2025 VC Survey“The Israeli high-tech sector stands at an inflection point in 2025”
2025 VC Survey
“The Israeli high-tech sector stands at an inflection point in 2025”
Notable Capital Managing Partner Oren Yunger spoke to CTech to share insights on the tech ecosystem as Israel prepares for 2025.
“The Israeli high-tech sector stands at an inflection point in 2025,” said Oren Yunger. “Israel’s unparalleled ecosystem of innovation and adaptability continues to thrive, even as the global and local political and economic climate presents challenges.”
Yunger joined CTech to discuss predictions for the year ahead as part of its 2025 VC Survey. Notable Capital also recently published an investment thesis trying to organize the ‘chaos’ of identity management in a 3x3 box, identifying emerging themes and exciting companies revolutionizing the $100B+ technology stack.
You can learn more about its investments and strategies below.
Fund ID
Firm: Notable Capital
Total sum of the fund: $4.2 billion
Managing Partners: Oren Yunger, Glenn Solomon, Hans Tung, Jeff Richards
Select portfolio companies (active):
[Specific to Oren] Coder, Descope, Drata, Monte Carlo, Orca Security, Pecan, Tonic, Torq, and Wing Security
[Specific to Notable Capital] Quince, Drata, Handshake, Vercel, Neon, Parafin, Patronus AI
2024 is almost over. How can you summarize it in terms of the Israeli high-tech industry?
It’s been a year of recalibration. The global challenges—like rising interest rates and cautious investment climates—slowed growth in some areas. Israeli high-tech showed resilience, especially in sectors like cybersecurity, which continued to lead innovation. Efficiency and sustainable scaling became the buzzwords, and companies adapted accordingly. In the second half of the year, we started to see companies return to strong growth but with much more efficiency than at the market peak in 2021.
Looking ahead to 2025 - What challenges and opportunities await the Israeli high-tech sector in the coming year, and how are you, as investors, preparing for them?
The Israeli high-tech sector stands at an inflection point in 2025. Israel’s unparalleled ecosystem of innovation and adaptability continues to thrive, even as the global and local political and economic climate presents challenges.
Challenges:
- Global and Local Market Conditions: Rising interest rates and tighter capital markets demand that startups go beyond technological excellence, demonstrating clear paths to sustainable growth and profitability. At the same time, Israel must address its own challenges, including regional instability and internal conflicts.
- Talent Dynamics: The global race for top-tier talent, especially in AI and cybersecurity, has intensified. Success will require not just competitive compensation but also offering a bold, inspiring vision that attracts the best minds.
Opportunities:
- AI at the Forefront: The AI era is in its early innings and Israel’s strength in algorithm development, cybersecurity, computer vision, and deep tech positions it to lead in critical areas like generative AI applications, AI safety, defense, and autonomous systems.
- Global Relevance: Geopolitical shifts and evolving trade dynamics create new demand for Israeli innovation in sectors like climate tech, quantum computing, and defense technologies.
How We’re Preparing:
With the strong momentum in the markets, it also feels like we’ve entered a new type of bubble and that growth at all costs is back in fashion. We work hard with our founders to ensure they understand that building a long-sustainable and independent business takes more than a 2-year stretch. This is a long journey, and companies that aren’t ready for it in the early days will have a tough time adapting. As investors, we’re focused on supporting startups that are both capital-efficient and scalable. We’re doubling down on companies addressing foundational challenges in AI and cybersecurity—areas where Israel has the ability to create unique advantages and lead to large businesses.
Additionally, we connect Israeli startups with best-in-class talent, buyer networks, corporate partnerships, and strategic allies in global markets, bridging the gap between innovation and scale.
2025 won’t be without its hurdles, but Israel’s ability to adapt, innovate, and execute positions it to thrive in this evolving landscape. For us, the goal is to back the companies that will define the next wave of global impact.
How will new American leadership affect the global high-tech industry or economy? And where does this place Israel and its entrepreneurs?
The new American leadership can shift priorities in areas like R&D funding, trade policies, technology regulation, and more, which could shape the global high-tech landscape. For Israel, this presents both opportunities and challenges. Entrepreneurs here are well-positioned to align with emerging U.S. priorities such as AI acceleration and cybersecurity, leveraging Israel’s strong innovation ecosystem. Deepening partnerships and staying proactive about regulatory shifts will be key to maintaining a competitive edge and accessing global markets. Today, more than ever before, it is important for startup founders to be where the market is. Building a strong go-to-market machine requires founders to be close to customers, partners, and talent to be able to take feedback, iterate, and realign the company accordingly.
What are the three most important things the Israeli government should do today to accelerate the high-tech engine in the coming year?
Israel has experienced significant turmoil over the past two years. It is crucial for leaders to continue supporting the high-tech sector as a key growth engine and empower founders to drive innovation forward.
Are there new sectors you see as relevant? Are there any fields you anticipate will weaken significantly in the coming year?
Relevant sectors include generative AI, autonomous systems, cybersecurity, data, and dev infrastructure. Fields like consumer-focused apps or non-critical SaaS offerings may weaken due to lower venture appetite for these business models.
