Exits jump while fund raising falls

The third quarter of 2025 was uncommon for the Israeli tech ecosystem. On the one hand, there was an unprecedented peak within the wave of mergers and acquisitions, with offers that place Israel on the heart of the worldwide tech map, whereas alternatively, there was a constant decline within the quantity of personal capital raisings and the variety of finance rounds, which illustrates the growing selectivity of traders. That is in line with two stories printed right now by Startup Nation Central (SNC) and IVC-LeumiTech.

The stories present a market in transition, during which massive cash flows primarily to mature and development firms, whereas early-stage firms should combat for the eye of traders. In line with SNC information, mergers and acquisitions offers totaling $31.8 billion had been signed in July-September. Probably the most notable deal within the present quarter was the acquisition of CyberArk by Palo Alto Networks for $25 billion, the second largest within the historical past of Israeli tech. Alongside it, the acquisition of Verint Programs was recorded for about $2 billion.

For the reason that begin of 2025, the quantity of M&A transactions has reached $71 billion, virtually 5 instances the corresponding interval in 2024, as a result of different enormous offers comparable to Google’s acquisition of Waze for $32 billion – the largest-ever exit in Israeli historical past.

Much less offers, greater financing rounds

Out of the general quantity of mergers and acquisitions, exits totalled $41 billion, thrice the degrees recorded final 12 months. Right here too, the cybersecurity trade stood out, contributing 58% of the full worth of the offers, together with Purpose Safety, which was acquired for $350 million, Findings, which was acquired for $305 million, and Immediate Safety, which was acquired for $275 million.

In parallel with the wave of exits, the info from each stories point out a seamless slowdown in non-public capital elevating. In line with SNC, within the third quarter, roughly $2.4 billion was raised, down 38% from the previous quarter (excluding a $2 billion financing spherical by Secure Superintelligence) and down 18% from the corresponding quarter final 12 months. The variety of recognized rounds fell to 141 – the bottom since 2020.

Nevertheless, along with the decline within the variety of offers, the median financing spherical measurement reached a report of $10.5-12.3 million. This can be a sharp enhance of fifty%-76% in comparison with final 12 months, indicating a transparent development: fewer rounds, however every profitable spherical attracts more cash.

The info from IVC-LeumiTech are related: $2.23 billion in 116 recognized rounds, and an estimate of 204 rounds in complete, which is a decline of 24% from the identical interval final 12 months. Nevertheless, when excluding distinctive rounds of over $200 million, a extra constructive image emerges: a rise of about 20% in contrast with the second quarter of this 12 months and about 50% in contrast with the corresponding quarter in 2024, and the best quantity of fundraising for the reason that starting of 2023.

The bottom variety of lively traders for the reason that begin of 2024

The main sectors had been the identical in each stories – cybersecurity and AI, which collectively raked in near 60% of the capital within the quarter, with notable fundraising rounds. For instance, Aidoc raised $110 million and Decart raised $100 million.

Traders, for his or her half, have gotten extra discerning: In line with SNC information, the variety of lively traders has dropped to only 230, the bottom for the reason that begin of 2024, though it is very important notice that greater than half of them are world traders. SNC CEO Avi Hasson summed it up as a “market in transition,” the place funding is slowing however M&A is breaking information. However, LeumiTech CEO Maya Eisen Zafrir pressured the soundness over the previous two years and the highly effective penetration of Israeli AI firms into the “world area.”

Backside line: Israeli tech within the third quarter presents a stark contradiction – a historic wave of exits in enormous offers, towards a slowdown in non-public capital elevating. The important thing query heading into 2026 is whether or not the massive cash flowing out in exits will return to younger firms, or whether or not the market will proceed to focus on a minority of enormous offers and solely mature firms, which function primarily within the cybersecurity and AI industries.

Revealed by Globes, Israel enterprise information – en.globes.co.il – on September 30, 2025.

© Copyright of Globes Writer Itonut (1983) Ltd., 2025.