Israel’s Cyber Strength: $4B Raised in 2024— and Counting
Cybersecurity by the numbers. Breaking Down the Key Drivers Behind a Thriving, Globally-Minded Ecosystem. Tons of lessons to be learnt for others.
Hello Cyber Builders,
Welcome back to our series on Cybersecurity by the Numbers. Today, I am focusing on the Israeli cybersecurity ecosystem, a true industry juggernaut.
As we enter 2025, many VC firms and M&A boutiques have published last year's data to analyze investment trends, funding activity, and M&A deals. But beyond the numbers, examining the strategies driving this success is essential. What are the playbooks for venture building and early-stage investing? What gives this ecosystem its unique strengths and edge?
When you examine it, you can’t help but admire the sheer strength of this industry—especially given the scale of the country behind it. Israel, a nation of just 10 million people, leads a global, high-stakes industry with unmatched excellence. To my Israeli followers, no offense meant—this is a testament to your ingenuity and commitment. What a success story. What an effort. The dedication poured into this industry over the past decade is remarkable.
Key Takeaways
M&A remains strong, with 67% of exits above $100M. Still, based on the high valuation - inflated based on large amount raised - we can estimate that some deals were not profitable for last round investors.
Seed Stage thrives, but Series A/B are challenging—indicating a “go big or go home” trend.
Five pillars (Chutzpah, 8200, Venture Builders, Practitioner Network, and Global Mindset) form the unique backbone of Israel’s cyber ecosystem.
References
I will use here several reports and extract data and trends
Special Report: Israeli Cyber Startups M&A Landscape 2024 from Night Dragon, a US-based company dedicated to growth stage investment in cyber.
State of the Cyber Nation 2024 Report from YL Ventures, an Israel-based VC firm.
Investment in Israeli cybersecurity companies has never been so strong
First, cybersecurity in Israel has remained a powerhouse even in uncertain times for startups and the tech industry in 2023-2024. The sector shows resilience and strength, focusing robustly on early-stage startups and growth-stage companies.
This balance is crucial—it demonstrates that the ecosystem isn’t skewed toward one development phase. Instead, it supports the entire lifecycle of innovation, a sign of true maturity and excellence.
Seed and Early-Stage Funding
Number of Rounds: 50
Total Raised: $400 million
Growth-Stage Funding
Number of Rounds: 16
Total Raised: $2.9 billion
Growth Comparison: This represents a significant increase from the $888 million raised in 2023 during the same stage. But one must remember that the Wiz round counts for $1 billion over these three.
Overall Investment Landscape
Total Funding in 2024: $4 billion across 89 funding rounds
Comparison to 2023: More than double the $1.89 billion raised in 2023 through 71 deals
This substantial growth is primarily attributed to the increasing demand for advanced cybersecurity solutions, particularly cloud security (e.g. Wiz) and artificial intelligence. Despite geopolitical challenges and being effectively “at war,” Israel had an astonishing year for its cybersecurity sector.
The YL Venture reports highlights:
While the number of seed rounds has increased steadily, follow-on rounds (Series A-B) have been considerably more challenging to raise in the past several years, becoming a drop-off point for cybersecurity startups that lacked the foundations or the traction to grow sustainably.
We saw a further decline in the number of Series A rounds raised in 2024 - down from 20 rounds in 2023 to 16 in 2024, and Series B rounds - down from 8 in 2023 to 7 in 2024.
One of the main drivers of this decline is the highly competitive nature of the Israeli cybersecurity ecosystem. Following their seed rounds, startup founders must rapidly gain traction to differentiate themselves from their competitors as cybersecurity categories become increasingly saturated. This demands strong execution from the very beginning, with a “go big or go home” mentality.
We can estimate that cybersecurity accounts for more than 30% of venture capital in Israel. One reason for the decline in Series B/C funding is probably the investors’ focus on AI in the last year. Another reason aligned with the global mindset of growth stage VC is to find metrics that justify extensive investment checks. When you are at Seed, technology/team/market are driving the opportunity. At growth, you are expecting a true sales machine with metrics comparable to those of other SaaS companies (e.g., not in the cybersecurity industry).