We are especially excited to see Israeli entrepreneurs building massive companies in the AI infrastructure space. This is an area where Israelis have demonstrated great strength and have significant potential to further expand and compete alongside their US counterparts.
Is Israel missing out on the AI revolution in the global arms race? If not, what should the local industry focus on to join the global race?
Israel is not missing out, but it is behind. The local industry excels at integrating AI with real-world applications, particularly in cybersecurity, autonomous systems, and defense. One way for Israeli tech to stay competitive is to strengthen its focus on developing domain-specific AI models and enhancing AI safety and security frameworks where it already has expertise.
Could the global IPO drought end in the coming year?
Let’s hope so! The IPO window could reopen by mid-2025 if macroeconomic conditions stabilize. We’ve started to see some companies going out with strong appetite from public investors. There is a great list of cloud infrastructure, AI, and Fintech businesses that are in line to ring the bell like Stripe, Databricks, CoreWeave, Cerebras, Klarna, Chime, Netskope, and more Investors are looking for companies with a clear path to profitability and continued growth, and IPO-ready businesses will need to meet that standard. The early signs of demand for new IPOs like ServiceTitan make us optimistic about 2025.
From an investor's perspective: will the coming year be better for early-stage startups or more mature companies?
After the tough slowdown of 2022, we are very optimistic to see a new wave of founders and seasoned founders pursuing their 2nd and 3rd entrepreneurial journeys.
At the same time, many young startups who endured the tough times in recent years have adapted and learned how to operate in times of difficulty. They adjusted their business models and now know how to drive towards a successful outcome without the artificial and constant need for “easy money” we’ve seen in the ZIRP days.
We believe the rise of AI also makes it a more attractive time for new startups that can move quickly to compete with existing platforms. We’re already seeing AI companies grow much faster than startups of the past, even in markets crowded with incumbents.
Did you raise fund money in 2024 for an existing fund or a new one? What are your expectations regarding this matter for 2025?
Earlier this year, we rebranded as Notable Capital, marking a new chapter for our firm after 23 years as GGV Capital. With over $8 billion raised and a track record of backing founders from companies like Airbnb, Affirm, HashiCorp, Square, Slack, and Zendesk, we’ve shifted focus in response to evolving geopolitical dynamics. Named for the notable founders and companies we back, the U.S. team now operates as Notable Capital, while the Asia team has become Granite Asia, functioning as a separate entity.
How many investments did you make in 2024, and how does it compare to previous years?
We led 11 investments in 2024 and will close the year with more than double the capital deployed compared to the previous year.
Investments included 10 early stage (seed, A, B), and one growth stage, including Gorgie, LocalStack, Parafin, Patronus AI, and Slope. Six companies have not yet announced their financings. Three companies are based in Tel Aviv.
13 portfolio companies had follow-on-financings, including Israeli startup Torq which closed a $70m C round.
The Notable Capital portfolio had five exits in 2024: Ibotta IPO (NYSE: IBTA), HashiCorp acquired by IBM (pending), Cacheflow acquired by Hubspot, Convex acquired by ServiceTitan, and Tel Aviv-based Gem Security acquired by Wiz.
Provide an example of an intriguing investment you made in 2024. What sets this company apart, or what is distinctive about its sector?
Over the last few years, we’ve spent a lot of time in the space of Security Event and Incident Management space and written about why it is ready for disruption. This is one of the biggest areas of spend for security teams today, and with the growth of data and tooling over the last years, teams are underserved. We recently made an investment behind an exceptional founding team looking to serve this need, creating a frictionless security data fabric to reduce cost, increase performance, bolster security. They enable security teams to get the right data in the right place while continuing to use the tools they are already familiar with or easily implement new ones. We’ve seen strong market pull for this product and we expect amazing things for this team in the coming year.
Two notable companies that you think will thrive in 2025. These can be from your portfolio or not.
Company Name: Monte Carlo
Sector + description of the product/service: As businesses increasingly rely on data to drive better decision-making and power digital products through AI, it’s mission-critical that this data is trustworthy and reliable. Monte Carlo, the data observability company, solves the costly problem of broken data through their fully automated, data observability platform.
Total Raised: $240 million
Founding Year: 2019
Reasoning why this is their year: They have what customers need – understanding of the relationship between data and AI. As small and large corporations explore and adopt AI, they must adopt tooling to ensure their data is reliable, accurate, and doesn’t lead to critical mistakes. AI reliability initiatives must be able to scale and operationalize effectively.
Company Name: Torq
Sector + description of the product/service: Torq is transforming cybersecurity with its AI-native autonomous SOC powered by hyperautomation. By connecting the entire security infrastructure stack, Torq empowers organizations to instantly and precisely remediate security events and orchestrate complex security processes at scale. Fortune 500 enterprises, including the world’s biggest financial, technology, consumer packaged goods, fashion, hospitality, and sports apparel companies, are experiencing extraordinary outcomes with Torq.
Total Raised: $188 million
Founding Year: 2019
Reasoning why this is their year: With the rising volume of cyberattacks, without the expansion in team sizes, companies are increasingly turning to technology to automate their breach response efforts. Analysts estimate the security automation market could reach $26.6 billion by 2032.
