2025 VC Survey“Israel is poised to excel in AI by building the transformative tech and industries around them”
2025 VC Survey
“Israel is poised to excel in AI by building the transformative tech and industries around them”
Liran Grinberg, Team8 Co-Founder & Managing Partner, joined CTech to share his predictions and insights on the year ahead.
“Just as Israel became a global force in cyber, we’re poised to excel in AI — not by leading in foundation models, but by building the transformative tech and industries around them,” explained Liran Grinberg, Co-Founder & Managing Partner at Team8. “In comparison, Israel wasn’t the pioneer of telecom ‘foundation models’ (cellular cores) but has built a big tech industry around it. Similar things will happen with AI. I’m very optimistic.”
Grinberg joined CTech for its 2025 VC Survey to share insights on the investment space and how Israeli tech settles into the new year. “AI played a big role in the war since October 7 across many defense organizations in both the public and private sectors. As the war hopefully settles in 2025, many talented individuals will transition back to civilian work and leverage their learning and experience, creating a new wave of innovation,” he said.
You can read the whole interview below.
Fund ID
Name of fund/funds: Team8
Total sum of the fund: Over $1.2 billion in Assets Under Management
Partners: Liran Grinberg, Yuval Shachar, Sarit Firon, Rakefet Aminoach, Amir Zilberstein, Aviad Harell, Assaf Mischari, Alon Huri, Varda Shalev, Roy Heldshtein, Israel Grimberg, Galia Beer-Gabel, Asaf Azulay, Dror Grof, Hadar Siterman Norris, Ronen Assia, Adm. Mike Rogers, Ori Yankelev, Dr. Eldad Rom, Charles Blauner
Notable/select portfolio companies (active): Claroty, FundGaurd, Port, Finout, Akeyless, Ox Security, Ionix, Bluespine, April
Notable exits: Talon (acq. Palo Alto Networks), Gem Security (acq. Wiz), Dig (acq. Palo Alto Networks), Curv (acq. Paypal), Portshift (acq. Cisco), Illusive (acq. Proofpoint), Sygnia (acq. Temasek), Planck (acq. Applied Systems), VisibleRisk (acq. Bitsight)
2024 is over. How can you summarize it in terms of the Israeli high-tech industry?
2024 was a year of contrasts for Israeli high-tech. Despite serious headwinds, the sector demonstrated resilience and growth, with significant M&A and investment activities, including multiple mega-rounds. Investor interest not only endured but grew, with Israel seeing funding rebounds across all stages. While the U.S. in comparison has experienced moderate recovery, with total funding rising in the first half of 2024 but dropping in Q3, the local market experienced a stronger recovery in 2024 - experiencing 41% growth in funding YoY between Q3/23 and Q3/24. Israel’s sharper rebound was fueled by large funding rounds and M&As totaling over $13 billion.
For Team8, it was a highly successful year. Since October 7th of 2023 and throughout 2024, we marked five exits (Talon, Dig, Gem, Planck, Setsail) and two mega funding rounds of $100 million in our portfolio (Claroty, FundGaurd). Additionally, several of our companies continued raising new rounds led by top-tier funds such as Accel, Bessemer, and Insight. We also led new investments, launched companies under our Venture Creation model, including fintech startup Bluespine and digital health company Fijoya, and evaluated 500+ new companies (surpassing last year’s numbers). Israel’s sharper rebound was fueled by major funding rounds, including Wiz’s historic raise, multiple growth funding rounds, and a new venture startup founded by OpenAI co-founder Ilya Sutskever.
Yet, challenges persist, with the security situation straining the workforce and the ongoing crisis of hostages in Gaza staying close to us all. While it’s too early to declare a full recovery, the market’s trajectory remains promising.
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?
AI remains the defining opportunity for 2025. Enterprises globally are increasing tech budgets to integrate AI, ensuring they stay competitive in rapidly evolving markets—and Israeli tech must follow suit by building companies that will be the building blocks of AI in years to come. At Team8, we announced the launch of an AI Excellence Center as part of our expansion into this domain, aiming to strengthen Israel’s position as a leading AI hub and innovation ecosystem.
