According to a new report by Start-Up Nation Central (SNC), which provides a detailed analysis of the impact of the current war on Israel’s tech industry, half of the companies reporting canceled investments and growing concerns about the future.
The survey, conducted in August, reveals that, despite instability at home and "regional complexities," investment trends in Israeli high-tech mirror those in the U.S. Since the outbreak of the war, Israeli companies have raised $7.8 billion, a slight drop of 4% compared to the previous year, while mergers and acquisitions amounted to $9.6 billion, down $1 billion from the previous year. Despite these declines, the data shows investors continue to have confidence in Israel's innovation potential, at least for now.
However, 49% of the companies also reported canceled investments, and about 70% expressed varying levels of concern about their ability to raise capital in the coming year.
Companies located in northern Israel are facing particular challenges. A separate survey of about 60 northern tech firms found that only 45% are fully operational. About 41% have relocated their activities to central Israel, and 20% already know they won’t return to the north. Just 43% said they had received any government support, while 40% are considering relocating operations outside of Israel, either partially or entirely. These figures reflect the severe blow they have suffered compared to the near-normal operations of companies in central Israel.
Industry-wide, there is significant concern over the lack of long-term planning. More than 80% of companies (90% in northern Israel) and 74% of investors doubt the current government’s ability to lead recovery efforts. Notably, 82% of all companies reported they have received no support related to the war. The report highlights the war’s dramatic impact on businesses: 24% had to relocate at least part of their operations, and 44% made workforce cuts.
Despite these challenges, 82% of investors in Israeli tech companies believe the global perception of Israel’s tech industry remains positive or at least neutral. Among the companies themselves, only 31% feel confident in their ability to raise funds in the coming year, but 54% remain optimistic about their potential for growth. Cybersecurity and enterprise software companies show the most optimism, with 72% and 65% respectively feeling positive about the near future, while health-tech and agrifood-tech firms are less confident, at 45% and 40%.
SNC particularly highlights the strength of Israeli cybersecurity and growth-stage companies, which have delivered impressive performances again this year. There is also growing optimism in the health-tech sector, where three major deals worth over $1.2 billion were closed this year.
Start-Up Nation Central, founded to promote Israeli innovation globally, manages a knowledge base on Israel’s tech industry, which includes 7,500 high-tech companies and startups, along with 500 multinational companies operating in the country, as well as investors, accelerators and more.
SNC CEO Avi Hasson emphasized: "Israeli high-tech is showing resilience, but we cannot take it for granted. The lack of long-term planning – in budgetary policy, research infrastructure, or future growth engines – creates uncertainty that could harm the sector's successful momentum. Future growth depends on regional stability and responsible government policy."