Israeli Venture Capital in 2026 What Founders Need to Know
Date: 29/09/2026
Knowledge-Hub
Israeli startups raised $7.6 billion in the first half of 2026. It is an impressive figure, especially alongside a year of major technology exits. But it does not describe the fundraising experience of every founder. In the same period, first investments accounted for only 35.5% of VC and corporate VC investment actions, the lowest share in a decade. More capital is moving through the market, while a smaller share of investors’ decisions is going to companies they have not backed before.[1]
For a founder raising a first institutional round, that is the tension to understand. A large funding total can make the market look open. In practice, much of the capital is going to established companies or existing portfolios. The useful question is not simply whether investors have money. It is what will give them the confidence to make a new bet.
A strong year with a narrower entrance
The distribution of funding makes the contrast clearer. In the second quarter of 2026, Series B and later rounds received 83% of the capital raised, while funding from pre-seed through Series A fell to $741 million, down from an average of $1.3 billion in the preceding three quarters. The median seed or Series A round nevertheless rose to $14 million in the first half of the year.[1]
These figures describe a selective market, not a closed one. Some young companies are raising meaningful rounds, but aggregate funding says little about how readily the next new company can secure its first check. They also describe one quarter and one half-year; founders should not mistake a short stretch of large late-stage deals for a permanent rule about every funding stage.
There are encouraging signs beyond the headlines. In the 2024 cohort tracked by IVC, the share progressing from seed to Series A rose to 14%, compared with 8% for the 2023 cohort. That is still below the historical 17% baseline, and the 2024 cohort’s data is not yet final. Even so, it suggests that the path from an early round to the next one is improving.[1]
The implication for founders is straightforward: think beyond getting a meeting or closing the current round. What will your company learn and demonstrate with the capital, and what will a customer have to believe before adopting the product?
The evidence that changes a fundraising conversation
An ambitious technical idea can earn attention. Evidence that a buyer has a pressing problem can change the conversation. This is particularly true in cybersecurity, where a product may work brilliantly in a demonstration yet face a very different test inside a large organization. A security leader has to decide whether the problem merits a new budget, whether the product fits existing workflows, and whether the team can be trusted with a critical function.
Founders can start testing those questions before the product is fully built. Speak with the person who lives with the problem, the person who owns the budget, and the team that would have to put a solution in place. They may all describe the same challenge differently. Those differences can expose a buying obstacle early enough to address it.
A useful customer conversation goes further than “Would you use this?” Ask how the organization handles the problem today. What happens if nothing changes? Who would approve a purchase? What proof would they need from a pilot? Which existing tool or process would your product replace? If people are interested but no one owns the decision, that is a signal too.
The aim is not to collect a stack of enthusiastic quotes. It is to learn whether the problem is urgent, whether the proposed solution fits the way customers actually work, and what evidence would move them from interest to a decision. A founder who can explain those answers has a more useful story for investors, and a better basis for deciding what to build next.
Why this matters in cybersecurity and AI
Cybersecurity and enterprise software received roughly equal shares of Israeli venture funding in the first half of 2026: 33.7% and 33.6%, respectively, under IVC’s sector categories. AI runs through many of these products rather than sitting neatly alongside them as a separate market.[1] A founder may describe a company as “AI security,” but the label cannot answer who will buy it or why.
Consider a team building an AI tool for security operations. Its first hypothesis might be that analysts need faster investigations. Conversations with analysts could confirm that, while conversations with security leaders reveal a different requirement: they need to know which actions an agent may take without approval and how its work can be reviewed. That discovery would change the product, the pilot, and the way the company explains its value. This is an illustrative example, not a claim about a particular company.
The same discipline applies across enterprise technology. Founders need to find the point where technical capability meets a problem someone is responsible for solving. Customer access matters most when it produces honest answers, including answers that challenge the original pitch.
What an investor can contribute after the first check
In this market, founders should ask prospective investors more than how much they can invest. Do they understand the buyer and the path to a purchasing decision? Can they bring the company into substantive conversations with relevant operators? Will they help interpret difficult feedback rather than simply provide introductions? What support and follow-on capacity can they offer as the company grows?
This is how we think about our role at Glilot Capital. We invest in cybersecurity, AI and enterprise software from seed through early growth. Through our network of CISOs and enterprise leaders and the Mach5 value creation program, portfolio founders can test assumptions about the problem, product, differentiation and buying process with people who know the market firsthand. Our value creation work continues across customer access, go-to-market and growth.[2][3]
We also create opportunities for founders to meet and learn: events that connect them with CISOs, enterprise leaders and investors, webinars that offer practical insights, and founder gatherings where they can share lessons with one another.
None of those conversations guarantees product-market fit. Their value is that they can reveal what is working, what is missing and what needs to change while founders still have room to act. Capital gives a company time to build. The right market signals help it use that time well.
What founders should take into the next round
Israel’s funding totals show the scale of the opportunity. The smaller share of first investments shows why founders need to make a clear case for a new company in that market. The most persuasive case starts with a specific problem, a buyer who feels its cost, and evidence of what it would take to win that buyer’s trust.
Before the next investor meeting, founders should be able to describe what they have heard from potential customers, where the answers conflict, and how those conversations have changed the product. That is useful even when the response is uncomfortable. It replaces a broad claim about market demand with a set of decisions grounded in the market itself.
The funding environment will keep changing. The work of finding a real problem, learning from the people who own it, and building something they will adopt remains a strong place to start.
Frequently asked questions
Is it harder to raise venture capital in Israel in 2026
For a new company, the data points to a more selective market. First investments made up 35.5% of VC and corporate VC investment actions in H1 2026, down from 43.1% in 2025. That measures the share of investment actions, not the share of funding dollars.[1]
What should an early stage founder demonstrate to investors
A clear customer problem, evidence that the problem matters to a buyer, and an honest account of what customer conversations have taught the team. The relevant proof will vary by company and stage; early research, pilot results, usage and purchasing commitments carry different weight.
How does Glilot Capital help founders test product market fit
Mach5 connects portfolio founders with experienced advisors and potential customers for structured feedback on their product-market-fit assumptions, differentiation and pricing. Glilot Capital also supports customer access and go-to-market work as companies grow.[2][3]
Building something new?
We want to hear about it. Reach out to us.
Sources
[1] IVC Research Center and LeumiTech, Israeli Tech Review Q2 2026 and H1 2026