A smart investor knows how to de-risk. Throughout Israel’s most turbulent year in our history, many around the globe pegged Israel as an unstable investing environment. But, what we’ve seen this past year has proven that it’s quite the opposite for Israeli cyber startups. The Israeli cybersecurity ecosystem is thriving amidst our most turbulent time. In fact, the cyber exits landscape has seen its second-best year, ever.
With $23 billion generated from 116 mergers and acquisitions (M&As) and $18B from IPOs over the last six years, in addition to $64B of unrealized value from cyber unicorns that have yet to exit, Israel has proven to be one of the most attractive cyber powerhouses worldwide. An ecosystem that continues to deliver exceptional results and thus attract investors around the world.
Here are five key trends shaping the future of this landscape.
1. The Rise of Early-Stage Exits
Israeli cybersecurity startups are achieving significant exits at earlier stages than ever before. In 2024, 73% of exits occurred after just seed or Series A funding rounds. On average, these startups are exiting in just three to four years. For exits at or above $100M, the amount of time it took to go from day 1 of startup establishment to acquisition has shortened by two full years on average. This accelerated timeline reflects a maturing ecosystem where startups solve pressing challenges with speed and precision, attracting strategic acquirers earlier in their lifecycle.
This trend is particularly advantageous for investors, as it allows them to realize returns quickly while reducing the financial and operational risks associated with long-term growth.
2. The Dominance of M&A as an Exit Strategy, but Opportunity for Success via IPO is Bigger
We saw $23B in total realized value across 116 cyber M&As since 2019. But, IPOs present a significant opportunity for startups who want to go the distance, with a median valuation at IPO (for Israeli cyber IPOs since 2019) of $3.3B, 30X that of the average M&A exit. Until the IPO market re-opens, which we expect to happen in 2025, M&A is the more reliable option.
Our report highlights that 65% of M&As this year involved $100M+ exit prices, and 61% of the startups were bought by public companies. American public companies like Palo Alto Networks, CrowdStrike, and Akamai have led the acquisition spree. In fact, according to median acquisition prices, Palo Alto Networks and Akamai have signed the highest checks over these six years. But, fast-growing Israeli private companies like Wiz and Cyera are also becoming significant players in the M&A space. The average price that Wiz has paid for the startups it has acquired is second only to Palo Alto Networks.
Notably, M&A “waves” — concentrated acquisition activity in specific subcategories — continue to define the landscape. Recent waves include DSPM (Data Security Posture Management) and Unified Remediation, with categories like AI Security and non-human identity expected to gain traction in the coming year.
3. Unicorn Growth Continues at an Impressive Pace
Israel is home to 21 cyber unicorns collectively valued at $64 billion, many of which achieved this status in record time. The report notes that startups founded during the COVID-19 boom became unicorns faster — within five years on average — compared to the typical six years for pre- or post-pandemic companies. Cloud security, DevSecOps, and data security remain the top categories driving unicorn growth, reflecting the increasing demand for comprehensive cybersecurity platforms.
A key insight is the significant role of serial entrepreneurs, who account for 60% of unicorn founders. Their experience in navigating the complexities of scaling startups contributes to the ecosystem’s maturity and success.
4. Foreign Investment Fuels the Ecosystem
While Israeli venture capital firms like Team8, Cyberstarts, YL Ventures and Glilot lead early-stage cyber funding, later-stage investments are dominated by U.S. and European VCs. These global investors bring not only capital but also networks, strategic guidance, and access to international markets, accelerating the growth of Israeli startups.
The combination of local expertise and foreign investment creates a unique ecosystem that blends innovation with global scalability, making Israeli startups highly attractive acquisition targets.
5. AI Security and Emerging Categories Take Center Stage
The convergence of artificial intelligence (AI) and cybersecurity is creating fertile ground for new startups. In 2024, Israel witnessed the rise of the “AI for the SOC” (Security Operations Center) category, alongside broader applications of AI in cybersecurity. Companies like Noma, Lasso, DeepKeep, and Apex Security exemplify this trend.
Additionally, emerging categories such as next-gen DLP and non-human identity protection are gaining momentum. These areas represent the next frontier of innovation and are poised to attract significant investment and M&A activity.
What’s Next for Israeli Cyber?
The Israeli cyber startup ecosystem’s ability to adapt to evolving challenges and opportunities positions it as a global leader in cybersecurity innovation. As trends like early-stage exits, AI-driven security, and unicorn growth continue to unfold, Israel will likely remain at the forefront of the global cybersecurity landscape for years to come.
Dorin Baniel is a Principal & Head of EMEA at NightDragon, a Forbes Israel 30 Under 30 alumni and a Contributor to Forbes Israel.
Forbes Israel Contributors are independent writers selected by the Forbes editorial team, experts in their fields, providing current commentary and reviews in their area of expertise. The content is their own and under their responsibility and is not sponsored content.
