through the Israel Innovation Authority, the state lays the groundwork for Deep Tech development by funding early-stage startups, establishing technology incubators that turn academic research into commercially viable ventures, and helping companies expand trade internationally.
Yet alongside these achievements, recently, serious threats have emerged and could undermine Israel’s position. The European Commission’s initiative to suspend Israel from Horizon Europe - the EU’s flagship research and innovation program with a €95 billion budget - risks the access to joint research funding, reducing opportunities for universities to secure research grants, and making it harder for startups to attract foreign investment. Although the previous suspension initiative was postponed in July 2025, the threat remains substantial and could be aggravated if the current ceasefire in Gaza falls apart. Past boycotts and restrictions from European countries have severely harmed Israeli industries and their ability to raise capital and penetrate international markets.
In the U.S., there are currently broad cuts to R&D grant programs, following shifting American budget priorities - unrelated to any antagonism towards Israel. These drastic changes - also have a significant impact, particularly in Deep Tech sectors that depend on extensive investment and long-term support.
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Israel’s tech industry cannot afford isolation. Our technological resilience and global standing depend on openness, collaboration, and full participation in international R&D frameworks. The delicate ceasefire may offer an opportunity to safeguard Israel’s inclusion in Horizon Europe, but simultaneously, Israel needs to move fast to establish new additional channels of R&D cooperation that will reduce dependence on Europe.
Israel’s bilateral innovation fund model, developed in partnership with the U.S., India, Singapore, and South Korea, offers successful vehicles of joint R&D financing that could be replicated and expanded. The model enables collaborative research and joint funded pilot programs between Israeli researchers and companies with counterparts abroad and has proven vital for Israeli innovation to access key global markets.
Deep Tech is not a luxury - it is a vital element of Israel’s long-term competitiveness. The past two decades earned Israel the title of "Startup Nation”. In the next two, we can secure our position as the "Deep Tech Nation" - but only if we keep our bridges to the world open and continue to cultivate international cooperation.
Shmuel Kedmi is CEO of NetZero Tech Ventures.
