Israeli Tech Sees Record-Breaking $71B in M&As in 2025 Despite Decline in Number of Funding Rounds in Q3 2025
- The market is shifting toward larger, more selective investments
- Stable global investor interest
- Cybersecurity continues to dominate M&As and attract significant capital
TEL AVIV, Israel, Oct. 3, 2025 /PRNewswire/ -- Startup Nation Central, a nonprofit promoting the Israeli innovation ecosystem globally, has released its Q3 2025 report summary based on data from the Finder platform. The quarter was defined by two contrasting trends: a sharp decline in private funding and vibrant M&A activity that reshaped the tech landscape.
Private capital raised in Q3 2025 reached an estimated $2.4 billion, representing a 38% drop compared to Q2 when excluding Safe Superintelligence's $2 billion round, and a 59% drop when including it. Compared to Q3 2024, funding volumes increased by 9% when excluding the Safe Superintelligence's $1 billion round from 2024. The number of deals contracted to 141, down 24% from Q2 and 38% year over year. Despite the decline in deal volume, the median round size grew to $10.5 million, a record high and a 50% increase compared to the same quarter last year, highlighting the shift toward fewer but larger deals.
M&A activity, in contrast, reached new heights. The quarter recorded $31.8 billion across 31 transactions, led by Palo Alto Networks' $25 billion acquisition of CyberArk, the second-largest acquisition in Israeli tech history. Other notable deals included the $2 billion acquisition of Verint Systems. The median M&A deal size jumped to $269 million. Cybersecurity dominated the exit landscape, accounting for 58% of total value, with major acquisitions such as Aim Security ($350 million by Cato Networks) and Findings ($305 million by Diginex).
Across the first three quarters of 2025, private funding totaled $11.9 billion, a 13% increase compared to the same period last year, despite a 22% drop in the number of deals from 725 to 569. M&A activity reached $71 billion, nearly five times higher than the same period in 2024, driven primarily by the $32 billion acquisition of Wiz and the CyberArk deal. M&A exits accounted for $41 billion, three times the levels of 2024, marking the highest M&A activity in Israel's history. IPO activity picked up with the $700 million Nasdaq listing of eToro and Via Transportation's $493 million NYSE listing.
Cybersecurity once again proved to be the strongest sector, raising $800 million in private funding during the quarter, or 38% of the total.
Investor participation continued to decline, with 230 active investors in Q3, down 20% from Q2 and the lowest level since early 2024. Global investors remained stable, representing 57% of the total investors, underscoring continued international interest in the Israeli tech ecosystem.
"Q3 2025 highlighted a market in transition. While funding slowed and investors became more selective, M&A activity reached historic highs," said Avi Hasson, CEO of Startup Nation Central. "We are seeing fewer rounds, but at record sizes, signaling confidence in scale-ready companies. At the same time, global buyers are making some of the boldest bets we've ever seen on Israeli tech, especially in cybersecurity."
About Startup Nation Central:
Startup Nation Central helps global solution seekers tackle complex challenges by giving them frictionless access to the expertise and solutions of Israel's problem solvers and their bold and determined approach to innovation. Its free business engagement platform, Finder, provides real-time insights into the Israeli tech ecosystem to explore opportunities and forge valuable connections.
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SOURCE Startup Nation Central
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