New Report: 130 Israeli Cyber Startups Funded in 2025, as Global Capital Surpasses Domestic Investment for the First Time

YL Ventures' State of the Cyber Nation Report reveals multiple fundamental shifts as early stage funding surges and Israeli companies further assert dominance

SAN FRANCISCO and TEL AVIV, Israel, Dec. 8, 2025 /PRNewswire/ -- Global venture capital firm YL Ventures' 10th annual State of the Cyber Nation Report reveals that 2025 marks the first time global VCs both outpaced Israeli funds at every stage and became the leading source of seed capital for Israeli cybersecurity companies. The sector saw 130 total funding rounds spanning all stages, totaling $4.4 billion.

The report also highlights several additional fundamental shifts in the ecosystem, including a surge in seed and early-stage activity reflecting a new generation of founders focused on building category-defining companies rather than pursuing quick exits. An indication of increased ecosystem maturity, 2025 also saw the most ever acquisitions of Israeli companies by other Israeli companies, with numerous scale-ups acquiring early-stage startups.

"This year's data tells a compelling story of maturation and ambition," said Or Salom, Analyst at YL Ventures, who authored the report. "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 covers a decade of growth in the Israeli cybersecurity industry, which saw a surge of over 500% in total funding over the period.

Key Findings from the 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, and 13 seed rounds were co-led by US and Israeli VCs
• Top-tier VCs including Sequoia, Mayfield, Greylock and General Catalyst doubling down on Israeli cyber
• Split-seed strategy: Increasingly favored by cybersecurity founders seeking 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

Record Early-Stage Activity

• 71 seed rounds in 2025, a 97% increase from 2023 and 42% increase from 2024
• 33 Series A rounds and 17 Series B rounds, marking significant increases over previous years
• The increase reflects a market in which founders enter with more mature strategies and investors are comfortable investing more, earlier

Homegrown Consolidation

• Israeli cybersecurity companies acquired 12 domestic startups in 2025
• Notable acquirers include Check Point, Cato Networks, Cyera, Pentera, and Orca Security
• Demonstrates the maturation of Israeli companies into platform builders

Mega-Rounds Drive Growth

• Cyera raised $540M in Series E funding
• Armis raised $435M in Series E funding
• Cato Networks raised $359M in Series G funding
• Island raised $250M in Series E funding
• Dream Security reached unicorn status with $100M in Series B funding

Hot Investment Categories

• Security for AI leads seed round funding (12 companies vs. 8 in 2024)
• Vulnerability & Risk Management dominates overall funding (20 companies)
• Endpoint Security has seen dramatic growth, with 11 funding rounds this year compared to just one in 2024

2015-2025: A Decade of Comprehensive Analysis

• Overall funding surged by more than 500% (from $689M to $4.4B)
• Average Seed Round grew by more than 230% (from $2.9M to $9.6M)
• Number of Seed Rounds rose by nearly 130% (from 31 to 71)
• Number of rounds grew by over 80% (from 72 to 130)

The report also highlights several high-profile exits, including Wiz's acquisition by Google and CyberArk's acquisition by Palo Alto Networks, further validating the strength and maturity of the Israeli cybersecurity sector.

"After a decade of analysing every funding round and exit in this ecosystem, the trajectory in 2025 is unmistakable," added 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 rather how fast."

The full YL Ventures State of the Cyber Nation 2025 report, including all data updated through the end of the year, will be published on January 7, 2026.

To see key findings and register to get the full report when it goes live, visit: stateofcybernation.ylventures.com

About YL Ventures

YL Ventures is a venture capital firm dedicated exclusively to cybersecurity. For nearly two decades, the firm 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 $800M under management, YL Ventures provides access to an unrivaled network of CISOs and industry leaders, shaping the next generation of Israeli cybersecurity innovation. Repeatedly recognized by PitchBook and TIME magazine for both performance and influence, YL Ventures stands at the forefront of cybersecurity venture capital.

Learn more at www.ylventures.com

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SOURCE YL Ventures