The Israeli tech ecosystem started the week at breakneck speed. Several of the year's largest rounds — including a $410M raise by DriveNets — closed within days of each other, while the Israel Innovation Authority's 2026 report painted a picture of an industry hitting new records in exports, fundraising, and exits.
DriveNets: $410M Series D at $8.5B valuation
DriveNets, the Ra'anana-based networking infrastructure company, closed a $410M Series D at an $8.5B valuation. The round was led by Bessemer Venture Partners and Atreides Management, with new investors including AMD and Red Dot Capital Partners, alongside existing backers Pitango and D1 Capital Partners. Total funding now stands at approximately $1 billion.
The company, cash-flow positive since 2025, plans to use the capital to scale manufacturing and inventory capacity, driven by surging demand for its Ethernet fabric solutions for large-scale AI deployments. DriveNets reports over $1 billion in secured business backlog.
ZutaCore: $100M for waterless chip cooling
Israeli liquid-cooling company ZutaCore closed a $100M Series C at an estimated $600M valuation. The round was led by Mitsubishi Electric, Carrier Ventures, and Samsung Ventures. ZutaCore develops waterless direct-to-chip two-phase liquid cooling for high-power AI processors. Founded in 2016, the company maintains significant R&D operations in Israel, including a facility in Sderot.
PointFive: $60M to tackle AI cost management
PointFive, an Israeli AI startup founded by ex-IntSights team members, raised $60M in Series B funding led by Index Ventures, Salesforce Ventures, and Accel, with Israeli investors Yasmin Lukatz and Miki Bodai also participating. The company's platform helps enterprises manage the exploding costs of AI infrastructure — a pain point that's becoming critical as AI model deployments scale.
Rylo (formerly Nagish): $85M at $500M valuation
Rylo, the AI-powered communication platform formerly known as Nagish, raised $85M at a valuation of $500M. The company develops real-time speech-to-text, call captioning, and sign-language translation tools for the deaf and hard-of-hearing community. Rylo holds FCC licenses for regulated U.S. services and reports early-stage profitability.
Israel Innovation Authority 2026 report: record year
The Israel Innovation Authority released its State of High-Tech 2026 report (covering 2025 data), with record figures across every major metric:
- High-tech exports crossed $85 billion — 58% of Israel's total exports
- Fundraising reached approximately $14.6 billion, up 30% year-over-year
- Exits hit a record $84 billion
- Sector output grew 8.2% in real terms to approximately NIS 352 billion
- 775 new startups were founded in 2025
- Employment reached ~400,000 workers, 11.4% of Israel's total workforce
On the margins
Alongside the celebrations, the ecosystem showed a more complex picture. Hailo, the AI chip company, reported laying off 50% of its workforce. Meanwhile, reports from Calcalist indicate Pioneer, the Israeli fintech company, is in advanced negotiations to be acquired by a Canadian firm for approximately $2.7 billion.
Senior executives at multinational tech companies operating in Israel (including Apple, Intel, IBM, and others) have reached out to the government seeking relief, as the strengthening shekel makes Israeli R&D centers more expensive than Silicon Valley alternatives. But according to the Innovation Authority's report, the overall picture is far more encouraging than the partial snapshot suggests.
The bottom line
The week opening June 2026 illustrates the duality of Israeli tech: mega-rounds led by global investors alongside contraction at companies that can't keep pace; record exports alongside exchange-rate concerns. The Innovation Authority's report provides the full picture — an industry continuing to grow rapidly, with a strong innovation base, global demand for AI infrastructure, and foreign capital continuing to flow in.
