Israel’s Tech Ecosystem Matures: Fewer Deals, Higher Quality

Startup Nation Central’s Q3 2025 report paints a picture of an increasingly mature Israeli tech ecosystem – evolving from the “Startup Nation” phase to the “Scale-Up Nation.”

Despite a 38% drop in private funding volume, the data reveals that capital has not disappeared but rather become more focused on strong, proven companies. The median deal size reached a record $10.5 million –   a 50% increase year over year.

The high-tech sector remains a central engine of growth for the Israeli economy: in the first half of 2025 it expanded by 5.2%, compared to just 2% for the overall economy, with productivity per employee rising by 3.9%.

Artificial intelligence has become the new investment magnet, driving momentum in cybersecurity – which accounted for 33% of all private funding.

The M&A market recorded one of its strongest quarters ever, with $32 billion in transactions in Q3 alone, led by Palo Alto Networks’ $25 billion acquisition of CyberArk. Altogether, Israeli tech companies completed $71 billion worth of M&A deals in the first nine months of 2025 – five times more than the same period last year.

Publicly traded Israeli tech companies also showed impressive strength: the Finder Index climbed 30% in the past year, outperforming the NASDAQ-100 Equal Weighted Index, which rose 12%. Leading performers included Elbit Systems, CyberArk, Nova and Tower Semiconductor.

The report highlights a significant “talent pivot” within the sector: R&D roles declined by 10.5% compared to 2024, while Product and Data roles surged by 36.8% – a clear sign of a broader shift toward commercialization and profitable growth.

Read the full report: Startup Nation Central – Q3 2025 Report