Israeli cyber industry funding hit new records in 2025, reaching $4.4 billion across 130 funding rounds, according to YL Ventures’ annual State of the Cyber Nation report.
With its 10th edition set to be fully released in January, the report reveals that investment in the Israeli cybersecurity industry saw a 500% increase in funding over the past decade. The report also shows that in 2025, global venture capitalists (VCs) surpassed Israeli investors across all stages of funding for the first time ever, with American VCs taking the lead.
In 2025, American VCs led 44 seed rounds and Israeli VCs led 35 rounds. Some of the VCs investing in the Israeli cyber industry include giants such as Sequoia, Mayfield, Greylock and General Catalyst. Combined, managing over $130 billion, their investments in Israel show global trust in the future development of the Israeli cyber industry, according to YL Ventures analyst Or Salom, who authored the report.
“The positive signs are there, because what sets the tone are the new companies that are rising,” she told The Jerusalem Post. “We see that both Israeli VCs and US VCs are believing in the talent here and want to invest,” she explained.
“US VCs were always around, always invested in Israel, but we've seen it happening in later stages, so the new trend for the last two years and the last year in particular, is that these VCs are entering in even earlier stages.” According to Salom, this allows the Israeli cyber industry “to thrive and win in the global market.”
Increase in seed funding shows growth
In total, 71 seed rounds mark 2025 as a year of sharp increase in early funding, as 2024 saw 50 rounds and 2023 only 36 rounds. Seed rounds, being the first round of significant funding, raises enough money for a start-up to turn an idea into a product and prepares the company for Series A, B, C and more. These later rounds of investment typically aim for scaling and involve much larger sums. As such, seed investments carry a certain risk for VCs, although the report covers an increasingly popular way of avoiding this.
While single-seed investment covered the majority of seed rounds in 2025, there were also 13 split-seed rounds, up from 12 in 2024 and 8 in 2023. Split-seed investing is a strategy allowing global VCs to mitigate risks in large seed investments “by co-investing with local VCs specializing in cybersecurity, bringing with them deep knowledge in these areas,” according to YL Ventures’ 2024 report.
“They get our expertise, that we have here — the boots on the ground,” Salom noted. Investors know the “Israeli mentality,” she says, making investing in Israeli startups more appealing for foreign investors, ultimately benefiting the Israeli industry.
Growth in Series A and Series B rounds marks a “new generation of founders focused on building category-defining companies rather than pursuing quick exits,” according to the report. Additionally, it states that “[these] increases illustrate a significant shift from the follow-on drought of 2024 into a healthier, more distributed market.”
Cyber industry has grown significantly over the years
Overall, 130 total funding rounds consisting of $4.4 billion topped last year’s $4 billion over 89 rounds. 2023, no doubt affected by the economic uncertainty caused by the start of the Israel-Hamas War, reached only $1.89 billion across 71 rounds.
According to Salom, the war didn’t necessarily have a negative impact on the industry. “We’ve seen growth in the amount of money entering Israel and the amount of funding rounds in 2024 and in 2025,” she said. “The growth is there despite the war.”
Still, the report voices concern over 2025’s decrease in Series C funding, which more established startups use to expand significantly. Series C-and-beyond rounds fell by over 62% from 2024, with only six startups reaching later levels of fundraising in 2025. Salom, however, doesn’t view this phenomenon as negative.
“2025 marks the building year. We’ve seen the highest number of seed rounds and a lot more A and B rounds. I expect the growth round to rise in 2026, because we're seeing so much investment in series A and B.
Analysts see bright future for Israeli cybertech
Overall, Salom sees potential for Israel to become a global cyber tech power, as long as trends continue.
“The numbers speak for themselves,” she said. “We are seeing a steady constant trend of more and more money entering here, more and more companies are forming, they are breaking their own record every year consistently…These are signs of a healthy ecosystem.”
Salom also expressed confidence in the Israeli cyber industry’s long-term abilities, referencing startups such as Wiz and Cyera.
“This is a proven industry,” she asserted, “meaning Israeli cybersecurity entrepreneurs know how to build global market leaders. We’re no longer this industry that aims to found companies and do a quick exit. The mindset has shifted to building market leaders and billion-dollar companies, and it is noticeable.”
Salom also spoke to the endurance of Israel’s market, even through times of national crisis. “You can also see the resilience of the ecosystem. We experienced war and the growth just keeps getting bigger and bigger,” she added.
“I believe that you will hear more and more about market leaders coming from Israel in the following years.”