Israel’s AI startups dominate tech investment landscape
Israel’s AI startups dominate tech investment landscape
AI companies secured nearly half of the total tech funding in Israel, a striking figure given that AI startups comprise just 30% of the broader tech ecosystem.
Israel has rapidly emerged as a global leader in artificial intelligence (AI), with its tech ecosystem now drawing more investment per capita than both the United States and Europe. The nation’s AI startups have seen unprecedented growth, surpassing 173% over the last decade, while the rest of its tech sector grew by just 12%.
According to a report by Startup Nation Central titled "Israel's World-Class AI Powerhouse: Leading Through Applied Innovation", although AI companies represent only 30% of the ecosystem, they secure 47% of total investments and 40% of fundraising rounds, highlighting their pivotal role in innovation. Since 2018, Israel’s share of AI investment has consistently surpassed that of the U.S. and Europe, at times by three to four times. Despite recent increases in AI investments in the U.S. due to high-profile deals, Israel maintains a unique competitive edge in the global AI landscape.
“Israel stands at the forefront of global AI innovation, propelled by an extraordinary ecosystem of startups, academia, and multinational support,” said Avi Hasson, CEO of Startup Nation Central. “Major corporations like NVIDIA, Microsoft, Google, Amazon, Meta, and Apple have significantly invested in Israel’s AI landscape, underscoring its global impact. Yet, to fully harness this momentum, additional government investment is essential to extending academic talent and research —both to advance public-benefit technologies and to sustain this critical engine of growth.”
The report also notes that despite a decline in the number of new companies founded in Israel over the past year, AI remains one of the most prominent sectors for investment today. The proportion of funding allocated to AI companies continues to exceed their representation in the Israeli ecosystem. Both the share of private fundraising rounds and the total amount raised consistently surpass the share of active AI companies. In 2024, although AI funding fell to 30% of total investments, AI companies still accounted for over 40% of fundraising rounds.
Israeli AI startups excel in early fundraising, consistently achieving at least 10% better results than non-AI startups in raising capital during their first two years. Another indicator of AI companies' fundraising advantage is the gap between companies that have raised capital and those that have not. Over 50% of non-AI companies have failed to secure any funding, while only 32% of AI startups fall into this category.
