Survey: 2025 record year for M&A activity in Israel

Greater than 300 enterprise capital companions, angel traders, serial entrepreneurs, and innovation leaders gathered for the annual “Developments & Forecasts” convention, which reviewed the efficiency of Israel’s tech sector in a difficult 12 months marked by ongoing uncertainty. They forecast how the business could also be affected in 2026 amid the speedy acceleration of worldwide AI developments.

In its eighth 12 months, the convention was initiated by Man Katsovich, cofounder and managing associate of the Fusion pre-seed fund and accelerator, along with Pearl Cohen regulation agency, aimed toward convening Israel’s startup ecosystem leaders every year to debate key entrepreneurial developments.

In a survey carried out by Fusion forward of the convention, with the participation of greater than 200 traders, respondents have been requested to establish essentially the most vital problem going through the enterprise capital business. The info present that 29% cited intensifying competitors for investments within the hottest sectors as the first problem. Ranked second was the problem confronted by native funds in competing with international funds, cited by 23% of respondents, up sharply from simply 10% final 12 months. The third-ranked problem was elevating new funds, which declined to twenty% this 12 months in comparison with 38% a 12 months in the past.

Buyers have been additionally requested which three sectors are anticipated to steer the business in 2026. 98% of respondents imagine cybersecurity will proceed to steer, whereas 96% additionally pointed to AI. Quantum applied sciences ranked third with 23%, changing fintech, which fell to fourth place this 12 months with 20%.

Classic Funding Companions co-managing associate Asaf Horesh introduced a report summarizing the efficiency of enterprise capital funds and startups in 2025. The report exhibits that almost all of capital invested in startups is more and more concentrated in a smaller variety of VC funds and directed towards fewer corporations. Enterprise capital fundraising within the US is anticipated to exceed $61 billion this 12 months, raised by 376 funds – a pointy decline in contrast with 2024, when 832 funds raised capital. Except a fund is among the many extremely sought-after managers capable of shut shortly, the time required to boost a fund has lengthened, with the median time to shut now standing at 18 months, up from 15.8 months final 12 months.

The report additionally exhibits that complete investments by US funds in startups exceeded $250 billion, with about 58% directed towards AI corporations in the course of the first three quarters of the 12 months. Round 50% of all investments have been funneled into 1% of corporations, most of them AI growth-stage corporations. On the similar time, firm valuations have been on an upward pattern between 2023 and 2025. In world markets, valuation will increase are comparatively average at early phases and rise sharply thereafter. In Israel, notably given the excessive proportion of repeat entrepreneur intense competitors is driving valuation will increase already at early phases. Accordingly, throughout this era in Israel, common firm valuations rose by 43% in Collection A rounds, 35% in Collection B, 29% in Collection C, and 36% in Collection D. “World funding habits round AI carefully resembles what we noticed in 2021-2022, however this may be defined by the unprecedented technological leap humanity is experiencing, accompanied by speedy adoption and vital worth creation,” Horesh mentioned.

The report additionally signifies that whereas the M&A market within the US and Europe continues to point out solely modest restoration, Israel presents a distinctly totally different image. 2025 has been a document 12 months for native M&A exercise. Even excluding the landmark Wiz acquisition, the quantity and tempo of offers in 2025 place it as a standalone document 12 months, underscoring the Israeli ecosystem’s constant skill to supply corporations of excessive strategic worth for world acquirers.

“We’re seeing a reawakening within the formation of recent funds, one thing we haven’t seen in fairly a while, alongside a renewed entry of non-U.S. international traders whose investments aren’t pushed by Zionist concerns,” mentioned Adv. Man Lachmann, Senior Associate within the Excessive-Tech Division at Pearl Cohen.

“Assuming there is no such thing as a geopolitical deterioration that halts this pattern, the sense is that the market is about to loosen up. There may be presently an abundance of enticing acquisition targets that, after about two difficult years, have transitioned to lean and environment friendly working fashions. On the similar time, many are beneath strain to promote, partially as a result of present traders have pulled again or lack the assets to proceed investing. After the vacations, a shift in sentiment is anticipated, with a rise in reviews of fundraising activity- besides in cyber, which creates an optical phantasm of an particularly sturdy market. Sectors that have been considerably affected by the geopolitical scenario, together with digital well being, fintech, agritech, foodtech, and construction-tech, skilled extended stagnation and drawn-out investments, but it surely now seems that these boundaries are starting to ease.”

“The Fusion survey additionally exhibits that optimism is returning amongst traders,” mentioned Katsovich. “When requested to outline the state of Israel’s enterprise capital business on a scale starting from ‘glorious’ to ‘poor,’ together with the choice ‘complicated,’ 20% of respondents rated it as ‘glorious,’ in comparison with simply 1% who did so final 12 months. 42% outlined the scenario as ‘good,’ a pointy enhance from 24% final 12 months. On the similar time, detrimental assessments declined considerably: ‘unhealthy’ fell from 16% to five%, and ‘poor’ from 5% to 1%. An identical pattern was seen concerning optimism about Israel’s future – 74.5% of respondents expressed optimism, in comparison with simply 57% the earlier 12 months.”

Revealed by Globes, Israel enterprise information – en.globes.co.il – on December 28, 2025.

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