VC Survey 2026
“Five percent of companies attract roughly 50 percent of total VC funding”
As part of the VC Survey 2026: The Next Leap, J-Ventures managing partner Oded Hermoni joins CTech to share his perspective on the future of the Israeli tech landscape, from the concentration of global capital to the country’s role in the deep tech engine.
“None of our Israeli portfolio companies failed to grow or raise capital during wartime,” says Oded Hermoni, managing partner at J-Ventures, calling the feat "almost unheard of" from an operational standpoint. However, the Silicon Valley-based investor warns that the "resilience" narrative of Startup Nation is a double-edged sword: if the story remains too focused on Israeli society rather than global market leadership, investor interest can fade. For Hermoni, resilience is only an advantage "when paired with global ambition and category leadership."
Following the turbulence of recent years and the stabilization of 2025, the Israeli tech ecosystem is entering a new era: The Next Leap. Hermoni joined CTech to share insights for its VC Survey 2026, which invites prominent investors to discuss the topics, trends, and “leaps” expected in the year ahead.
With five percent of companies attracting roughly 50 percent of VC funding, Hermoni expects M&A to remain the primary liquidity path for Israeli startups in 2026, while IPOs are "reserved for a small group of truly global, revenue-scaled leaders." He also anticipates Israel will realize its "underappreciated advantage in deep tech" as a power source for the sector. Meanwhile, in the AI era, Hermoni predicts “the strongest companies will stay lean not because they lack ambition, but because efficiency itself becomes a competitive advantage."
You can read the entire interview below:
Fund ID
Name of Fund: J-Ventures Group
Total Assets Under Management (AUM): $105M
Partners/Managers: Jim Koshland, Oded Hermoni, Nilesh Trivedi
Notable Portfolio Companies (Active): Descope, Beehero, Finout, Volumez, Cents, Hidden Level, Datarobot, VisbyMedical, Bria.ai, Nimble, Raaam, Connie Health
Notable Exits: Omada, Conversa Health, Concertio, Macheye, Ananda
The Liquidity Leap: After a period defined by cash preservation, will 2026 see the reopening of the IPO window for Israeli tech, or will M&A remain the sole viable liquidity event?
Over 70 tech companies went public in 2025, the highest number since 2021, and roughly 10 percent were Israeli-oriented. Yet more than half of those tech IPOs ended the year below their IPO price. This includes one of our own portfolio companies, Omada, which went public in 2025. That data alone explains why confidence in the IPO window remains fragile.
As a result, I expect the IPO market in 2026 to remain volatile for both Israeli and non-Israeli companies. The uncertainty is driven by the dual fear and promise of AI, alongside macroeconomic and geopolitical risks. Interest rate dynamics in the US remain unclear, and broader political uncertainty, including China’s posture toward Taiwan, continues to weigh on long-term visibility.
At the same time, there is a clear contradiction in the market. Despite the volatility of 2025, the Magnificent Seven ended the year with strong gains. AI, combined with independence in computing and storage, reshaped expectations around incumbents. Google gained roughly 65 percent after many believed OpenAI would disrupt search, and NVIDIA rose 30 to 40 percent. Capital is clearly willing to reward true category leaders.
Looking ahead, two potential IPOs could redefine the market in 2026: OpenAI and Anthropic. Their performance will likely set the perimeter for the broader tech IPO market and could trigger a snowball effect in valuations and sentiment. If they disappoint, the shock could ripple even into major players like NVIDIA or Oracle. That said, this is hard to predict. These companies may be too systemically important to fail, and recent history suggests governments are willing to intervene, as we saw with Intel.
All of this strengthens the case for M&A. Public companies are sitting on large cash reserves and have benefited from valuation recovery in recent years. As a result, M&A activity is picking up, particularly in cyber, AI, infrastructure, and deep tech. For most Israeli tech companies in 2026, M&A is likely to remain the more reliable liquidity path, while IPOs will be reserved for a small group of truly global, revenue-scaled leaders.
The Global Leap: How is the 'Israeli Tech' asset class being rebranded to global LPs in 2026? Are we shifting the narrative from 'Innovation' to 'Extreme Resilience'?
We are a Silicon Valley based VC fund, so we see Israeli tech through the lens of the US market, US venture firms, and also through working with non-Israeli portfolio companies. From that perspective, the level of resilience we have seen is extraordinary. None of our Israeli portfolio companies failed to grow or raise capital during wartime, even while founders and employees were in reserve duty. From an operating standpoint, this is almost unheard of.
