The State of Israeli Tech in 2024

Israeli tech, the country's economic engine, is in trouble. A new report from RISE Israel (formerly SNPI) reveals worrying trends in the high-tech sector, with far-reaching implications for the country. Here's what you need to know:

1. Mo Money, Mo Problems: While total investment grew to $9.7B from $8.7B in 2023, number of funding rounds hit a five-year low. Fewer rounds overall, and dominance of Mega rounds ($100M+) shows a market circling the wagons. Makes sense, we're in the 15th month of war, and the 24th month of internal political instability.

2.1. Cyber Uber Alles: 42% of ALL tech investments go to cyber. Don't get me wrong cyber is good, but other sectors are once again being overshadowed. Before the war we were talking precision agriculture, digital health, food-tech.

2.2 Un-Fun Fact: Many companies near Israel’s northern and southern borders—specially in agri-foodtech and cleantech—have faced severe disruptions due to the ongoing war. These firms play a vital role in regional innovation, resilience, and economic diversity. They need support, and the sectors they represent are just as important for Israel and the world's future as cyber is.

3. The Darwin Awards: Just 10 companies raised a third of all capital (34%) invested in Israeli tech this year. The gap between large and small players is widening--Darwinian vibes.

4. Uncle Sam: 80% of foreign investors in Israeli tech are American, as the decline in the number of active investors in Israel, both local and foreign, fell 16% in 2024. This worries me.

6. Uncle Shaun: Shaun Maguire and Sequoia Capital Global Equities represent 24% of total capital raised in Israeli tech in 2024. Shaun's an incredible mensch, a superb investor. The new wind out of Washington DC also seems hopeful. This inspires me.

7. The Future is Murder: The number of new startups continues to decline, high-tech job growth has flatlined for the first time in a decade, and Brain Drain fears grow. Israel cannot afford to let these trends in its human capital continue. Period. We don't have oil, we only have our brains and hustle here.

8.1 The Authors of the report urge the government to:

• Rebuild investor confidence
• Advance national AI capabilities
• Implement a comprehensive plan to retain top minds

8.2. Instead, what I see the gov't doing is:

• Lengthening mandatory and reserve military service while deferring the ultra-Orthodox draft.
• Funding ultra-religious education without core subjects leads, to more unemployment.
• Increasing tensions with the Judiciary and the security services.

9. Moody Moody's: Negative outlook, War on 7 fronts, rising defense costs, higher taxes, higher cost of living, internal governance weaknesses, institutional instability...we can only hope Israel's economic indicators turn the corner soon.

10. Looking ahead to 2025, there are those who believe we're on the verge of an innovation boom. And then there are those, like me, who believe that Israeli tech is unlikely to stabilize and grow under this Netanyahu government's priorities. This is obviously just my personal opinion. To me, 2026 and its elections could be more interesting for Israeli tech if there's a change in government priorities.