Israel has also a unique opportunity to build on its unmatched momentum in cybersecurity, continuing to drive significant M&A activity while scaling transformative companies like Claroty and Wiz into global market leaders and IPOs. At Team8, we’ve been introducing new methods to back the cyber venture ecosystem for 11 years now, and will continue to evolve and innovate in the space.
That being said, the deeper challenge and opportunity lie in maintaining Israel’s position as the destination for global corporates and investors. The security situation has understandably slowed the steady stream of delegations that were once a hallmark of our ecosystem (and Team8’s), but the underlying interest in Israeli innovation remains strong.
Encouragingly, we’ve seen major venture players like Sequoia, Greylock, Accel, and Index reinforcing their commitments to Israeli companies, launching local offices, and investing in numerous new companies in 2024.
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 signals an exciting early shift for the tech community, with key figures due to step into influential roles beyond Elon Musk. Notable appointments include David Sacks of Craft Ventures as AI Czar, Sriram Krishnan from a16z as Senior Policy Advisor for AI, and Stephen Feinberg of Cerberus Capital Management, joining as Deputy Secretary of Defense.
For Israeli startups, this is a unique opportunity, partly due to the growing demand for cyber defense in the face of escalating global threats, but not only. With Israel’s unparalleled talent density, especially in AI, we anticipate growing demand for Israeli expertise to contribute to the U.S. tech economy (we’ve also seen Musk courting and working with numerous Israeli companies). The strengthened collaboration between Israeli innovation and American policy could drive impactful outcomes for investors and entrepreneurs who go to market in the U.S.
What are the three most important things the Israeli government should do today to accelerate the high-tech engine in the coming year?
- Invest in AI Leadership: As global players such as Perplexity and x.ai secure mega-rounds, Israel must create an environment that positions its companies at the forefront of this revolution.
- Boost Tech Education: With high-tech contributing nearly 20% of Israel's GDP, innovative solutions are needed to grow this impact further and increase workforce participation in the sector.
- Support Deep Tech funding: strengthen the presence of foreign investors in the local market — both LP investors in funds and direct investors in startup companies.
Are there new sectors you see as relevant? Are there any fields you anticipate will weaken significantly in the coming year?
AI is disrupting software development altogether and we’re seeing exceptional opportunities in areas including developer experience, productivity, application security, and cost management. These sectors have attracted significant attention from tier-1 investors this year. A standout example is Port in our portfolio, which followed its strong growth trajectory with a $35 Million funding round led by Accel and Bessemer Venture Partners.
Digital Resilience is becoming top of mind. Not only from cyber attacks, carried by insider or external malicious actors but also from operational faults and mistakes. The Crowdstrike software update incident demonstrated how fragile our digital work is, crashing roughly 8.5 million computers worldwide. In cybersecurity, AI fuels increased complexity, particularly in tackling AI-generated phishing attacks, deepfakes, data privacy, shadow AI usage, and securing the development lifecycle. On the other hand, AI also offers opportunities to develop next-generation security controls to tackle the growing threats, with agents augmenting or replacing manual security work by SOC analysts, secure design experts, and more.
Quantum computing is also picking up in awareness with breakthrough advancements from companies like Google and growing Israeli innovation from the likes of Classiq.
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?
Just as Israel became a global force in cyber, we’re poised to excel in AI — not by leading in foundation models, but by building the transformative tech and industries around them. In comparison, Israel wasn’t the pioneer of telecom “foundation models” (cellular cores) but has built a big tech industry around it. Similar things will happen with AI. I’m very optimistic.
AI played a big role in the war since October 7 across many defense organizations in both the public and private sector. As the war hopefully settles in 2025, many talented individuals will transition back to civilian work and leverage their learning and experience, creating a new wave of innovation.
As investors, we’re using a structured framework to evaluate companies, classifying them into four categories:
- Architects: Builders of foundational AI infrastructure, like OpenAI and AI21
- Pioneers: Innovators creating entirely new AI-driven products
- Innovators: Companies enhancing existing products with AI to improve efficiency, functionality, or user experience.
- Integrators: Businesses leveraging AI to elevate performance or add new features to already successful products.
This framework helps us identify businesses with sustainable value and avoid those whose products risk obsolescence.
Could the global IPO drought end in the coming year?
