AI becomes Israel’s largest tech engine with funding jumping from $4.9 billion to $7.9 billion
Data shows the national tech economy now anchored by AI-first companies.
Israel’s technology economy is undergoing one of its most dramatic reallocations of capital in years, driven by an unprecedented surge of investment into pure artificial intelligence companies. According to Startup Nation Central, funding for AI-focused startups is expected to rise from $4.9 billion in 2024 to approximately $7.9 billion in 2025, a jump that places AI at the center of the country’s innovation and growth engine.
According to the updated projections, total tech funding is expected to exceed $12.3 billion in 2025, and the majority of that momentum comes from AI companies. Much of this growth is linked to the rapid expansion of AI-security startups, those developing tools to secure models, infrastructure, and runtime environments, as well as purely foundational AI companies building models and developer tooling.
Firms operating at the intersection of cyber and AI are projected to attract $2.5 billion in 2025, nearly double the previous year. That would make AI-security companies responsible for 64% of all cybersecurity investment, up from 34%.
These shifts reflect broader adjustments in the structure and maturity of Israel’s tech economy. Cybersecurity still commands an outsized share of national investment, 37% of all tech funding, and cyber companies continue to outperform the broader market in scale: 16% are now in growth stage, compared to 7% across all tech sectors, and 31% employ more than 50 people, underscoring operational depth in an increasingly competitive industry.
The acquisition landscape reinforces the shift: companies like Prompt Security, Veriti, Talon, Dig Security, and Avalor have all been absorbed by global buyers in the past two years, culminating in Google’s $32 billion acquisition of Wiz, the largest exit in Israeli history.
