Opinion
From cybersecurity to AI: How Israeli companies can lead the next tech revolution
"Israel has repeatedly demonstrated its ability to lead in fast-evolving, high-stakes industries. But to achieve global leadership in AI, it must act strategically and decisively," write Oren Yunger and Dan Cahana of Notable Capital.
Israel has rightfully earned its reputation as the “Startup Nation” – a global powerhouse in innovation. The country produced industry-defining companies such as SentinelOne, Monday, and Wix, pioneered groundbreaking technologies, and created a thriving ecosystem of startups. And now with the next wave of technology, AI, Israel’s heritage of ingenuity and resilience positions it well to adapt. To lead in AI, Israeli companies can draw lessons from their cybersecurity successes and apply those principles to the unique shape of the AI revolution.
We believe that a few internal and external initiatives could help Israel bridge the gap and move into a leadership position in AI. Creating a centralized AI talent and research hub in Tel Aviv, while also fostering collaboration between AI builders and Israelis with deep expertise in vertical markets (healthcare, developer tools, etc.) will help stronger teams form around more compelling market opportunities. Building a brand for Israeli AI and connecting it to the broader AI ecosystem, especially in San Francisco, will allow founders on the ground to stay ahead of the curve.
The blueprint for Israeli startup success has been drawn by the cybersecurity industry. Israel’s cybersecurity dominance stems from strategic advantages that create a fertile ground for innovation and global leadership.
- Talent Pipeline from the Military: elite military intelligence groups within Unit 8200 and 81, where they gain hands-on experience with cutting-edge technologies and develop a problem-solving mindset.
- Investor Networks and rich M&A Environment: Israeli investors actively fund startups and connect them to customers and capital in the U.S., fueled by a rich M&A market. Many of Israel’s biggest cyber companies, like Wiz, were founded by entrepreneurs who had previously sold companies for <$500M.
- A Culture of Finding Market Niches: Israeli entrepreneurs excel at interviewing potential customers and delivering best-in-class solutions for specific products.
The Israeli AI industry has not yet replicated the country’s success in cyber. Despite strong technical talent, Israel faces key challenges in becoming an AI Hub. The country currently lacks the research density and centralized ecosystem that have enabled AI hubs like San Francisco to thrive. While Israel has strong research universities like Tel Aviv University and the Weitzman Institute, it lacks an applied research center with the scale to drive breakthroughs.
Unlike cybersecurity, where most founders start in the military and remain connected throughout their entrepreneurial journeys, the best Israeli AI talent is dispersed across fields and organizations. This fragmentation limits collaboration, knowledge-sharing, and the compounding advantages of proximity to cutting-edge AI developments. With AI evolving faster than any technology cycle before, staying close to the epicenter of breakthroughs is critical.
Israel’s cybersecurity success provides a foundation for AI, but the AI revolution requires new strategies. To bridge the gap, Israel must:
1. Create a Centralized Talent Hub - A national AI research center could play a transformative role, consolidating talent, fostering partnerships, and driving innovation. San Francisco’s AI boom shows the power of geographic concentration with companies like OpenAI, Anthropic, and Google Deepmind all within 50 miles. The Gulf states are undertaking a similar approach, funding massive LLM projects like the Falcon models. Companies like Nvidia (Mellanox), AI21 Labs, and SSI are well-positioned to lead such initiatives. If major players like Microsoft and Google do not build on their substantial local footprints to take the lead, these Israeli-rooted companies could establish Israel as a global hub for cutting-edge AI research.
2. Foster Cross-Disciplinary Collaboration - Many of the most valuable AI applications emerge at the intersection of disciplines, as seen with Abridge (AI + healthcare) and Cursor (AI + dev tools). Israel’s diverse tech ecosystem is well-suited to drive innovation in AI for cybersecurity, fintech, healthcare, and defense. To accelerate this, Israel should create more community spaces and events for AI builders. In San Francisco, billion-dollar companies are often born out of near-daily AI hackathons. Israel could see similar results by fostering more collaborative environments where AI founders can exchange ideas and build together.
3. Strengthen Ties to Global Markets - As seen in cybersecurity, founders must immerse themselves in the ecosystems where customers live. For AI, this means being local to the action—San Francisco, the current epicenter of AI breakthroughs. The importance of proximity is amplified tenfold in this rapidly forming field. Israeli founders must prioritize embedding themselves in the AI heartlands to understand market demands, build connections, and stay ahead of the curve on new technology. This also means expanding their network of buyers from large enterprises to tech-native companies experimenting with AI.
4. Build a Global Brand for Israeli AI - Israel’s global reputation as a cybersecurity leader was built on consistent successes and strategic promotion. The same approach must now be applied to AI. Celebrating Israeli AI achievements, promoting companies internationally, and creating platforms for knowledge-sharing, collaboration, and visibility will help establish a strong global identity for Israeli AI innovation.
Israel has repeatedly demonstrated its ability to lead in fast-evolving, high-stakes industries. But to achieve global leadership in AI, it must act strategically and decisively. The opportunity is massive—AI’s projected market potential of $827 billion over the next five years dwarfs even that of cybersecurity, which is estimated at $272 billion by 2029.
This is a call to action for entrepreneurs, investors, academia, and policymakers. Israel’s resilience, ingenuity, and innovation have already made it a global tech leader. With focused effort, there’s no reason the Startup Nation cannot redefine itself as the AI Nation—and we are excited to support the founders driving this transformation.
Oren Yunger and Dan Cahana are investors at Notable Capital.
