Israel's tech ecosystem posted a strong first half of 2026, with startups raising approximately $8.6 billion, a 45% increase year-over-year, according to a Poalim Tech and Dealigence report. The period was marked by mega-rounds, a sustained M&A wave led by global tech giants, and a landmark government initiative to position Israel as a global AI powerhouse.

Mega-rounds dominate June

June alone produced some of the largest funding rounds of the year. AppsFlyer raised over $1 billion at a $2.7 billion valuation, backed by Google, Meta, Unity, and Moloco to accelerate AI-powered measurement tools.

Cyera, the data security company, raised $600 million at a $12 billion valuation, a sharp increase in a short period. DriveNets, which builds AI-driven networking infrastructure, raised $410 million at an $8.5 billion valuation and reported positive cash flow with a strong backlog.

Other notable raises in the AI and infrastructure space: Coralogix ($200 million at $1.6 billion, observability), ZutaCore ($100 million Series C at $600 million, data center cooling backed by Samsung and Mitsubishi), and PointFive ($60 million Series B, AI infrastructure cost management).

Emerging AI companies also drew significant capital: Rylo (formerly Nagish) raised $85 million at a $500 million valuation for real-time AI sign-language translation; Limitless Labs raised $20 million Series A for AI-driven factory automation; and Lama AI raised $12 million Series A led by EJF Ventures for banking AI agents.

M&A wave: Apple, Motorola, Cisco lead the charge

H1 2026 saw intense M&A activity targeting Israeli companies across AI, cybersecurity, defense tech, and fintech. Major deals included Nuvei's $2.75 billion acquisition of Payoneer, Motorola Solutions' $1.5 billion purchase of D-Fend Solutions (counter-drone tech), and Apple's $1.5 billion acquisition of Q.ai (AI audio/wearables).

In cybersecurity, Cisco acquired Astrix Security for ~$400 million (non-human identity security), Palo Alto Networks bought Koi for ~$400 million (agentic endpoint security), and CrowdStrike acquired Seraphic Security for ~$400 million (browser security).

Israeli-to-Israeli consolidation is accelerating: Cyera acquired Ryft and Genie Security; Fireblocks bought TRES Finance; and eToro acquired Zengo. Deloitte Israel acquired Vision.bi to expand AI and data capabilities.

National AI plan and innovation in motion

The Israeli government approved a sweeping national AI plan on June 16, investing in quantum computing infrastructure, research, education, and public services to position Israel as a global AI leader. Meanwhile, Uber began testing autonomous driving technology from Israeli startup Autobrains on the streets of Munich.

Dream Security, co-founded by former NSO Group CEO Shalev Hulio and former Austrian Chancellor Sebastian Kurz, reached a $3 billion valuation, focusing on helping governments secure AI assets. Immunai signed a $15 million research agreement with Boehringer Ingelheim.

Headwinds persist

A strong shekel continues to pressure export-oriented tech companies. Cyberbit announced it is shutting down its Israeli operations, while Amdocs began cutting jobs in Israel as part of a global restructuring. Wix has also made significant workforce reductions amid AI-related shifts and currency pressures.

The bottom line

Israeli high-tech demonstrated resilience in the first half of 2026, with fundraising jumping 45% year-over-year despite security and macroeconomic headwinds. Global tech giants continue to view Israel as a strategic acquisition target, and the ecosystem is maturing as local companies increasingly acquire their peers. AI, cybersecurity, and infrastructure remain the dominant growth drivers.