2025 VC Survey5 leading AI trends and startups to watch in 2025
2025 VC Survey
5 leading AI trends and startups to watch in 2025
From cybersecurity to biotech, local ventures excel in applicative and vertical AI, driving global industry transformation.
There's no doubt that artificial intelligence is the current queen of the global high-tech industry, and although it seems that Israel is lagging slightly behind technological powerhouses in AI research and development – venture capital investors remain quite optimistic, especially in the generative AI domain. The prevailing perspective among local venture capital investors is that while Israel may not be leading the AI revolution, it is certainly not trailing behind. These insights are evident in the 2025 VC Survey project, currently published on CTech, which includes interviews with over 50 leading venture capital fund managers in Israel.
As part of the survey, investors were asked to select two startups they anticipate will excel in the upcoming year, including those within their current investment portfolios, and provide rationales for their selections. Most fund managers participating in the survey distinguish between two innovation approaches in AI: Applicative AI and Vertical AI. Since Israeli companies excel at applying artificial intelligence to real-world problems, particularly in domains like cybersecurity, healthcare, and defense, the focus on applicative AI allows them to create practical, immediately impactful solutions instead of competing with tech giants in developing basic models. Expertise in vertical AI enables Israeli companies to implement advanced AI models for creating solutions tailored to specific industries. This strategy combines deep professional domain knowledge with AI capabilities, empowering them to transform major global industries.
Here are 5 leading trends in the Israeli AI ecosystem, along with a relevant company for each trend:
AI-driven solutions for cybersecurity
There is a strong emphasis on leveraging AI to enhance cybersecurity, particularly in the face of growing threats. Many VCs highlight the increasing need for AI-powered tools to manage risks, prevent breaches, and ensure operational continuity. They indicate a major trend in utilizing AI to bolster cybersecurity defenses. This is driven by the increasing sophistication and frequency of cyberattacks, along with the need for more effective threat detection and response mechanisms. Traditional security tools are struggling to keep up with the pace of these evolving threats, creating a demand for AI-powered solutions that can proactively identify vulnerabilities, detect anomalies, and automate incident response
Cynomi
Description of the product/service: Cynomi provides a vCISO platform that uses AI to automate many tasks, helping service providers achieve cyber resilience for their clients.
Investment amount: $23.5M in total funding
Founding year: 2020
Reasoning why this is their year according to Flint Capital: Cynomi is experiencing rapid growth, having already tripled its ARR, doubled its customer base and headcount, and is riding strong momentum.
AI for software development and code quality
The investors suggest that AI is increasingly being used in software development, which is creating new challenges around code quality and security. As AI becomes more integrated into software development processes, there's a growing need to ensure the quality and security of AI-generated code. The investors highlight that while AI can speed up the coding process, it also introduces new challenges related to reliability, potential vulnerabilities, and scalability. This is driving the demand for tools that can help developers build robust and bug-free AI-powered software.
Qodo
Description of the product/service: Qodo is a quality-first generative AI coding platform that helps developers write, test, and review code within IDE and Git.
Investment amount + total: $50M
Founding year: 2022.
Reasoning why this is their year according to TLV Partners: As AI takes center stage in software development, maintaining code quality is no longer optional—it’s essential. Without rigorous validation, the speed and efficiency promised by AI-generated code can be quickly undermined by unforeseen complexities and costly setbacks later in the development cycle.
The future of software development isn’t coming—it’s already here. Companies worldwide are increasingly leveraging AI to build their software. Just recently, Google CEO Sundar Pichai revealed that 25% of Google’s internal code is now AI-generated—a staggering statistic that marks only the beginning of this transformation. Qodo stands ready to lead this new era with its commitment ensuring the highest standards of code quality and integrity.
Qodo is a quality-first generative AI coding platform, offering busy developers tools for writing, testing, and reviewing code. Using Qodo, developers can leverage the power of AI directly within their IDE and Git, ensuring that generated code is accurate and high quality. Qodo’s platform focuses on code integrity, with features like automated code reviews, contextual code suggestions, and comprehensive test generation. By integrating seamlessly into existing workflows, Qodo empowers developers to produce robust, reliable software efficiently, helping teams maintain high standards of code quality and integrity throughout the development lifecycle.
