Nearly 50% of Israeli tech companies report canceled investments since Oct 7

Close to half (49%) of the Israeli high-tech companies say they have experienced canceled investments since the war began on Oct. 7, according to the “One Year of Israeli Innovation in War” report published by Startup Nation Central (SNC). Furthermore, only 31% of companies expressed confidence in their ability to raise funds next year and close to 48% of those expect a continued decline in investments in 2025.

While Israel's economy is typically known for being robust amid periods of conflict, the current war in Gaza against the Hamas terrorist organization has had a profound impact on Israel's financial situation and the local tech sector.

While there is still global confidence in the future of Israeli tech, there is reportedly much lower confidence in the Israeli government’s handling of the ongoing war in Gaza and the potential war with Hezbollah terror forces in Lebanon.

According to the SNC report, over 80% of tech companies in Israel are pessimistic about the government’s economic recovery efforts in the war-affected regions. In addition, almost three-quarters (74%) of investors expressed doubt about the Netanyahu government’s ability to recover the local tech ecosystem.

The report indicates that businesses have been far more affected in the northern and southern regions of Israel, where the war has had a greater impact. In contrast, central Israel, with the commercial capital Tel Aviv, has been far less affected by the war.

In northern Israel, a whopping 69% of tech companies are concerned about their ability to raise funds in 2025. Due to the serious threat from Hezbollah, approximately 40% of businesses in the northern region have considered relocating all or part of their operations elsewhere.

Despite the decline in investments and various economic challenges, the SNC report indicated that the Israeli tech sector remains resilient. Since Oct. 7, the Israeli tech sector has raised $7.8 billion in investments, which is only 4% less than in the preceding year. Furthermore, acquisition and merger deals in Israel since the war began reached an impressive $9.6 billion (down from $10.6 billion in the previous year).

“The strength of Israel’s tech ecosystem is bolstered by the robust performance of the cybersecurity sector and thriving scale-up companies,” the report stated. “However, early-stage companies have faced more significant challenges, highlighting a disparity in the ecosystem’s overall resilience.”

Startup Nation Central CEO Avi Hasson stated: “Israeli tech has shown incredible resilience in the face of prolonged conflict and mounting challenges. But this resilience cannot be taken for granted. The lack of long-term planning – whether in budget policy, research infrastructure, or future growth drivers – creates uncertainty that could undermine our momentum. Now more than ever, the government must act responsibly to ensure the sector continues to thrive, attract investment, and secure the future of our economy.”

This assessment was shared by Israel Innovation Authority CEO Dror Bin.

He praised the resilience of the tech companies but noted that “going forward, the tech sector’s high dependency on foreign investments and increasing competition, backed by massive government investments in other global innovation hubs, require the Israeli government to double-down on their investments in Israeli tech,” Bin stated.

Earlier this year, some 60% of the multinational companies that operate in Israel expressed optimism about the Israeli tech sector despite the ongoing war.