Israeli tech raises $11.9B in 2025 as M&A soars to $71B, five times last year
Despite a 22% drop in deal volume through the first three quarters of the year, funding climbed 13% year over year, while exits hit $41 billion and cybersecurity dominated record-breaking acquisitions.
Israel’s technology sector is experiencing a split reality: investment capital is shrinking, but mergers and acquisitions are reaching historic heights.
According to new data from Startup Nation Central, private funding in Q3 2025 totaled $2.4 billion, a 38% decline compared with the previous quarter when excluding Safe Superintelligence’s $2 billion raise, and 59% lower when including it. Compared with Q3 2024, funding volumes fell 18%. The number of deals also contracted sharply to 141, down 24% from Q2 and 38% year over year.
Despite the pullback, the median round size climbed to a record $10.5 million, up 50% from last year. The figures suggest that investors are focusing on fewer but more mature companies, willing to back larger rounds even as overall participation shrinks. Active investors in Q3 fell to 230, a 20% decline from the prior quarter and the lowest level since early 2024.
In contrast, M&A activity surged. The quarter saw $31.8 billion in transactions across 31 deals, the strongest quarter on record. The standout was Palo Alto Networks’ $25 billion acquisition of CyberArk, the second-largest deal in Israeli tech history, followed by Verint Systems’ $2 billion sale. Cybersecurity dominated the exit landscape, representing 58% of total deal value, including acquisitions of Aim Security by Cato Networks for $350 million and Findings by Diginex for $305 million. The median deal size reached $269 million.
The first three quarters of 2025 underscore the scale of the shift. Private funding totaled $11.9 billion, up 13% year on year despite a 22% drop in the number of deals, while M&A activity hit $71 billion, nearly five times higher than the same period in 2024. Exits accounted for $41 billion, three times last year’s total and the highest in Israel’s history.
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Public listings have also begun to re-emerge. The quarter included eToro’s $700 million Nasdaq IPO and Via Transportation’s $493 million listing on the NYSE, signaling that Israeli companies are again testing global public markets.
Cybersecurity remained the leading sector for private investment, raising $800 million in Q3, about 38% of the total.
“Q3 2025 highlighted a market in transition,” said Avi Hasson, CEO of Startup Nation Central. “While funding slowed and investors became more selective, M&A activity reached historic highs. We are seeing fewer rounds, but at record sizes, signaling confidence in scale-ready companies. At the same time, global buyers are making some of the boldest bets we’ve ever seen on Israeli tech, especially in cybersecurity.”