That said, most US VCs do not invest in Israel because of resilience as a value in itself. They invest in Israel for cyber and AI, and increasingly for deep tech and defense. Leading firms like Sequoia Capital, Andreessen Horowitz, and Insight Partners have all doubled down on Israel, and recent exits have only increased their appetite. The opportunity set is simply too strong.
At the same time, there is a real risk. If the narrative becomes too inward looking, or too focused on the Israeli story as a society rather than on global market leadership, interest can fade quickly. We saw that at the beginning of the war, when several US VCs told me directly that they believed Israel would not recover. That sentiment reversed, but it was a reminder of how fragile perception can be.
This also shows up in very practical ways. We learned how much we should appreciate direct flights to Israel, not only with El Al. It is easy to forget how many deals, meetings, and momentum were lost during periods when there was no direct flight between Israel and Silicon Valley. Access, presence, and friction still matter.
The Israeli tech narrative is evolving. Innovation alone is no longer enough, and global LPs already assume strong engineering talent. What differentiates Israel today is execution under pressure. Companies are built, shipped, and sold while operating in a highly unstable environment, and that reality has become part of the asset class story.
At the same time, capital is becoming increasingly concentrated. Recent studies show that about 5 percent of companies attract roughly 50 percent of total VC funding, and 10 percent capture close to 75 percent. This has created an industry where fewer companies receive much larger bets, and LPs are focused on identifying those few that can become global category leaders.
For Israeli managers, this means shifting the framing away from local innovation toward global relevance. Israeli companies are increasingly positioned as infrastructure, cyber, AI, deep tech, and dual-use players that sell into global markets from day one. In that sense, resilience is not a slogan. It is an operational advantage, but only when paired with global ambition and category leadership.
The Deep Tech Leap: With the rising focus on hardware-heavy sectors (Defense, Climate, Quantum), is the Israeli VC model adapted to fund high-CAPEX ventures?
Israeli tech has a long and underappreciated advantage in deep tech. Some of the country’s biggest technology wins were not SaaS companies but semiconductor and infrastructure leaders. Galileo, Mellanox, Annobit, and Tower built foundational technologies that global companies depended on. This is one of the core reasons why the largest technology players continue to invest in and acquire companies in Israel.
That said, deep tech requires a different venture model. Hardware-heavy companies demand longer timelines, higher upfront capital, and milestone-driven financing rather than pure growth narratives. Traditional Israeli VC, which evolved around fast software cycles, is not always structured for this type of risk and duration.
However, this is changing. The renewed focus on AI infrastructure, semiconductors, energy efficiency, and defense has brought strategic capital, government involvement, and longer-duration thinking back into the market. Google’s success in turning what began as a side chip initiative into a strategic AI advantage is a clear reminder of how powerful deep tech can be when it reaches scale.
From the J-Ventures portfolio, one company I am highly confident will take a significant step forward is Raaam. Raaam operates at the intersection of semiconductors and AI infrastructure and recently closed an oversubscribed Series A. The company is tackling one of the hardest problems in modern computing: memory and data movement bottlenecks that limit AI performance and efficiency. As AI workloads scale and energy efficiency becomes critical, solutions like Raaam’s move from being optional to foundational. This is classic deep tech, with long development cycles, high barriers to entry, and enormous upside once adoption begins.
The Efficiency Leap: In the era of AI-driven hyper-productivity, is the traditional correlation between 'Headcount Growth' and 'Company Success' permanently broken?
We are in a very unusual moment in technology development. AI has changed the rules, and everything is moving extremely fast. In software especially, investors are being asked to predict which companies will lead entire categories ten years from now. That has always been hard, but today it feels almost impossible given the pace of change in technology and business models.
In this environment, the traditional correlation between headcount growth and company success is breaking. AI has fundamentally changed how much output a small, highly capable team can generate. Functions that once required large teams, including software development, customer support, go-to-market operations, analytics, and even parts of product management, can now be handled with far fewer people.
This shift changes how we evaluate companies. Growth is no longer measured by how many people you hire, but by how fast you learn, iterate, and deliver value to customers. A significant part of today’s valuation premium is therefore placed on the founding team, with the expectation that they will continuously adapt the path as markets and technologies evolve. The strongest companies will stay lean not because they lack ambition, but because efficiency itself becomes a competitive advantage.
