A K-shaped recovery redraws Israel’s startup landscape
Some sectors surge, others stall, and the gap is widening.
The private funding market for Israeli technology companies has begun to move again, but not in the way founders grew accustomed to during the boom years.
According to a new analysis by altshare, which aggregates anonymized data from thousands of Israeli and international technology companies, capital is returning selectively, concentrating in fewer sectors, fewer companies, and fewer people. The result is a market that is no longer frozen, but far less forgiving.
At the Seed stage, headline figures suggest stability. Median Seed rounds closed the fourth quarter of 2025 at $6.0 million, with a median pre-money valuation of $12.3 million. Beneath that surface, however, momentum was uneven. Artificial intelligence and cybersecurity continued to pull capital toward them, while fintech and healthtech lagged, locked in slower resets shaped by regulation, longer sales cycles, and tighter investor scrutiny.
Altshare’s forward-looking model points to a brief pause in early 2026, with median Seed investments projected to dip to $5.0 million in the first quarter, followed by a modest rebound in the second half of the year, assuming easing financial conditions and a lower cost of capital.
The report describes what has become a defining feature of the current cycle: a K-shaped recovery. In artificial intelligence, median Seed investments peaked at $6.4 million in the final quarter of 2025, with pre-money valuations climbing to $16.4 million. Cybersecurity Seed rounds were even larger, reaching a median of $7.2 million, underscoring the sector’s position as a dependable category even as broader markets softened.
By contrast, fintech Seed rounds ended the year at a median of $4.9 million, while healthtech remained closer to $3.4 million, figures that reflect not collapse, but restraint. Investors are still writing checks, but at lower velocity and with greater emphasis on efficiency and execution.
The same pattern is visible at Series A. While overall median Series A checks rose to $12.8 million in late 2025, valuations stayed flat, signaling a concentration of capital in fewer, higher-conviction companies. In AI, median Series A rounds reached $22 million, with pre-money valuations approaching $58.3 million. Cybersecurity valuations climbed even higher, crossing $84 million.
One of the clearest shifts documented in the data is the normalization of secondary transactions. What were once exceptions have become part of the standard playbook, particularly from Series B onward.
Median secondary sales increase meaningfully between Series A and Series B, with employees consistently selling a larger share of their holdings than founders. Fintech leads in secondary activity, followed by cybersecurity and AI, while healthtech remains the most conservative sector for early liquidity.
After two years in which one-year exit delays became the default outcome, the report shows a partial reversal in 2024-2025. More companies are now moving forward with liquidity events as planned, rather than deferring indefinitely, a sign of growing confidence, but also of pragmatism.
“Liquidity isn’t a reward anymore, it’s a requirement,” said Ronen Solomon, founder and CEO of altshare. “Secondary deals used to be the exception. Today, they’re part of the playbook.”
The redistribution of equity is another defining feature of the current phase. While men still receive roughly two-thirds of equity grants overall, the report identifies early signs of narrowing gender gaps among younger employees, particularly in healthtech and agri-food technology.
At the same time, equity is increasingly flowing to older, more experienced employees. From 2022 to 2025, the share of grants allocated to workers over 50 grew steadily across sectors, while grants to employees under 30 declined. The shift is most pronounced in fintech and industrial sectors, where operational depth and regulatory experience are at a premium.
“Equity only matters when it turns into real value. In sectors like fintech, we’re seeing employees actually cash out. In others, equity is still mostly theoretical,” said Solomon. “But the market is shifting, experience and execution are being rewarded, and we’re finally seeing early signs of narrowing gender gaps in equity, especially among younger employees.”
Altshare’s data suggests that the era of “growth at all costs” is firmly over. Revenue multiples, which collapsed across sectors in 2022, have stabilized, but not rebounded indiscriminately. AI and data-driven companies now command the highest forward multiples, cybersecurity has held up steadily, and fintech shows tentative signs of recovery only where execution has improved. Healthtech remains the laggard, constrained by longer timelines and capital intensity.
“Momentum matters but timing matters more,” said Solomon. “The market has split. AI and Cyber are pulling ahead with premium rounds and strong tailwinds, while other sectors are still in a slower reset. It’s not just about what you’re building, it’s whether you’re building it at the right time.”
