Private funding for Israel’s cybersecurity sector in 2024 nearly doubled from 2023, reaching a level equivalent to 40% of the total US cybersecurity funding market, while European and Asian markets shrank, according to the non-profit Startup Nation Central’s 2025 Cybersecurity Spotlight report released on Thursday.
This “underscores unwavering investor confidence in Israel’s unique innovation model,” despite geopolitical challenges such as the Israel-Hamas War, according to the non-profit.
Israeli cybersecurity companies attracted 38% of all tech investment in 2024, despite comprising only seven percent of Israel’s tech ecosystem, according to the data.
The primary exit path for cybersecurity companies was through Mergers and Acquisitions (M&A), with 11% of companies being acquired early, while only one percent went public. This was far below the four percent public rate seen in other sectors, the report noted.
The report also found strong growth indicators, with cybersecurity having the highest concentration of growth-stage companies across the Israeli tech sector, at 16% as compared to seven percent in other tech sectors.
Additionally, 31% of Israeli cybersecurity companies employ over 50 people, which the non-profit stated shows a high level of scalability, “reflecting a stronger scaling profile than the broader ecosystem.”
Why are Israeli cybersecurity companies doing so well?
The 2025 Cybersecurity Spotlight also examined why Israeli cybersecurity companies are performing so well, highlighting various strengths that differentiate them from global competitors.
One such strength is military-driven expertise. Many founders and professionals in Israeli firms served in military intelligence and cyber units, including the prestigious Unit 8200, gaining a “background of technical skills, real-world cyber defense expertise, and a problem-solving mindset that translates effectively into the private sector.”
Another strength is a robust innovation ecosystem. Israel possesses a vibrant startup culture, supported by government initiatives and academic institutions. This creates an environment that “fosters continuous innovation in cybersecurity,” and an emphasis on research and development, which leads to breakthroughs in AI-driven security solutions and cloud protection.
A third strength of the Israeli market is that its firms attract significant international investment due to global confidence in their technologies, the non-profit noted. This is furthered by Israeli firms collaborating with multinational corporations and participating in global cybersecurity alliances, which enhances their reach and impact.
A fourth unique strength is Israeli firms’ focus on emerging threats. Israeli firms proactively address evolving cyber threats, including quantum computing and artificial intelligence, the non-profit commented. This allows them to adapt to new challenges in an agile manner, ensuring that they remain at the forefront of the sector.
THE 2025 Cybersecurity Spotlight also explored how Israeli cybersecurity startups cover several domains, including application and website security, cloud security, data security, endpoint security, governance, risk management and compliance, identity security, industrial security, network and infrastructure security, security intelligence, and security operations.
Cybersecurity experts comment on Israeli cybersecurity firms
The 2025 Cybersecurity Spotlight cited various experts from the cybersecurity industry commenting on the effectiveness of Israeli cybersecurity firms.
“Cybersecurity is one of the most critical sectors in global tech, driven by escalating threats and the rise of AI and cloud technologies. As digital systems increasingly underpin how we live, work, and govern, the demand for resilient cyber solutions will only intensify. Israel is uniquely positioned to lead this transformation and shape the future of digital security”, Startup Nation Central CEO Avi Hasson said.
“In a dynamic global technology landscape, Israel has solidified its position as the undisputed leader in the cybersecurity sector,” Yariv Lotan, Startup Nation Central’s vice president of Product and Data, added.
“The Israeli cybersecurity market distinguishes itself through a distinctly disruptive and globally-focused mindset,” Yair Snir, managing director of Dell Technologies Capital, stated.
“Israel’s cybersecurity ecosystem thrives on early, strategic alignment between startups and real-world needs,” Alon Rafaeli, founder and partner of Cyber Together, said.
“This structure allows startups to understand enterprise pain points at inception, accelerating product-market fit and global relevance,” Rafaeli added.
“The strength of Israel’s cybersecurity landscape remains not in its size but in its focused innovation. Israeli companies often tackle niche, deeply technical problems, which allows them to offer specialized solutions that larger vendors struggle to address,” he commented.
“The high acquisition rate among Israeli cyber startups reflects their success in delivering sharp, differentiated technologies that fill gaps in global portfolios, and early-stage companies can leverage this consolidation trend, collaborating with established players while maintaining their innovation edge,” he stated.
“The ongoing challenge for Israeli early-stage startups is attracting top-tier R&D talent in a market crowded with multinational giants,” he said.
“In Israel, despite geopolitical tensions, investor interest remains unwavering, and a growing number of mature cybersecurity companies are now acquiring local startups, partly due to lower risk and stronger familiarity,” Amit Karp, partner of Bessemer Venture Partners, noted.