Israeli startups raised $8.6 billion in the first half of 2026, a 45% jump from the same period last year, but the number of deals shrank as investors concentrated bigger checks on fewer, more mature companies. This week brought some of the largest rounds of the year so far.
The data, released by the Israel Innovation Authority, underscores a structural shift in the ecosystem. Capital is flooding into AI, cybersecurity and infrastructure companies with proven revenue and deep technology moats. Early-stage rounds under $10 million are becoming rarer, while $100-million-plus rounds are almost routine.
AppsFlyer lands $1B+ from Google and Meta
The week's headline deal was AppsFlyer's $1 billion-plus round at a $2.7 billion valuation, backed by Google, Meta, Unity and Moloco. The four digital-advertising giants are simultaneously competitors and customers of the mobile attribution and measurement platform.
AppsFlyer plans to use the capital to accelerate AI-powered advertising tools. That both Google and Meta, archrivals in ad tech, invested in the same company signals the strategic importance of independent measurement in an increasingly AI-driven ad ecosystem.
Cyera and DriveNets keep the mega-round streak alive
Cyera, the data-security company, closed a $600 million round at a $12 billion valuation, cementing its place among Israel's most valuable private cybersecurity firms. The company operates at the intersection of AI and data protection, a space that has attracted intense investor interest.
DriveNets, a networking infrastructure company riding the AI data-center buildout, raised $410 million at an $8.5 billion valuation. The company is cash-flow positive with a strong backlog, driven by demand from telecom carriers and cloud providers racing to upgrade their networks for AI workloads.
Other notable rounds this week: Coralogix ($200M, observability), ZutaCore ($100M Series C, data-center cooling), Rylo ($85M, AI sign-language translation), and NewCore ($66M, identity security for the AI era).
Deep33 closes first fund at $200M, above target
Venture capital firm Deep33 announced the close of its first fund at $200 million, exceeding its original $150 million target by a third. Founded by Israeli VC Lior Prosor and US entrepreneur Michael Broukhim, the fund focuses on deep tech: AI infrastructure, energy, quantum computing, advanced communications and physical technologies.
About 70% of the fund's capital is earmarked for companies founded by Israeli entrepreneurs. Deep33 has already made initial investments in startups including Particle, QuamCore, Seabridge and OHR.
The big picture: fewer R&D jobs in Israel, more companies abroad
Beyond the headline numbers, the Innovation Authority's annual Hi-Tech Report paints a more nuanced picture. For the first time in over a decade, the number of R&D employees in Israeli tech declined, by approximately 3,500 positions. Only 62% of employees at Israeli private tech companies are now based in Israel, down from 69% in 2019.
The trend reflects a gradual globalization of the industry. Successful Israeli companies are opening offices abroad, hiring overseas, and sometimes relocating R&D operations closer to end customers. AI is accelerating the shift: fewer R&D engineers are needed for the same output, while product and go-to-market roles are expanding where the customers are.
In a counterbalancing move, the Israeli government approved a national AI plan this week aimed at positioning the country as a global AI leader. The plan targets 100,000 processing units, investments in semiconductors and quantum computing, and expanded research and education programs.
The bottom line
Israeli tech has never had more capital available. But the money is flowing disproportionately to companies that have already crossed the revenue chasm, while smaller rounds are getting squeezed. The industry's globalization continues, and the question is whether Israel can maintain its position as a leading R&D hub, or whether it will gradually become an invention factory whose products are built and marketed elsewhere.