Lastly, a strong ecosystem attracts capital from other countries to its local ecosystem. Global VC firms' participation in seed investments rose from 10 rounds in 2023 to 22 in 2024.
M&A Boom: No sign of a downturn
When you develop cutting-edge security solutions and expand globally quickly—powered by a true entrepreneurial spirit—you attract large companies that desperately need more innovation to grow their businesses and complement their IT, Network, and Security platforms.
Over the years, Israeli companies have become prime acquisition targets for global tech giants such as Microsoft, Palo Alto Networks, and Google. The sector has seen consistent activity, with notable deals including acquiring companies specializing in cloud security, IoT security, and AI-driven threat detection.
In 2024, M&A activity accelerated, fueled by the increasing complexity of cyber threats and a growing need for integrated, end-to-end solutions. This trend underscores the nation’s role as a leading innovation hub and a strategic partner in addressing global cybersecurity challenges.
In the last six years, there have been 116 acquisitions of VC-backed Israeli cyber companies, generating over $23B in exit value. In 2024, 67% of exits reached $100M or more.
Night Dragon also highlights that the exit to strategic buyers takes less time. It used to take 6-8 years, but now 3-4 years.
Based on several conversations I had behind closed doors, many are challenging some M&A operations from the investor's point of view. As we’ve seen, there is a trend to raise more money even at a very early stage. However, the dilution percentage would remain similar (say 20% to 30% per round). As a result, these companies' valuation (the company's value “on paper” when you inject fresh new capital into it) will be higher.
Based on this high valuation - inflated based on the large amount raised - we can estimate that some deals were not profitable for last-round investors.
To my fellow Cyber Builders, say you raise $10M, typically at a $30M pre-money valuation for 25% dilution. It means a $40M exit for an ROI of zero and a $100M exit for a ~3x return ratio. So raising $10M is a "liability" to exit at 100 (see them here)
Five Ingredients for Israeli Cyber Success
What are the five key ingredients to get there if this is “success”?
I am not part of the Israeli ecosystem, but like many Cyber Builders, I followed these reports and interacted with Tel Aviv-based founders.
I have identified several patterns worth noting that other ecosystems (e.g., Europe!!) would replicate. Let's make a list, and I’ll happily get your comments.
Chutzpah - “Chutzpah” describes the boldness and audacity that characterize Israel’s entrepreneurial spirit. This cultural trait encourages individuals to challenge the status quo, take risks, pursue ambitious goals, and be proud of it
8200 - Unit 8200 is a renowned intelligence unit of the Israel Defense Forces (IDF). It specializes in signal intelligence (SIGINT) and cyber defense, playing a central role in Israel’s national security. It is known for pioneering cutting-edge technologies in cyber defense, cryptography, and data analysis. Moreover, Mesayaatech is an initiative that connects senior mentors from the high-tech industry with reservists seeking employment opportunities in the tech sector. The program offers guidance and support to help individuals transition into high-tech roles.
Venture Builders - Cybersecurity innovation is driven by a structured venture-building approach supported by cybersecurity entrepreneurs and veterans. Team8 is a well-known venture builder and think tank based in Israel. It was founded by veterans of Israel’s elite intelligence units, including Unit 8200. Another top reference is Cyberstart, which provides operational support and capital to early-stage startups.
Ecosystem of Practitioners—Working in closed loops is a recipe for disaster. Venture Builders and VCs in Israel have built a network of high-level CISOs and security practitioners worldwide (mainly in the US and some in Europe) who help shape the products at a very early stage.
International Business at Day 1—When you live in a country with 10 million people, you do not think for one second about being the leader of your country. Your ambition and playbook are global on day 1. This mindset enables every business to conquer emerging markets all around the world.
Israel’s cybersecurity founders scale globally from Day 1. That’s the real magic behind these billion-dollar rounds.
Conclusion
What do you think about the ‘go big or go home’ approach in Israeli cyber?
Please share your thoughts in the comments, and let’s discuss how other ecosystems - especially Europe - can replicate these best practices.
See you next week
Laurent 💚