Report: Israeli Tech Sector Still Strong Even After Challenging Year

After a year filled with civil unrest that was followed by the heinous terror attack by the Hamas terrorist organization on October 7, which started the still-raging war, the Israeli tech sector still remains strong, a new report has found. 

According to the report by Startup Nation Central, a non-profit organization that connects global solution seekers with Israel’s innovators, the country’s dynamic startup culture, the unchanged engagement of global players, and the maintained resilience remain the economic key. 

Despite an overall decline in 2022, the report, which bases itself on data based on the business-engagement platform Finder, expects private funds for Israeli tech in 2023 to reach nearly $10 billion. Currently, the funding stands at $7.9 billion.  

Public funding has also remained high at $1.9 billion, with health tech doubling its public funding. 

Foreign investors have remained pivotal contributors, according to the report, with their participation in funding rounds rising. 

The report says that cybersecurity remained the highest privately funded sector, with funding of $1.9 billion. Health tech had steady funding in the first three quarters of the year, but the fourth saw a drop in investments. Climate and agritech decreased 60 percent in Q4, although the first three quarters of 2023 the funding was stable. 

After conducting a survey of investment firms active in the Israeli tech system, Startup Nation Central found that there is optimism that Israel will have the ability to overcome its current challenges and that 88 percent of Israeli tech is planning to expand activity in Israel.

While most investors indicate that investments in Israel will drop in 2024, the AI and cyber sectors are expected to continue to lead 2024 funding, with a rise in funding for defense tech. 

“Looking to 2024, the outlook is cautious but optimistic. We hope the ecosystem’s bedrock of innovation, global partnership, and proven resilience will steer it through uncertainty toward a continued growth trajectory,” said Startup Nation Central CEO Avi Hasson.

“With investments in Israel leveled down to 2019 numbers, the main challenge is attracting investment to the Israeli tech ecosystem and preserving human capital – Israel’s most significant asset.”