Investments (Q1/Q2 2025) in Israeli Startups. The Panic in EU-Europe

Spoiler alert: Israeli startups are performing excellently. Startups in the EU underperform. EU in panic mode: Smash Israel by creating a terror state “Palestine”.

Such synopses should, of course, always be read with a grain of salt. Some investments aren’t disclosed publicly, remain secret, others simply escape attention, and finally, more and more Israeli startups are headquartered in the USA. Are they Israeli or US startups? And, last but not least, there’s no central registry, which is also a good thing. That’s free market economics.

With these caveats, one can say that the two quarters (Q1/Q2 2025) once again demonstrate the resilience of the Israeli startup scene. This is also supported by the very good performance data from the Tel Aviv Stock Exchange so far. So, we’re not dealing with ‘bubbles’. Israel’s economy is cum grano salis, solid and resilient. However, a lot has to be done.

The Israeli tech ecosystem in 2025 continues its shift from a startup-centric model to a scale-up powerhouse, with larger funding rounds and a focus on mature companies. Cybersecurity led with significant investments, followed by AI and real estate tech.

The Performance

In Q1 2025, Israeli startups raised $3.2 billion across 185 funding rounds, marking a 12.1% increase from Q4 2024 despite a 6.1% drop in deal volume. This reflects a trend toward fewer but larger deals, with five mega-rounds (each over $100 million) accounting for $1.1 billion, or 43% of total private funding.

In Q2 2025, Israeli startups raised approximately $6 billion across 180 funding rounds, nearly doubling the $3.2 billion raised in Q1 2025, according to data from Startup Nation Central.

This marks the strongest quarterly performance in three years, reflecting a robust recovery in the Israeli tech ecosystem despite ongoing geopolitical challenges.

The surge was driven by larger funding rounds, particularly in cybersecurity, artificial intelligence (AI), and enterprise software, with a notable emphasis on scale-ups rather than early-stage ventures.

The total funding for the first half of 2025 reached $9.3 billion across 365 rounds, a 54% increase from the $6 billion raised in the second half of 2024.

The Panic in the EU

One could say that the investment markets trust Israel more than the anti-Semitic propaganda of European states. Looking at the figures, EU-Europe seems to be afraid of Israel’s competition and sees the “Palestine” issue as a welcome opportunity to damage a competitor on the capital market. Without success, it must be said.

EU startups raised in Q1 and Q2 2025 roughly $26 billion. Not that impressive for an ecosystem with about 450 million inhabitants compared to roughly $9 billion for an ecosystem with roughly 10 million inhabitants.

However, from the $26 billion investment sum for EU startups in Q1/Q2 2025, you must deduct roughly $11 billion. Why? Because of the European Commission’s EU Startup and Scaleup Strategy, launched in May 2025, aims to bolster the ecosystem with a $11 billion public-private fund. So, tax money “invested” by the EU. Not impressive.

If deducted, we see roughly $9 billion (Israel) vs $15 billion (EU). A disaster for the EU, which again is outperformed by Israel. Not for the first time.

The reactions of the EU states over the past few weeks can be described as panicky. Sure, some of it has to do with domestic politics, some with imploding woke narratives, but the main driving force seems to be the economy and innovation, where the EU is consistently losing to Israel. And the fuel for innovation is venture capital, not bureaucracy. Fact.

The EU has been in a panic mode since 2021, again. The big question which seems to haunt the EU is “How to stop Israel in the competition for venture capital and innovation?”

Some murmur that the power centres of European cities weren’t unhappy about Hamas’ genocidal attack. May stop Israel as a competitor in the venture capital market? Perhaps those deep state power centres of the EU even helped, encouraged, and sent signals to Hamas. Who knows.

In any case, Hamas, a staunch sworn enemy of Israel, was propped up with billions in EU funds. That’s a fact. But the math didn’t work out. Israel again outperforms the EU. And the EU has to buy arms from Israel. Israel is unstoppable.

Pic AI-generated. Illustrative.