The Israeli hi-tech sector was not spared by the war between Israel and Hamas triggered by the pogrom perpetrated by the latter on October 7, 2023, and its regional repercussions.
High-tech companies had to deal with massive staff reductions, as 15 to 20% of employees, and sometimes even more, were mobilized on the front lines.
Air traffic, crucial for this international sector, was suspended and foreign investors froze all investments awaiting the outcome.
In Israel, the war also led to a brain drain. Between October 2023 and July 2024, 8,300 high-tech sector employees left the country for a year or more, accounting for 2.1% of the sector’s workforce.
In 2023, high-tech growth far exceeded GDP growth, with a 13.7% increase compared to 1.8% for GDP. However, sector production stagnated in 2024 and 2025.
Israeli high-tech companies raised $15.6 billion in private funding in 2025, up from $12.2 billion in 2024, according to Startup Nation Central (SNC) figures released in December.
Disruptive innovation (“deep tech”), relying on major scientific or engineering advances (such as artificial intelligence, biotechnology, or quantum computing) to drive profound and lasting transformations, regained its pre-2021 levels in 2025, considered a historic peak for Israeli high-tech.
The last two years have also seen a spectacular rise in technological innovation in defense, as the Israeli army was engaged on multiple fronts.
Between July 2024 and April 2025, the number of startups in this sector nearly doubled, from 160 to 312.
Out of the 300+ emerging companies collaborating with the Israeli Ministry of Defense’s research and development department, “over 130 joined our operations during the war,” said Amir Baram, the ministry’s director general, last December.
Operational challenges on the ground led the ministry to “accept products that may not be completely finished or tested, from startups.”
Defense-related technologies have overtaken cybersecurity as a highly sought-after high-tech sector.
