Resilience and Risk
What $9.3B in H1 Tells Us About Israeli VC
Venture capital is always a story of contradictions: optimism against uncertainty, opportunity against risk. Nowhere is that more apparent than in Israel today.
Nearly two years into war, with IDF reserve call-ups disrupting everyday life, Israeli tech continues to post numbers that look almost implausible from the outside. In the first half of 2025, startups raised $9.3 billion, a 54% jump year-on-year according to Start-Up Nation Central. M&A surged to $39 billion, highlighted by Google’s acquisition of Wiz and CyberArk’s $25 billion deal in July.
The resilience is real. But the numbers also reveal something deeper about where global venture capital is headed and the fault lines that are emerging under the surface.
AI Takes the Lion’s Share
Globally, North America accounted for about 70% of all venture capital in the first half of the year. The big driver? Artificial intelligence. AI companies alone pulled in 62% of total dollars raised, an extraordinary concentration that shows how completely the sector dominates investor priorities.
The result has been an explosion of mega-deals. Sixteen companies worldwide raised $500 million or more in the first six months of 2025, an unprecedented tally. These rounds are defining the new two-tier market: capital flooding into the giants, while smaller startups in less favoured sectors: foodtech, agtech, mobility, all struggle to secure runway.
Liquidity Through the Side Door
The IPO window remains sluggishly, cautiously reopening. But for most companies, the real exit route is now secondaries. U.S. secondary transactions reached $60 billion in H1, a massive jump from prior quarters. This reflects a broader reality: investors are looking for ways to recycle capital sooner, rather than waiting for a traditional public market debut.
This shift matters for Israel, where many growth-stage companies are eyeing liquidity but wary of U.S. IPO volatility. If secondaries become the default exit, it could change how Israeli founders and investors think about scaling and fundraising strategy.
Confidence at Home
While liquidity strategies evolve globally, Israel’s public markets are outperforming expectations. The Tel Aviv Stock Exchange rose 25.5% in H1, compared to just 1.6% for the S&P 500 over the same period. The shekel has strengthened against the dollar and other major currencies, signaling strong investor confidence in the Israeli economy despite war.
That confidence is being reinforced by foreign investors. Mega-rounds and record M&A are attracting capital from global players who see Israel not as a risk zone but as an innovation hub too important to ignore.
Resilience at the Top, Risk Below
The top tier of Israel’s ecosystem looks stronger than ever. Companies with Israeli roots or ties, from Wiz to Anthropic to Perplexity are commanding global attention and capital. These decacorns and unicorns showcase the depth of talent and innovation that has long defined “Start-Up Nation.”
But the base of the pyramid is weaker. Early-stage startups are facing funding droughts, and many early investors lack the “dry powder” to make follow-on investments. Promising ventures are being written off sooner than in past cycles. The danger is that the ecosystem becomes top-heavy: rich in giants, thin on the next generation.
Why This Matters
The paradox of 2025 is that venture capital has never been larger, yet never more concentrated. For Israel, the challenge is not whether it can produce winners, the mega-deals and record exits already prove that. The real test is whether it can nurture the broader ecosystem so that resilience at the top does not mask fragility below.
Policymakers must ensure that incentives and support reach early-stage companies in less favoured sectors. Investors, too, need to remember that today’s decacorns once started as risky seed-stage bets. Without a pipeline of innovation, the long-term story of Israeli tech could shift from “Start-Up Nation” to “Scale-Up Nation,” with fewer startups making it out of the gate.
Resilience, but Responsibility Too
I’ve spent the last decade telling Israel’s innovation story to global audiences. The resilience has always been real: founders coding in bomb shelters, investors wiring money during conflict, and startups scaling to the global stage in defiance of the odds.
That resilience is on display again in 2025. But resilience alone is not enough. To sustain momentum, Israel’s ecosystem must ensure that capital flows not only to the giants dominating the headlines, but also to the smaller, scrappier teams building the next wave of innovation.
The $9.3 billion raised in H1 tells a story of strength. The struggles at the base tell a story of risk. Both are true and both will define the future of Israeli venture capital.
Leah Stern is a Partner at OurCrowd, a global investment firm
