Israeli cybersecurity firms are being funded at record levels—reaching $4.4 billion in 2025, up 9% from the year before. 

But if that’s not impressive enough, check out the surge in the number of funding rounds, increasing 46% in a year to 130, according to YL Ventures’ 10th annual State of the Cyber Nation Report. 

That tracks with what has happened with Merlin Ventures, whose oversubscribed inaugural fund exceeded the company’s $75 million target.   

YL Ventures Analyst Or Salom, who authored the report, said the findings show a “maturation and ambition” in the Israeli cybersecurity space. “Israeli cybersecurity entrepreneurs are no longer just building great technology; the Israeli cybersecurity ecosystem is consistently producing category-leading companies at a global scale,” he said at the report’s release. 

In the 10 years that the report has been published, the Israeli cybersecurity industry has seen a 500% surge in total funding. 

The need to fill security gaps and to do so quickly is helping drive investments. “Cyber technology is particularly susceptible to atrophy if it isn’t cared for and fed properly. AI-powered threat actors and machine-on-machine cyber warfare is now a reality,” says Hank Thomas, cofounder and CEO of Strategic Cyber Ventures.  

“It is imperative that cyber tactics, techniques, procedures, and technology quickly innovate, collaborate with, and if needed, merge with other technologies to fill gaps in our defenses,” says Thomas. “If you wait too long to do this, the value of your security solution could quickly plummet towards zero.” 

This year’s report revealed 71 seed rounds in 2025, which represents a 97 percent increase from 2023 and a 42% increase from 2024. There were 33 Series A rounds and 17 Series B rounds, which is significantly higher than in previous years. The firm sees that increase as a reflection of a market where founders come in with mature strategies, and which finds investors comfortable in investing more earlier on. 

US VCs, though, lead Israeli cyber investments, regardless of stage. For instance, US VCs led 44 seed rounds in comparison to 35 by Israeli VCs but US and Israeli VCs teamed up to lead 13 seed rounds. 

Sequoia, Mayfield, Greylock and General Catalyst and other top-tier VCs doubled down on Israeli cybersecurity in 2025. And the year saw cybersecurity founders often favoring a split-seed strategy “to ground their early trajectory with both an Israeli cybersecurity VC’s domain expertise while securing the scale, reach and long-term capital potential of leading global funds,” the report explained. 

“What has been quite interesting to see as a VC that primarily focuses on the Israeli cyber market is the desire of many countries, in all regions of the world, to overlook past (and even present) geopolitical tensions to gain access to the cybersecurity technologies coming out of Israel,” says Seth Spergel, managing partner at Merlin Ventures. “I expect that continued investment in cybersecurity, especially in Israeli cybersecurity companies, will be one of the hottest topics in the year to come.” 

Much of the consolidation in the market this year has been “homegrown” with Israeli cybersecurity firms—including Check Point, Cato Networks, Cyera, Pentera, and Orca Security—scooping up 12 domestic startups. Again, YL Ventures points to maturity in the market, this time as Israeli companies build platforms. 

Not surprisingly, security AI led the seed round funding—12 companies, up from eight in 2024. But the prize for overall funding went to vulnerability and risk management, which encompassed 20 companies. Endpoint security, too, saw a serious uptick, with 11 funding rounds in 2025, up from a single round the year before.