VC Survey 2026
“Israeli tech remains dependent on the US as investors, buyers, partners, and customers”
Dorin Baniel, Partner, Israel, at NightDragon, joined CTech for its 2026 VC Survey.
“When it comes to quantum, the most under-valued category is error mitigation. Across the quantum stack layers, it’s got the lowest valuations on average – but given it’s critical to adoption, I think there’s a big asymmetric upside here. As for cyber, it’s more difficult to pick an under-valued category. Maybe I would say zero-trust or identity security platforms – just given the fact that the fastest-growing users in the enterprise aren’t people anymore, so while the attack surface is growing rapidly, the valuations don’t seem to be,” said Dorin Baniel, Partner, Israel, at NightDragon, when asked to identify undervalued sectors likely to leap forward in 2026.
“Generally, there are much more over-valued categories in cyber (in Israel) – ones where exits and valuations are extremely high for solutions that seem more like features rather than scalable platforms.”
Following the turbulence of recent years and the stabilization of 2025, the Israeli tech ecosystem is entering a new era: The Next Leap. Baniel joined CTech to share insights for its VC Survey 2026.
You can read the entire interview below.
Fund ID
Fund Name: NightDragon
Total Assets Under Management: $1.5B
Partners/Managers: Dave DeWalt, Ken Gonzalez, Morgan Kyauk, Amy DeSalvatore, Barbara Massa, Dorin Baniel, Hannah Huffman
Notable Portfolio Companies: Classiq, Saronic, Hawkeye360, Dataminr, Epirus, HUMAN, Horizon3
Notable Exits: Capella Space (acquired by IonQ)
The Valuation Leap: Moving past the market correction, what is the single most critical metric (e.g., EBITDA, NRR) that will drive premium valuations in 2026?
In 2026, premium valuations will go to companies that deliver durable, efficient growth. Beyond the baseline premium for exceptional teams and technology, the most important metric for Israeli companies will remain top-line revenue growth, closely followed by net revenue retention. Israeli cyber has historically achieved fast exits at high multiples driven by talent and innovation—but that only goes so far. Achieving a billion-dollar valuation requires scaling the idea into a repeatable, durable business with sustained growth, validated by increasing market urgency. Revenue quantity and growth matter as much as revenue quality. A clear signal of true product-market fit and readiness for global scale is repeatable sales to the ideal customer profile, supported by mature partnerships and a global distribution engine. If the ICP is US enterprises, but revenue is largely generated elsewhere—or partners fail to drive meaningful resale and distribution—that gap will be reflected in a lower valuation.
The Agentic Leap: As we transition from 'Copilots' to autonomous 'Agents,' which specific vertical will be the first to fully trust AI with independent decision-making?
CISOs historically like to have a high amount of automation, but typically coupled with oversight for the final remediation decisions. If I had to choose an area within cyber, then I’d choose the SOC where the agents deal with repeatable, policy or playbook-driven and time-critical tasks. For example, taking care of low-severity tickets, making decisions around classifying, correlating, and prioritizing alerts, and identifying new threats with added context. Those types of decisions can be made by agents today, but it will take more time for remediation decisions and actual fixes to be done by agents in a scalable way.
The Sovereign Leap: Have the geopolitical lessons of recent years pushed Israeli startups to build independent, 'sovereign' tech stacks to reduce reliance on global platforms?
Not really - For most, the priority remains speed to market and access to the US ecosystem, with design and operating choices being optimized for keeping technology control while still using and scaling on global platforms. Given the strength and mutual dependency of the US–Israel relationship, Israeli startups continue to rely primarily on a single global platform—the Americas, with the US serving as the core market and global distribution engine. For Israeli companies selling into the US federal market, there are still regulatory and compliance hurdles to navigate, as there are for any foreign entity. At the same time, US corporates remain the most active—and most generous—buyers of Israeli technology. Without buyers, there is no liquidity, and without liquidity, venture capital slows—something we’ve seen clearly over the past few years as the public markets were quiet. Israeli tech therefore remains dependent on the US as investors, buyers, partners, and customers, and the relationship between the two countries is as strong as it has been in decades.
The Efficiency Leap: In the era of AI-driven hyper-productivity, is the traditional correlation between 'Headcount Growth' and 'Company Success' permanently broken?
I believe we’re getting to a point where it’s not that important of a signal. As a growth investor, we want to see high-revenue and high-growth businesses building the talent needed to achieve their goals – but, efficiency is just as, if not more, important. It’s best to hire at the right pace, focused on high quality talent, rather than hiring too fast, then needing to re-build down the road. More than that, today, it is very important to see companies learning and implementing AI, and therefore it’s understood that companies do not need as many people as they did before. What matters is output per employee – including leverage through AI – putting efficiency (rather than headcount) as an even more important signal of growth success.
Finally, what are 2-3 startups that, in your opinion, are likely to make a leap forward in 2026?
Classiq (Portfolio company) – they are the Microsoft of quantum computing. We are going to see huge things from them in the coming years, which is why we proudly joined their last round (series C).
Dream Security – above the outstanding founders, they have a mission that is critical, they have the vast network and experience selling in their domain, the R&D talent… and now they are executing.
Coralogix – Unlike many feature-based startups that come out of Israel, Coralogix was building a platform from day one and today, its power and ability to scale seems unparalleled.
