Unreported rounds push Israeli tech funding past $12 billion in 2024
Unreported rounds push Israeli tech funding past $12 billion in 2024
Officially reported funding reaches $10.6B, but newly revealed data shows total financing surged 31%.
The high-tech industry in Israel raised $12 billion in funding and recorded $15.8 billion in exits in 2024, according to a report by Startup Nation Central. These achievements significantly contributed to Israel's economic growth, with the high-tech sector's GDP increasing by 2.2%, even as the broader economy contracted.
The report shows that Israeli high-tech companies secured $10.6 billion in reported funding in 2024, a 28% increase compared to $8.3 billion in 2023. When accounting for unreported rounds and undisclosed funding amounts, the total annual funding is estimated at $12.2 billion, reflecting a 31% increase from last year's adjusted figure. This growth aligns with trends in U.S. venture capital activity and surpasses those in Europe and Asia, despite a global decline in the number of investment rounds. Early-stage financing (Pre-Seed to Series A) accounted for 82% of all deals, while later-stage financing reached record levels, approaching the peak seen in 2021.
In an interview with Calcalist, Avi Hasson, CEO of Startup Nation Central, expressed surprise at the sector's strong performance: "If you had told me a year ago that these would be the numbers at year’s end, I would have been pleasantly surprised. Despite the complex situation in Israel, including 20% of employees serving in the IDF reserves and limited inbound flights, these results are remarkable." Hasson added, "While the number of R&D workers increased, the number of non-R&D workers remained stagnant due to factors such as outsourcing, the aftereffects of 2021, and the impact of AI, which optimizes processes and reduces the need for non-tech employees."
The cybersecurity sector continues to show strong growth, representing only 7% of Israel’s tech companies but accounting for 36% of total funding, or $3.8 billion—a 90% increase year-over-year. Median funding rounds in the sector reached $18 million, highlighting its critical importance in the ecosystem. "Cybersecurity does not harm other industries," Hasson noted. "Israel is a global leader in cybersecurity, with many of the largest companies founded by Israelis. The ecosystem is highly sophisticated, supported by talent from elite intelligence units. While cyber is a strong asset, we must also foster growth in other fields like climate tech and health tech to ensure long-term success."
The report also highlights the rise of "mega-rounds" in 2024, with 15 such deals totaling $4 billion, accounting for 41% of all funding—compared to nine mega-rounds worth $2 billion (22%) in 2023. Additionally, 2024 was a record year for acquisition-based exits, with $15.8 billion in transaction value, a 49% increase from 2023.
However, the report raises concerns about challenges facing Israeli high-tech. The global decline in new startup creation is impacting Israel, reducing the diversity of future opportunities. While the quality of existing companies remains high, fewer new companies limit innovation and the variety of future technologies. The shrinking number of global investment rounds further constrains early-stage innovation. The authors recommend balanced grants and incentives to promote entrepreneurship and help early-stage companies access funding. Legal and economic uncertainty, combined with regional instability, threatens Israel's competitiveness and erodes investor confidence.
