Private investment in Israeli tech fell sharply in the third quarter, while mergers and acquisitions soared, Startup Nation Central reported on Tuesday.
Israeli startups raised an estimated $2.4 billion in Q3, a 38% drop from the previous quarter when excluding Tel Aviv-based Safe Superintelligence’s $2 billion raise, and a 59% decline when including it. Deal volume also slid, with 141 funding rounds—a 24% quarterly and 38% annual decrease. Despite fewer deals, median round size jumped to a record $10.5 million, up 50% from last year, reflecting growing preference for large-scale investments.
Meanwhile, Israeli tech firms saw unprecedented M&A activity. Thirty-one deals totaled $31.8 billion, led by Palo Alto Networks’ $25 billion buyout of Petach-Tikvah-based CyberArk Software—the second-largest purchase in Israel’s tech history. Verint Systems was acquired for $2 billion. The median deal size rose to $269 million, with cybersecurity accounting for 58% of total value, including Tel Aviv-based Aim Security’s $350 million acquisition by Cato Networks and Modi’in-Maccabim-Reut-based Findings’ $305 million sale to Diginex.
Year-to-date, private funding reached $11.9 billion, up 13% from last year, even as the total number of deals fell 22%. M&A reached $71 billion, nearly five times higher than in the same period in 2024, driven by billion-dollar exits such as Wiz and CyberArk. IPO activity recovered as eToro listed on Nasdaq for $700 million and Via Transportation on NYSE for $493 million.
Cybersecurity remained dominant, attracting $800 million in Q3 private funding, or 38% of the sector’s total.
Investor participation continued to drop, with 230 active investors—the fewest since early 2024. Global funds accounted for 57%, signaling steady international interest.
“Q3 2025 highlighted a market in transition. While funding slowed and investors became more selective, M&A activity reached historic highs,” said Avi Hasson, CEO of Startup Nation Central. “We are seeing fewer rounds, but at record sizes, signaling confidence in scale-ready companies. At the same time, global buyers are making some of the boldest bets we’ve ever seen on Israeli tech, especially in cybersecurity.”
