The third quarter of 2025 was unusual for the Israeli tech ecosystem. On the one hand, there was an unprecedented peak in the wave of mergers and acquisitions, with deals that position Israel at the center of the global tech map, while on the other hand, there was a consistent decline in the volume of private capital raisings and the number of finance rounds, which illustrates the increasing selectivity of investors. This is according to two reports published today by Startup Nation Central (SNC) and IVC-LeumiTech.
The reports show a market in transition, in which big money flows mainly to mature and growth companies, while early-stage companies must fight for the attention of investors. According to SNC data, mergers and acquisitions deals totaling $31.8 billion were signed in July-September. The most notable deal in the current quarter was the acquisition of CyberArk by Palo Alto Networks for $25 billion, the second largest in the history of Israeli tech. Alongside it, the acquisition of Verint Systems was recorded for about $2 billion.
Since the start of 2025, the volume of M&A transactions has reached $71 billion, almost five times the corresponding period in 2024, due to other huge deals such as Google’s acquisition of Waze for $32 billion – the largest-ever exit in Israeli history.
Less deals, bigger financing rounds
Out of the overall amount of mergers and acquisitions, exits totalled $41 billion, three times the levels recorded last year. Here too, the cybersecurity industry stood out, contributing 58% of the total value of the deals, including Aim Security, which was acquired for $350 million, Findings, which was acquired for $305 million, and Prompt Security, which was acquired for $275 million.
In parallel with the wave of exits, the data from both reports indicate a continuing slowdown in private capital raising. According to SNC, in the third quarter, roughly $2.4 billion was raised, down 38% from the preceding quarter (excluding a $2 billion financing round by Safe Superintelligence) and down 18% from the corresponding quarter last year. The number of known rounds fell to 141 – the lowest since 2020.
However, together with the decline in the number of deals, the median financing round size reached a record of $10.5-12.3 million. This is a sharp increase of 50%-76% compared to last year, indicating a clear trend: fewer rounds, but each successful round attracts more money.
The data from IVC-LeumiTech are similar: $2.23 billion in 116 known rounds, and an estimate of 204 rounds in total, which is a decline of 24% from the same period last year. However, when excluding exceptional rounds of over $200 million, a more positive picture emerges: an increase of about 20% compared with the second quarter of this year and about 50% compared with the corresponding quarter in 2024, and the highest volume of fundraising since the beginning of 2023.
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The leading sectors were the same in both reports – cybersecurity and AI, which together raked in close to 60% of the capital in the quarter, with notable fundraising rounds. For example, Aidoc raised $110 million and Decart raised $100 million.
Investors, for their part, are becoming more discerning: According to SNC data, the number of active investors has dropped to just 230, the lowest since the start of 2024, although it is important to note that more than half of them are global investors. SNC CEO Avi Hasson summed it up as a “market in transition,” where funding is slowing but M&A is breaking records. On the other hand, LeumiTech CEO Maya Eisen Zafrir stressed the stability over the past two years and the powerful penetration of Israeli AI companies into the “global arena.”
Bottom line: Israeli tech in the third quarter presents a stark contradiction – a historic wave of exits in huge deals, against a slowdown in private capital raising. The key question heading into 2026 is whether the big money flowing out in exits will return to young companies, or whether the market will continue to concentrate on a minority of large deals and only mature companies, which operate mainly in the cybersecurity and AI industries.
Published by Globes, Israel business news – en.globes.co.il – on September 30, 2025.
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