Israel’s hi-tech industry began 2026 with an increase in raising capital, despite the security escalation and ongoing war with Iran. According to the Tech Review Israeli report by LeumiTech, the high-tech banking arm of Bank Leumi, and IVC, a provider of data, quantitative research, and business intelligence, Israeli tech companies raised approximately $3.1 billion in 98 funding rounds in the first quarter; an increase of 34% compared to the same period last year.

The volume of fundraising points to relative stability in investment pace, at around $2.7 billion per quarter over the past two years, and even above levels recorded before the COVID-19 pandemic. The data is particularly notable given the security situation; in March alone, at the height of the fighting, more than $900 million was raised.

However, behind the stability in capital volumes lies a structural shift in the market. The number of deals remains relatively low, and capital is concentrated in fewer companies. As noted, only 98 deals were completed in the first quarter, about 35% lower than the average recorded in 2020. This indicates that more capital is flowing into fewer companies, primarily through larger funding rounds.

The data also points to a shift in the distribution of funding stages. Early-stage rounds, up to Series A, accounted for more than 40% of total capital raised, approximately $1.3 billion. In contrast, mid-stage rounds (Series B and C) declined to about 29% of the market, despite an absolute increase in volume. Late-stage rounds remained relatively stable, also accounting for about 29% of total capital.

The cybersecurity sector continues to lead the industry by a significant margin, with approximately $1.2 billion, around 40% of total funding. Alongside it, generative artificial intelligence is capturing a growing share, with 16.1% of the quarter’s capital. Together, these two sectors serve as a major magnet for international investment.

At the same time, there has been a gradual decline in the share of foreign investors. In the first quarter of 2026, they accounted for 65.9% of total investment, compared to around 73% over the past decade. The decline reflects increasing reliance on local funds, which are taking on a more significant role during periods of uncertainty. In addition, according to IVC estimates, when factoring in rounds that were not fully disclosed, total funding for the quarter may reach approximately $3.6 billion across 200 to 250 deals.

Maya Eisen-Zafrir, CEO of LeumiTech, addressed the trends emerging from the data, saying, “We continue to see Israeli entrepreneurs demonstrating resilience in a reality of uncertainty and challenging macroeconomic conditions.” She added that alongside stability in funding volumes, there is growing concentration within the industry, with fewer rounds and a focus on a smaller number of dominant sectors. “The situation requires entrepreneurs to demonstrate sharpness and careful capital management,” she said, noting that it is encouraging to see increased involvement from local funds, particularly in early stages.

Guy Holtzman, Chairman and CEO of IVC, added that the data reflects “a stabilization of the market around quarterly fundraising levels of approximately $3 billion,” alongside a more focused market in which cybersecurity attracts a significant share of investment. He noted the growing reliance on local investors during periods of uncertainty but warned of the challenges facing mid-stage companies. “The ability of these companies to bridge funding gaps and maintain sectoral diversity will be critical to sustaining the momentum of Israeli high-tech.”