Resilience in crisis: How Israel’s startup ecosystem thrives amid conflict

In times of war or political instability, startup ecosystems often take a severe hit. Companies relocate, and investors lose interest. Take Ukraine, for example. After the Russian invasion in 2022, many tech companies had to evacuate employees, move operations, or shut down entirely.  Lift99’s Kyiv hub, for example, now hosts 47 startups, down from more than 100 before the war outbreak. Furthermore, venture capital funding into Ukrainian startups plummeted as investors deemed the region too risky. In 2022, venture capital investments in the region decreased by approximately 74% compared to 2021, from a record $832 million to around $218 million. 

Israel proves to be an exception. Despite a backdrop of war, political instability, and global economic uncertainty, the local tech sector not only weathered the storm — it thrived. According to the “Israeli Tech Review 2024” by IVC Data and Insights and LeumiTech, the country’s startup ecosystem experienced substantial growth compared to 2023. Capital raised in 2024 surged by 40 percent. The number of funding rounds also increased by 15 percent. Seven new unicorns — privately held startups valued at over $1 billion — emerged in the Israeli market, up from just four the previous year. Exit value reached an impressive $13 billion. 

Interest in tech events is on the rise too. According to our research, Google searches for “tech conferences” in the country rose by 30%, “tech events” by 26.3%, and “startup events” by 20%. And we personally expect more participants at this year’s Axis Tel Aviv tech conference from across the globe compared to last year, when it was much harder to attract international guests. 

So what makes Israel the exception to the rule? The answer lies in a combination of factors that have uniquely equipped Israel to thrive amid adversity. Resilience isn’t just a trait here — it’s a national ethos. For decades, Israeli founders have operated in a high-stakes environment, shaped by regional tensions and military service. Many of the country’s most successful tech leaders are veterans of elite army units, like Unit 8200, where rapid problem-solving, resourcefulness, and innovation under pressure are standard operating procedures. This mindset translates directly into startup life.

Beyond its people, Israel’s tech sector is deeply embedded into the global economy. Startups often launch with international operations from day one. It’s not uncommon for a company to keep its R&D in Tel Aviv while its go-to-market team is based in New York, San Francisco, or London. For example, companies like Classiq, a developer of quantum computing software; AiOla, which specializes in conversational AI solutions for businesses; and BaroMar, a provider of energy storage solutions, operate this way. This decentralization has served as a hedge against local disruptions, allowing businesses to stay operational and investor-ready even during crises. 

Investor loyalty also plays a crucial role. Firms like Andreessen Horowitz, Insight Partners, and SoftBank continue to back Israeli founders, knowing that some of the most valuable companies are born in the crucible of pressure.

Many multinational companies (MNCs) such as Renault Group, BMW, Siemens, The Coca-Cola operating in Israel also contribute to the thriving local startup ecosystem. They are constantly expanding and typically seek to enter new business areas as quickly as possible. The fastest way to achieve this is by acquiring companies that are already established in these fields. A great example of this strategy is the recent deal between Google and the Israeli cybersecurity company Wiz. This strong demand for ready-made innovation drives the supply of Israeli startups.

Finally, both government and private institutions offer infrastructure that supports rapid adaptation. One of the prominent examples is the Startup National Center. The non-profit organization connects Israeli startups with global investors and partners. We also contribute. Over the last 12 years, we have helped link hundreds of Israeli companies with both local and international investors through our Axis Tel Aviv event. To date, more than 300 participating startups have collectively raised over $2 billion in funding. 

If 2024 is any indication, the Israeli tech sector is not only resilient — it’s poised for even greater acceleration in 2025 and beyond. The pace of large-scale funding rounds is expected to continue. We see signs of this trend already. In January 2025 alone, Israeli startups secured over $620 million across 27 deals, representing a 30 percent increase from the same month the year before.

We regularly engage with hundreds of multinational companies (MNCs) and their corporate venture capital arms, as we believe that their interest often drives wider investment from traditional venture capital firms. Currently, we are seeing strong demand in several key sectors: artificial intelligence, cybersecurity, sustainability solutions — including green technologies, the circular economy, and climate-tech innovations — as well as dual-use technologies with both civilian and defense applications, and Industry 4.0 fields such as smart manufacturing, the Internet of Things (IoT), and next-generation industrial automation. In our view, startups operating in these areas are well-positioned to attract significant funding this year.

Despite the noise, despite the chaos, and despite the global narrative of conflict, Israel’s startup ecosystem continues to write its own story — one of resilience, reinvention, and relentless progress.