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Israeli startups’ early-stage valuations jump on AI boom: report
Early-stage startup valuations in Israel have jumped as investor interest in AI and cybersecurity remains high, according to a report by Vintage Investment Partners.
Between 2023 and 2025, average valuations for Israeli startups rose by 43% in series A rounds, 35% in series B, 29% in series C, and 36% in series D.
The report, presented at Israel’s “Trends & Forecasts” conference, highlights that U.S. venture capital fundraising has slowed, with US$61 billion expected to be raised by 376 funds in 2025, down from 832 funds last year.
Despite fewer funds, U.S. investors allocated over US$250 billion to startups in the first three quarters of 2025, with about 58% going to AI-focused companies.
In Israel, investments and high valuations are concentrated in AI and cybersecurity, with quantum technologies also gaining attention, while fintech has declined.
Surveyed investors cited competition in popular sectors and the ability of local funds to compete with foreign investors as key challenges.
🔗 Source: Calcalist
🧠 Food for thought
Implications, context, and why it matters.
Valuation gains mean little without exits to back them up
- Israeli tech raised $11.1 billion in 2025 across 418 rounds. Sales and public listings reached $17.7 billion from 180 mergers/acquisitions (M&A) or initial public offerings (IPOs) 1. That ratio makes valuations look less speculative.
- Pending exits total $63 billion, with two top proposed deals. Google plans to buy Wiz for $32 billion, while Palo Alto Networks plans to buy CyberArk for $27 billion 1.
- Remove these two deals, and the exit market looks thin. Mid-sized AI and cybersecurity startups may not find buyers or public-market demand at high prices. Some founders could face down rounds (raising capital at a lower valuation than the prior round) if growth cools.
Venture debt lenders can fill the gap as equity rounds get pricier
- Series A prices are up 43 percent as competition in AI and cybersecurity intensifies. Startups need non-dilutive capital (funding that doesn’t require giving up additional equity) to extend runway between raises.
- Venture debt is a loan product designed for startups. Companies tap it alongside or shortly after equity rounds. It costs less than equity and can fund R&D (Research/Development), customer acquisition, or operations 2.
- Hercules Capital is a U.S.-based venture debt provider. It already works with Israeli unicorns, startups valued at 1 billion or more, such as Armis (cybersecurity) and Tipalti (payments software) 3. That opens the door for credit funds and banks to write more loans with flexible terms in sectors where equity pricing has outrun performance.
