Investment in Israeli startups soared about 45 percent this year, despite a period of war and a fresh round of fighting with Iran, as the continued strength of the shekel poses a different kind of challenge to the local industry, according to a new report by Poalim Tech and Dealigence.

Israeli startups raised about $8.6 billion in the first five months of 2026, compared with roughly $6 billion in the same period last year, with the lion’s share of funding flowing to cybersecurity companies and AI startups, according to data collated in the report.

“The data shows that even though the conflict remains, funding is growing, including in March, in which Israel experienced a full-blown war with Iran and [$2.1 billion in] funding continued to flow into Israel,” Elad Har Zahav, head of business development at Poalim Tech, told The Times of Israel. “This has been the strongest half-year since 2021, and if the trend continues for the remainder of the year, it will be the strongest since 2020 and 2021.”

The Poalim Tech-Dealigence report about financial and workforce trends in the Israeli high-tech industry is based on a database of 1,685 startups with significant operations in Israel that employ 161,730 people.

At the same time, the report’s findings showed that not everyone is benefiting, as investors are increasingly more selective. The number of funding rounds this year declined by about 35% year-on-year, indicating that although a larger share of capital was raised, it was invested among a smaller number of tech firms. In addition, cybersecurity and AI startups attracted most of the funding raised this year.

The report also showed a growing preference of investors to park their funds with startups led by experienced serial entrepreneurs with a track record. The share of funding rounds raised by serial founders rose from 34% in 2025 to 39% in the first five months of 2026.

Tech entrepreneurs........

© The Times of Israel