In year of war, investment in Israeli cyber startups more than doubles to $4 billion
Fundraising in 2024 was led by Israeli cyber firms that develop technology to protect the cloud and artificial intelligence threats, according to a report by YL Ventures
Sharon Wrobel is a tech reporter for The Times of Israel.
Israel’s cyber industry defied the odds in 2024, attracting $4 billion in investments, more than double those of a year earlier, as the country contended with a multi-front war with the Hamas terror group in Gaza and Iran-backed Hezbollah in Lebanon.
Local cybersecurity companies in 2024 raised $4 billion across 89 funding rounds, compared with $1.89 billion raised in 2023 via 71 funding deals, according to a report by US-Israeli venture capital firm, YL Ventures, which specializes in seed-stage cybersecurity investments. The funding rounds were led by cyber firms that seek to provide technology solutions to protect the cloud, along with artificial intelligence threats.
In the State of the Cyber Nation Report, YL Ventures remarked that the “increase in funding highlights the continued global confidence in Israeli cybersecurity innovation and talent,” despite the challenging war period that caused “geopolitical, defense, economic, and internal distress that has created an unstable and unpredictable reality.”
“The high-tech industry — Israel’s leading and most productive sector — continued providing innovative products, services, and customer support to the global market, while navigating widespread recruitment of employees to military reserve duty, an economy jolted by wartime disruptions and an overall national state of alert,” YL analysts said in the report. “The Israeli cybersecurity industry, the country’s most prominent high-tech pillar, was also… affected by the war in the region.”
Israel is considered a cybersecurity powerhouse, with its startups in the field garnering about a third of total global private investments.
The YL Ventures report found that most of the funding in 2024 went to growth-stage cyber companies, with about $2.9 billion of the annual total allocated across 16 Series C rounds and above. However, that assessment entails an important caveat: Israeli cybersecurity unicorn Wiz raised a $1 billion, skewing the data as an outlier. 2024 investments into later-stage cyber companies compared to $888 million raised a year earlier.
“These funding numbers tell a powerful story about Israeli cyber resilience,” said YL Ventures analyst Or Salom. “What we are seeing isn’t just a rebound, it’s a validation of how our ecosystem has evolved.”
“Israeli founders have always been technical powerhouses, but now they combine that with business acumen,” said Salom.
The vast majority of capital pouring into Israeli cybersecurity was primarily funded by overseas investors, according to the report. Global venture capital firms, including Sequoia, Greylock, Battery Ventures, and General Catalyst, doubled down on investments in Israeli cyber startups. The number of investments into early-stage startups made by global VCs increased from 10 seed rounds in 2023 to 22 in 2024, despite the ongoing war,
“The changes we are observing in 2024 — global VCs investing earlier in companies, an opening up of the seed and growth round markets and more acquisitions, especially by Israeli companies — signal a rising tide for 2025,” said Andy Ellis, Partner at YL Ventures. “While the floodgates aren’t going to crash open, we expect to see more activity across the board.”
In 2024, there were 50 seed funding rounds raising a record $400 million in investments into early-stage cyber startups. The number of funding rounds was the highest in the past six years and marked an increase of 14 compared to 2023.
