Surge in Private Funding and M&A Activity in Israeli Tech Sector

The Israeli tech sector has witnessed a remarkable surge in private funding and mergers and acquisitions (M&A) activity, with the total value of M&A deals reaching a record $74.3 billion. Despite the impressive financial figures, the total number of deals fell to 717, marking the lowest count in a decade. This article explores the factors driving these trends, focusing on strategic acquisitions, the role of AI and cybersecurity, and the future outlook for the sector.

Record M&A Activity and Decline in Deal Count

While the monetary value of M&A transactions in the Israeli tech industry reached unprecedented heights in 2025, the number of deals decreased significantly. The 717 deals recorded represent the lowest number in ten years, a trend attributed to a strategic shift in acquisition approaches. Companies are becoming more selective, focusing on high-value acquisitions rather than a high volume of transactions.

The largest M&A transaction involved the acquisition of Wiz by Google, underscoring the growing interest in cybersecurity. This sector, along with artificial intelligence (AI), has seen increased acquisition activity. The strategic focus on acquiring talent and intellectual property (IP) is reshaping valuation metrics, particularly in the AI domain where 'acqui-hires'—acquisitions primarily for talent—are prevalent.

Global Venture Funding and Private Financing Trends

In 2025, global venture funding surged, with private funding reaching $425 billion, marking the third-highest record in venture financing history. The median size of private deals in the Israeli tech sector was $10 million, reflecting a robust environment for venture capital investment. This influx of private capital is supporting continued innovation and growth within the industry.

The surge in funding and M&A activity is largely driven by strategic plays rather than distressed sales, indicating a healthy economic environment for tech companies. Digital transformation initiatives are a significant factor propelling strategic acquisitions, as companies seek to enhance their technological capabilities and stay competitive in a rapidly evolving marketplace.

Impact of Regulatory Environment and Strategic Drivers

The regulatory environment plays a crucial role in shaping deal confidence within the tech sector. Companies are navigating complex regulatory landscapes to ensure compliance while pursuing strategic acquisitions. Despite these challenges, the focus remains on leveraging digital transformation and strategic acquisitions to drive growth and competitiveness.

AI and cybersecurity remain at the forefront of strategic acquisitions, with companies investing in these areas to bolster their technological edge. The shift towards valuing talent and IP over traditional metrics is indicative of the sector's emphasis on innovative capabilities and future growth potential.

Future Outlook: Increasing M&A Activity in 2026

Looking ahead to 2026, M&A activity in the Israeli tech sector is forecasted to increase further. The economic health of the region will play a pivotal role in shaping the market, influencing both the pace and nature of future transactions. As companies continue to prioritize strategic acquisitions, the focus on digital transformation and technological advancement will likely persist.

Overall, the Israeli tech sector is poised for continued growth, driven by strategic investments in key areas such as AI and cybersecurity. As the industry evolves, companies will need to navigate regulatory challenges while capitalizing on opportunities for innovation and expansion.

“The economic health will shape the 2026 M&A market, with strategic acquisitions continuing to drive the sector forward.”