At the same time, AI also makes it easier to appear productive without real customer pull. As a result, real revenue, retention, and usage quality matter more than ever. Valuation premiums will increasingly go to teams that demonstrate high output per employee and disciplined execution, rather than organizational scale.
The Next Engine: Cybersecurity has been Israel's primary export engine for a decade. Which domain is best positioned to take the lead by 2030?
Cybersecurity will remain critically important, but it is no longer the only growth engine. AI infrastructure and deep tech are best positioned to take the lead by 2030. This includes semiconductors, memory, data movement, storage, networking, and the systems that make AI scalable, efficient, and reliable in the real world. As AI workloads grow, these layers move from being optional optimizations to foundational infrastructure.
AI is also fundamentally reshaping cybersecurity itself. It gives attackers capabilities they did not have before: speed, scale, automation, and adaptability. This dramatically increases the attack surface and the level of vulnerability, forcing security systems to evolve much faster than in the past. The need to continuously adjust defenses is significantly greater than before, and static security models quickly become obsolete.
Recent large cyber outcomes have distorted parts of the market. The major deals around CyberArk, Wiz, and Armis pushed the cyber sector into something close to valuation mania. In several areas of tech investing, the level of FOMO is extremely high, often with little correlation between valuation and actual revenue. These deals inflated public comparables and spilled into private markets, including M&A for very young companies.
A second major engine is defense and dual-use technology, particularly in sensing, autonomy, and real-time decision systems. The strongest companies in this space are not pivoting between civilian and defense markets. They are building technology where both use cases share the same core physics: sensing, tracking, deciding, and acting in real time.
Climate and industrial tech also present a meaningful opportunity, especially in energy efficiency, infrastructure resilience, and resource optimization. These are areas where Israeli technical depth and mission-critical thinking translate well.
Infrastructure and semiconductors deserve to be called out explicitly because they sit at the center of everything else. AI, cyber, defense, and climate all ultimately depend on them. As models scale, constraints shift from algorithms to physics: bandwidth, latency, power, and heat. This is where Israeli deep tech has a structural advantage built over decades of semiconductor and system design expertise.
Finally, what are 2-3 startups that, in your opinion, are likely to make a leap forward in 2026?
Israeli tech has a long and underappreciated advantage in deep tech. We tend to forget that some of the biggest Israeli technology wins were not SaaS companies, but semiconductor and infrastructure leaders. From Galileo, Mellanox, Annobit, and Tower, these companies built core technologies that global leaders ultimately depended on. This is one of the main reasons why the largest technology companies in the world continue to invest in and acquire companies in Israel.
This year, Google reminded the market how powerful deep tech can be, showing that what started as a side chip initiative can become a strategic engine that enables AI leadership and technological independence. That backdrop matters when thinking about which startups are positioned to make a real leap forward in 2026.
One company poised for a breakout is Finout (J-Ventures portfolio company). As cloud and AI spending accelerate, cost visibility and optimization have become board-level issues. Finout has built itself into the financial control layer of modern cloud infrastructure, helping companies understand, predict, and optimize spend across increasingly complex environments. With AI driving unpredictable usage patterns, FinOps is no longer a nice-to-have, and Finout is growing rapidly as enterprises look for discipline without slowing innovation.
Another is Bria AI (J-Ventures portfolio company). Bria has taken a fundamentally different approach to generative AI by building its own independent model with strong ethical and legal foundations. The company enables enterprises to regain control over AI-generated visual and audio outputs in a responsible way that does not violate intellectual property or individual rights. Over the past year, Bria has made a major leap in model quality, closing the gap with much larger players while maintaining its principled approach. As regulation tightens and enterprises demand safe, controllable AI, this positioning becomes a real advantage.
More broadly, we often look at startups through the prism of Israeli versus non-Israeli, especially in areas like cyber and defense. In reality, most of these markets are global, and in some cases, particularly defense tech, Israeli companies face structural challenges breaking directly into the US Department of Defense ecosystem. That makes it even more important to focus on fundamentals: deep technology, defensibility, and relevance to global strategic priorities.
In 2026, the companies most likely to break out will not be those chasing short-term hype, but those building hard, foundational technologies that the next generation of AI, cloud, and infrastructure simply cannot run without.
