Israeli cybersecurity firms raised $4 billion in 2024, more than double that of 2023, led by firms focusing on cloud protection and the growing use of artificial intelligence, according to global venture capital firm YL Ventures. This surge in funding reflects the increasing importance of cybersecurity within Israel’s high-tech sector, which plays a pivotal role in the country’s economy, accounting for 20% of economic activity, 16% of jobs, and over half of its exports.
In its State of the Cyber Nation Report, YL Ventures highlighted Israel’s cybersecurity sector’s rapid growth despite geopolitical challenges. The report anticipates Israel’s cybersecurity companies transitioning from being known for exceptional security solutions to becoming recognized as dominant players in the global market.
The report disclosed that in 2024, there were 89 funding rounds in Israel, with 50 of them being seed or early-stage rounds, resulting in a total of $400 million raised. Global venture capitalists significantly increased their investments in Israeli cybersecurity firms throughout the year.
Regarding growth-stage funding, categorized as C and higher rounds, there were 16 rounds in 2024 raising $2.9 billion, marking a substantial 300% increase from the $888 million raised in 2023. Overall, Israeli cybersecurity companies raised $1.89 billion in 2023.
Andy Ellis, a partner at YL Ventures, commented on the changing trends observed in 2024, pointing out that global venture capitalists are now investing in companies at an earlier stage. He also noted an expansion in both seed and growth rounds, as well as an uptick in acquisitions by Israeli companies, signaling a positive outlook for 2025.
Ofer Schreiber, senior partner and head of YL’s Israel office, attributed Israel’s cybersecurity success to its elite military intelligence units, which have instilled a culture of entrepreneurship characterized by efficiency and effectiveness. He acknowledged the impact of the war initiated by Hamas militants on Oct. 7, 2023, which compelled many tech professionals to join the military, leading to new challenges for cyber founders in maintaining business continuity amidst economic uncertainty and a wary customer base.
The cybersecurity sector in Israel continues to evolve, with a promising outlook for the future fueled by increased investment, innovative solutions, and a resilient entrepreneurial spirit derived from the country’s unique military background.
(Reporting by Steven Scheer; Editing by Sharon Singleton)