AI infrastructure and foundational models
While some VCs suggest Israel may not be leading in developing foundational AI models that require massive capital investment, they emphasize the country's strength in creating innovative infrastructure solutions to support AI applications. This trend focuses on the hardware and software components that are needed to make AI systems more efficient, scalable, and cost-effective.
NeoLogic
Description of product/service: NeoLogic develops next-generation AI data center processors using its proprietary Quasi-CMOS technology. This innovation delivers groundbreaking improvements in power, speed, and area (PPA) efficiency, reducing power consumption by up to 25% while enhancing performance. NeoLogic’s processors address the increasing computational demands of AI-driven workloads in data centers, offering sustainable solutions for cloud providers and advancing beyond traditional semiconductor design limitations.
Investment amount + total: $8M (Seed round, 2023)
Founding year: 2021
Reasoning why this is their year: NeoLogic is transforming the semiconductor industry with its proprietary Quasi-CMOS technology, which delivers groundbreaking improvements in power, speed, and area (PPA) for AI-driven data centers. By reducing power consumption by up to 25% and significantly improving chip performance, NeoLogic addresses the rising operational and environmental costs faced by data centers globally. With strategic partnerships with industry leaders, NeoLogic is positioned to leapfrog Moore’s Law, creating processors that are not only more efficient but also future-proof.
AI-powered applications and vertical AI solutions
Rather than competing to develop foundational models, many Israeli startups are focusing on building specialized AI applications and vertical AI solutions. These solutions are tailored to specific industries and designed to address unique challenges, making them more efficient and effective than generic AI tools. This approach is particularly relevant for sectors like healthcare, manufacturing, and finance, where domain-specific knowledge is essential.
MNDL Bio
Description of product/service: MNDL Bio operates at the intersection of Biotech and Deeptech, specializing in Synthetic Biology and Bioconvergence. Their advanced AI platform, built on years of research, optimizes the design of genetic instructions to help SynBio companies produce valuable proteins more efficiently in living cells. By eliminating the traditional trial-and-error approach, MNDL's technology accelerates development timelines, reduces costs, and enhances protein yields. This empowers companies in pharma, foodtech, and biotech to bring innovative products to market faster and more affordably.
Investment amount + total: $2M
Founding year: 2023
Reasoning why this is their year according to Earth & Beyond Ventures: Heading into 2025, global challenges like population growth, food security, and healthcare access intensify, the demand for innovative biotech solutions is surging. Industries like pharmaceuticals, food tech, and synthetic biology need efficient, scalable tools—but many lack the expertise and data to engineer genetic sequences effectively. Enter MNDL Bio: their AI-driven platform accelerates product development, cuts costs, and boosts productivity. At the intersection of AI and biotech, MNDL is uniquely positioned to lead the next wave of innovation, empowering companies to meet market demands in a rapidly evolving landscape.
AI for data management
As AI systems become more prevalent, the need for efficient data management and security becomes critical. High-quality, well-structured data is the foundation of successful AI applications. There is a growing demand for solutions that can automate data acquisition, streamline data pipelines, and ensure that data is accessible and secure.
Nimble
Description of the product/service: Nimble’s platform enables companies to effortlessly interact with web data. Nimble turns long and complex cycles of building web scraping pipelines and scripting into a fast ‘full-stack’ solution that collects unstructured website data and turns it into structured, hypergranular and easy to consume tables. It enables anyone in the organization to seamlessly access that data in the way that suits their needs through the Nimble Knowledge Cloud.
Investment amount + total: ~$45m
Founding year: 2021
Reasoning why this is their year according to Square Peg: Data forms the backbone of AI systems. The proliferation of AI applications inside enterprises drives growing demand for a diversity of high-quality, well-structured data. Nimble provides an effective data acquisition solution that automates the scraping of real-time, structured data from across the web. The convenience and the accuracy of Nimble’s refined enterprise offering distinguishes it within the category, where it is currently the clear innovator.
