On paper, 2026 is a good year for funding in Israeli tech. According to Globes, Israeli companies raised about $9.6 billion in the first eight months of the year, and in the first half funding jumped 52% from a year earlier. According to a preliminary review, about $3.6 billion was raised in the third quarter in 91 rounds. But break the numbers down and a very different market from the previous boom emerges.
The most striking figure is the concentration in cyber. According to the same review, cyber companies raised about $4.3 billion in the first three quarters, about 38% of all funding. This week alone, Sentra announced $150 million, Daylight $80 million and Bay $50 million, and Cyera is heading toward an $800 million round. One such round is worth almost everything Israeli tech raised in October, about $872 million in 14 rounds, according to Calcalist.
The second pattern is fewer, bigger rounds. Investors prefer to put huge sums into a few companies that look like winners, mainly in AI security and AI infrastructure, rather than spread money across many early-stage startups. The result is a two-tier market: a few companies raising hundreds of millions at multibillion-dollar valuations, and many others, in fields such as food tech, fintech and software tools, that struggle to raise and are forced to cut.
Why is this risky? Because Israeli tech's success was always built on breadth: thousands of startups in different fields, from which a few big successes emerged. When money concentrates in one field and a few companies, the whole industry becomes more sensitive to changes in that field. If the AI-security rush cools, or the cyber giants decide to build capabilities themselves rather than buy, much of this year's funding will look like a bubble.
This does not mean investors are wrong. Israeli cyber is one of the strongest brands in the world, and the problems these companies solve are real. But a country that wants a stable industry should ask not only how much money comes in, but where it goes, and what happens to everyone left outside the rush.