In 2024, the IPO market continued to stagnate, with a relatively small number of offerings. This reflects ongoing macroeconomic challenges on a global scale and extends the negative trend seen over the past year. However, we’re starting to see signs of activity, with a number of companies preparing to go public, as reported recently in The Information. As public market dynamics shift and the IPO window reopens, we anticipate growing demand for strategic acquisitions too. It also suggests a gradual market maturation that could pave the way for the return of technology IPOs in the coming year and into 2026.
From an investor's perspective: will the coming year be better for early-stage startups or more mature companies?
I hope for both. With the IPO window opening up, some mature companies will go that path, and some of them will aim for the required IPO metrics via inorganic growth, putting big dollars to work in significant acquisitions. In parallel, the winds are also in favor of early-stage startups, which have seen a 45% increase in total funding from Q1 to Q3 2024 compared to the same period in 2023.
Did you raise fund money in 2024 for an existing fund or a new one? What are your expectations regarding this matter for 2025?
Team8 announced $500 million raised for three new funds in March 2024, spiking our AUM to way over $1 billion. I am very much encouraged by the fact that investors from the US and Europe continued to back their existing funds portfolio despite the war. Adding new funds to their portfolio was the trickier part, and I hope that with increased stability in our region in 2025, we will see those institutional LP investors become more active in Israel.
How many investments did you make in 2024, and how does it compare to previous years?
We made eight new investments (some of which are still in stealth mode), as well as numerous follow-on investments in our portfolio companies. Two portfolio companies raised mega-rounds of $100M and many others raised new rounds led by leading VCs such as Accel, Bessemer, Insight Partners, and more. We are actively investing and kept at a similar pace to last year.
Provide an example of an intriguing investment you made in 2024. What sets this company apart, or what is distinctive about its sector?
We invested in Port, the leader in developer experience, as part of their $35 million B-Round led by Accel and Bessemer Venture Partners, bringing total funding to $58 million. The highly oversubscribed round came on the heels of Port's exceptional growth, with a 7x year-over-year increase in revenue. Port’s user base has expanded eightfold since its previous funding just one year ago, with customers including leading brands like LG, British Telecom, and GitHub, which recently selected Port as the internal developer portal for their engineering team. Additionally, Port announced the integration of LLMs into its platform, enabling organizations to enhance their developer experience with generative AI.
With software development being disrupted by AI, the market momentum for Port with the focus on developer experience – couldn’t be more exciting.
Two notable companies that you think will thrive in 2025.
Company Name: Akeyless
Sector + description of the product/service: Cyber/Infrastructure. Akeyless unifies secrets and machine identity management, securing credentials, certificates, and keys across all environments with a scalable platform.
Total Investment Amount: $88.5 million
Founding Year: 2019
Reasoning why this is their year: Machine identity, also referred to as non-human identities (NHI), became top of mind as a growing threat for enterprises, resulting in the founding of numerous new startups in this space in the past two years. Akeyless is further ahead at growth stage with marquee Fortune 100 customers across many industries, recently securing a strategic investment from Deutsche Bank. With IBM acquiring its main competitor, Hashicorp Vault, we believe Akeyless has immense opportunity for market leadership and exceptional growth.
Company Name: Nagomi Security
Sector + description of the product/service: Cyber, proactive security and continuous threat exposure management. With a mission to help cybersecurity teams focus on real world threats, Nagomi’s Proactive Defense Platform enables customers to maximize the effectiveness of their security stacks to defend against emerging, relevant threats that are being carried out in the wild. The platform transforms fragmented best-of-breed solutions into best-of-suite security for customers, by providing end-to-end visibility of defense capabilities mapped against threats.
Total Investment Amount: $30 million (Team8, TCV, Crowdstrike, Okta)
Founding Year: 2023
Reasoning why this is their year: The cybersecurity industry is fraught with challenges, not least of which is the complexity of managing diverse and fragmented security tools. It’s becoming unsustainable and enterprises are longing for a solution. Nagomi’s platform addresses this directly by providing organizations with clarity on how well their tools are configured to combat specific threats. This is increasingly important as the threat environment evolves and new vulnerabilities emerge. By enabling continuous reassessment and realignment of security postures, Nagomi helps organizations stay ahead of the attackers whilst gaining true visibility of their security posture.
