Great optimism about the future of Israeli high-tech - alongside major global and domestic challenges - was the picture presented by Dror Bin, CEO of the Israel Innovation Authority, in his address to the 32nd Globes Israel Business Conference last week.
Bin reviewed the major crises that the local industry has faced over the years - from the dot-com bubble of the early 2000s, to the 2008 financial crisis, Covid-19, and recent security crises. "The common denominator is that after every crisis, Israeli high-tech broke boundaries and grew."
He described the key question now facing Israel’s economy: whether similar growth can be expected following the challenges of the last two years of war, and indeed the last five years, which he described as "very challenging."
"Israeli high-tech is ultimately a product of global high-tech," Bin said. "Most investors here are foreign, most customers are multinational giants, mergers and acquisitions happen through companies abroad that acquire startups here, and IPOs of Israeli companies take place overseas."
Global challenges due to investment climate shifts
Bin said the global investment climate had changed dramatically since the war in Ukraine, along with rising inflation, and higher interest rates. "In 2021 there was crazy hyper-growth in high-tech investment - here as well - and then a crash across the world and in Israel. Now we’re also talking about boycotts and investors who say they don’t want to invest in Israel - all of this is real."
Another major shift, he noted, concerns the areas where high-tech investment is focused. "We’ve just come out of fifteen years of enormous innovation in the digital world and cyber, driven by the need to protect digital assets. Recently there has been less innovation in those areas and more innovation in real-world domains that require deep technologies such as defense tech, food-tech, and health-tech."
Bin also pointed to the dramatic move made by the Biden administration in 2022, channeling hundreds of billions of dollars into technology and infrastructure as part of the US-China global race.
These global challenges converged with Israel’s wartime challenges over the past two years. Bin described the severe conditions faced by high-tech companies, including the fact that in some firms 20% of employees were called up for reserve duty. Many companies were unable to send employees abroad or host visitors during the time of war.
Bin presented an optimistic outlook on this matter. "Two years later, Israeli high-tech has demonstrated extraordinary resilience. 2025 is already the best year ever for exits - Israeli companies have been acquired for $71 billion. The previous record was 2017, when exits totaled $22 billion."
He also reported encouraging data showing that Israel is the fifth-largest hub in the world in terms of total capital raised by startups, and that high-tech now accounts for 57% of Israel’s total exports.
Decline in new Israeli startups
Alongside the good news, Bin highlighted worrying indicators - including a drop in the number of new startups founded in Israel, and a sharp drop in capital raised by venture capital funds. In 2024, VC funds raised only $1.3 billion, compared with $6.1 billion in 2022. He also warned about the over-concentration of investment in cybersecurity and enterprise software. "We want to see a much more diverse high-tech sector," he said.
Looking ahead, Bin named several encouraging factors. Chief among them is a significant reduction in security and geopolitical risk. "The threats from Hamas, Iran, Syria, and Hezbollah have declined and our situation has greatly improved."
He added that during the war, Israel delivered a "mind-blowing technological demonstration" of its capabilities - including Iron Dome, AI-driven warfare, drones, "and many technologies that the world is now seeing and marveling at what Israeli is doing. Companies want to be here and be part of what is happening."
Another source of optimism, he said, is "Vibrant entrepreneurial activity." According to the Innovation Authority, even in the midst of the war there was a 60% surge in applications from entrepreneurs seeking funding. Bin attributed this jump to people being pushed out of their comfort zones and encountering new needs and opportunities. "I hope this will mature into many new startups the day after."
"Israel is world’s #2 in deep-tech fundraising"
Bin expects that the startups emerging after the war will be different - focused on solving "tangible real-world problems, not just digital ones." In recent weeks, he noted, "We have been seeing strong revival both in startup activity and in venture capital. Maybe things are revving up. Time will tell."
Regarding the rapidly growing deep-tech sector, Bin said Israel had always been a powerhouse. "About 1,500 companies in Israel are classified as deep-tech - roughly 20% of all tech companies in the country. These companies have raised $28.6 billion, about a third of total high-tech investment. Israel ranks second in the world after the US in deep-tech fundraising."
Following the start of the war, the Innovation Authority launched the Deep-Tech Venture Capital Funds Incentive, aimed at creating "the best funding environment in the world for ventures in this sector," Bin said. "I guarantee this is the best government deep-tech fund anywhere."
On the "red-hot" area of artificial intelligence, he said, "AI is going to change everything we know across all areas of life and all high-tech sectors. Contrary to the prevalent narrative, Israeli high-tech is in a strong position globally. We are fourth in the world in the number of AI startups, and fifth in total AI investment. Israel must continue investing. We’ve only just begun." In this regard, he noted the new national AI taskforce now being advanced by the Prime Minister’s Office, and the NIS 1 billion investment in AI made by the Innovation Authority in recent years.
Another revolution, no less important than AI, Bin said, is synthetic biology, which is "changing existing forms of life for the better, or creating new forms of life. We’re about to see an extraordinary breakthrough, very relevant for those who have a degree in biology." He mentioned a recent Israeli achievement involving the successful implantation of a 3D-printed artificial eye in a human body.
"The role of the Innovation Authority is to create the optimal environment to maximize potential," Bin concluded. He pointed to the Authority’s funds supporting incubators, investment funds, and institutional investment in deep-tech, as well as the tax reform announced by the Innovation Authority, the Tax Authority, and the Ministry of Finance granting tax breaks to incentivize Israeli high-tech.
He emphasized that the reform "affects all stakeholders - Israeli and foreign investors, growth companies, and Israelis who want to return home. The goal is to ensure that Israeli high-tech fires on all cylinders to drive the entire Israeli economy forward."
Published by Globes, Israel business news - en.globes.co.il - on December 3, 2025.
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