Israeli cybersecurity startups raised a record $4.4 billion across 130 funding rounds in 2025, according to YL Ventures’ tenth annual State of the Cyber Nation Report. The report shows that, for the first time, global venture capital outpaced domestic investment at every stage and became the leading source of seed funding for Israeli cyber companies.
The report identifies several additional shifts in the ecosystem, including a sharp rise in seed and early-stage activity driven by a new generation of founders focused on building category-defining companies rather than seeking quick exits. Reflecting growing maturity, 2025 also saw the highest number of acquisitions of Israeli startups by other Israeli companies, with multiple scale-ups buying early-stage ventures.
"This year's data tells a compelling story of maturation and ambition," said Or Salom, an analyst at YL Ventures and the report’s author. "Israeli cybersecurity entrepreneurs are no longer just building great technology; the Israeli cybersecurity ecosystem is consistently producing category-leading companies at global scale."
Marking its tenth year, the report also tracks a decade of growth in the Israeli cybersecurity sector, which recorded a funding surge of more than 500 percent during that period.
Key findings from YL Ventures’ 2025 State of the Cyber Nation Report
Global investment leadership
• US VCs now lead Israeli cyber investments across all stages
• US VCs led 44 seed rounds; Israeli VCs led 35; 13 seed rounds were co-led
• Top-tier funds including Sequoia, Mayfield, Greylock and General Catalyst are doubling down on Israeli cyber
• A “split-seed” strategy is increasingly popular, giving founders both domestic domain expertise and the scale and long-term capital of global funds
Record early-stage activity
• 71 seed rounds in 2025, up 97 percent from 2023 and 42 percent from 2024
• 33 Series A rounds and 17 Series B rounds, significant increases over previous years
• The trend reflects founders entering with more mature strategies and investors willing to invest more, earlier
Homegrown consolidation
• Israeli cybersecurity companies acquired 12 domestic startups in 2025
• Notable acquirers included Check Point, Cato Networks, Cyera, Pentera and Orca Security
• The wave of acquisitions demonstrates the sector’s evolution into platform-building companies
Mega-rounds drive growth
• Cyera raised $540 million in Series E funding
• Armis raised $435 million in Series E funding
• Cato Networks raised $359 million in Series G funding
• Island raised $250 million in Series E funding
• Dream Security reached unicorn status with a $100 million Series B
Hot investment categories
• Security for AI led seed funding (12 companies, up from 8 in 2024)
• Vulnerability and risk management dominated overall funding (20 companies)
• Endpoint security surged, with 11 funding rounds compared with just one in 2024
2015–2025: A decade of analysis
• Total funding rose more than 500 percent, from $689 million to $4.4 billion
• Average seed rounds increased more than 230 percent, from $2.9 million to $9.6 million
• The number of seed rounds nearly doubled, from 31 to 71
• Total funding rounds grew more than 80 percent, from 72 to 130
The report also cites several high-profile exits, including Wiz’s acquisition by Google and CyberArk’s acquisition by Palo Alto Networks, further underscoring the strength and maturity of Israel’s cybersecurity sector.
"After a decade of analyzing every funding round and exit in this ecosystem, the trajectory in 2025 is unmistakable," said Yoav Leitersdorf, managing partner at YL Ventures. "Israeli cybersecurity now operates at a scale, pace and level of consistency that surpasses anything we’ve seen. The question is no longer how much Israeli cybersecurity companies can scale, but how fast."
Yoav Leitersdorf Managing Partner YL VenturesPhoto: Tammy Bar-ShayYL Ventures is a venture capital firm focused exclusively on cybersecurity. For nearly two decades, it has partnered with top Israeli founders from inception, helping build category-leading companies that define the market. With offices in Silicon Valley and Tel Aviv and $800 million under management, the firm provides access to a broad network of CISOs and industry leaders. Repeatedly recognized by PitchBook and TIME magazine for both performance and influence, YL Ventures is considered a leader in cybersecurity venture capital. The full 2025 State of the Cyber Nation Report, with data updated through the end of 2025, will be published on January 7, 2026.