High-Tech Status Report in Israel 2026: Continuous Growth Alongside Increasing Challenges

SadaNews - The High-Tech Status Report for 2026, issued by the Israeli Innovation Authority, presents a complex picture of the Israeli high-tech sector during 2025; on one hand, the sector continued to record impressive growth indicators in GDP, exports, funding rounds, and exit deals, while on the other hand, challenges emerged concerning the decline in research and development staff numbers and the increasing transfer of activities outside Israel.

Despite the complex security and economic conditions, the technology investment market in Israel continued to show resilience, with funding rounds reaching approximately $3.36 billion in the first quarter of 2026.

According to the report, the GDP of the Israeli high-tech sector in 2025 amounted to about 352 billion shekels, while high-tech exports rose to around $85 billion, accounting for 58% of total Israeli exports. The output per employee in the sector also increased to about 827,000 shekels annually, the highest among all economic sectors.

In 2025, approximately 775 new startups were established after a decade of decline in the number of new companies, while Israel maintained its position as one of the world's leading technology hubs, ranking fourth globally in startup funding volume and first outside the United States, with total funding of about $15 billion.

During the year, exit deals were recorded with a total value of about $84 billion, alongside an increase in the number of multinational companies operating in Israel to 511 companies.

In contrast, the report indicates an increase in the activities of Israeli high-tech companies outside Israel. Between 2019 and 2026, the percentage of employees working within Israel in private Israeli high-tech companies decreased from 69% to 62%, while the primary increase in employment outside the country concentrated in the United States. Additionally, for the first time in a decade, there was a decline in the number of research and development employees within Israel, alongside an increase in jobs related to product management, which may reflect a change in job nature in the age of artificial intelligence.

The report also shows the continued reliance of the Israeli high-tech sector on foreign capital, as 47% of commercial research and development funding sources come from abroad, while about 70% of venture capital investments in 2025 were classified as foreign investments.