Israel's tech sector in 2025: Is there a bright future ahead for innovation and growth?
The Why 2025 is a Great Year to Invest in Israeli Tech is now over a month old, so it is time for a refresh as we will draw on an analysis from Globes article that reviews macro variable on the Israeli Tech Sector, and assesses whether Israel is still a promising scenario for international investors.
The New Middle East
One of the most promising developments shaping Israel’s economic future is the increasing trade with Middle Eastern and African nations. Trade with the United Arab Emirates alone was projected to reach $3.3 billion in 2024. The potential for further expansion remains strong, particularly with the possibility of renewed American interest in broadening the scope of the Abraham Accords pioneered by President Trump's in his previous term, which initially formalised economic and diplomatic ties between Israel, the UAE, Morocco, and Bahrain.
Economic cooperation between Israel and Saudi Arabia is also progressing, despite the absence of formal diplomatic relations. According to Globes, Saudi Arabia’s sovereign wealth fund has disclosed significant investments in Israeli technology firms. With evolving geopolitical dynamics, many believe further investment opportunities will arise in the coming years.
Israel’s ability to attract over $12 billion in total investments in 2024, marking a 31% increase from 2023, demonstrates its robust technology sector and growing trade partnerships. The nation’s deep expertise in cutting-edge technologies and its proactive approach to addressing global challenges in energy, food security, cybersecurity, and defence makes it an increasingly attractive market for international investors.
Defence Technology
Global defence spending is rising, and as modern warfare, security, and defence strategies rapidly evolve, Israel’s position as a leader in defence technology becomes even more significant. The number of dec
However, beyond military applications, defence technologies are being repurposed for civilian use, offering further investment potential. Innovations originally developed for security purposes are now being integrated into smart home devices, advanced AI chips, and autonomous vehicle technology.
Additionally, Israeli advancements in drone and space exploration technologies are gaining global traction. The dual-use nature of these technologies ensures continued demand and growth across multiple industries, regardless of geopolitical uncertainties.
Israel’s real-world application of these solutions for its own security needs provides a strong proof of concept, facilitating faster adoption in international markets.
Cybersecurity
Israel has long been a global leader in cybersecurity. With the increasing integration of AI into digital infrastructures, the need for robust cybersecurity solutions is expected to grow significantly.
The Israeli cybersecurity sector experienced substantial growth in 2024, with companies raising $4 billion in funding. One of the most notable deals was the U.S.-Israeli firm Wiz securing $1 billion in private investment. Furthermore, major acquisitions continued to highlight Israel’s strength in this space, including Salesforce’s $1.9 billion purchase of Israeli data backup firm Own.
With the ongoing impact of the Abraham Accords, Israeli cybersecurity firms are well-positioned to expand into Middle Eastern and North African markets, where demand for cybersecurity solutions is anticipated to rise in the coming years.
Climate Technology
As climate change drives urgent global demand for sustainable energy, food, and water solutions, Israel has emerged as a key player in climate technology. The country is home to over 300 energy tech startups, according to Startup Nation Central for Innovation Diplomacy
Israel’s innovations in water technology are particularly noteworthy. Once a water-scarce nation, Israel now meets the majority of its freshwater needs through desalination from the Mediterranean Sea.
As climate challenges intensify, the demand for Israeli expertise in water and food security solutions is expected to grow both in the Middle East and globally. Israel already supplies much of Jordan's fresh water, which it has done with often increasing volumes, for the last 30 years.
Looking Ahead
In 2025, private investment returns in Israel are likely to be fuelled by a strong pipeline of new technologies. Despite Israel's self-defensive wars and ongoing security challenges in the region, the Israeli tech sector has demonstrated character-defining resilience.
Mergers and acquisitions in the Israeli technology industry remained strong in 2024. According to CTech, total M&A deals, including secondary sales of public companies, exceeded $17 billion last year.
A recent survey of Israeli venture capital firms and investment banks, reported by Globes, suggests that the IPO market may experience a much-needed recovery shortly.
If global economic conditions stabilise, including more predictable interest rates and renewed investor confidence, 2025 is likely to provide favourable opportunities for IPOs. More mature Israeli companies may find advantageous conditions for international market entry, attracting investors who seek proven tech business models and strategic exit opportunities.
For those looking to invest in Israel, one effective entry point is through investment funds, which provide initial exposure to the market while allowing investors to develop a deeper understanding of Israel’s investment landscape. Subscribe to our How to Invest in Israeli Tech Email Newsletter as our next article Investing in Israeli Technology Innovation - Top VCs Welcoming Foreign Investment we interview leading Israeli VCs.
Ultimately, Israel remains open for business and continues to be a compelling destination for global investors.
Insight provided by Lisya Bahar Manoah in the Forbes article Why Israel Is Back On Investors’ Minds Today.
Article by Jon Simmons - Content Strategist for Tech Founder and Investment Houses that specialise in investing in Israel.
The Israel Stock List Ebook updated for 2025 is now available for only $15. This simple eBook provides a comprehensive list of all the Israeli-founded companies that can be purchased on the international markets.
Jon Simmons is a bi-lateral trade investment advocate for Israel and its supporters, and content strategist for ambitious businesses looking to grow online.
