Israeli startups raised approximately $8.6 billion in the first half of 2026, up about 45% from the roughly $6 billion raised during the same period last year, according to a report released by Poalim Tech and Dealigence. The increase came despite ongoing security challenges and economic uncertainty, including the recent conflict with Iran. At the same time, the number of funding rounds fell by about 35%, suggesting investors are concentrating larger sums of capital in a smaller number of companies. The report found that cybersecurity remained one of the strongest sectors in Israeli tech, with investment in cybersecurity companies more than doubling compared with the first half of 2025. Funding in the sector remained steady even during periods of heightened security tensions, reaching about $580 million in March. The trend toward greater investor selectivity was also reflected in the profile of companies securing funding. Serial entrepreneurs accounted for a growing share of fundraising activity, with the proportion of rounds raised by repeat founders rising from 34% in 2025 to 39% during the first six months of 2026. A similar pattern emerged in mergers and acquisitions. The number of M&A transactions involving Israeli technology companies declined by about 16% year over year, falling from 100 deals to 84. However, average deal values increased by roughly 10%, excluding major transactions involving Wiz and CyberArk. Total M&A volume reached approximately $10.7 billion during the first half of the year. The report also pointed to diverging trends in the technology labor market. While multinational technology companies continued to implement layoffs and cost-cutting measures amid economic uncertainty, artificial intelligence-driven efficiency efforts and a weaker U.S. dollar, employment at Israeli early- and mid-stage startups grew by about 2%. According to the report, younger companies have generally maintained leaner workforce structures, limiting the need for additional staff