Israeli startups raise $8.6 billion in first half of 2026 despite war, but strong shekel erodes purchasing power
Israeli startups secured $8.6 billion in funding during the first five months of 2026, a 45% increase year-over-year, according to a Poalim Tech and Dealigence report. The funding surge occurred despite ongoing conflict with Iran and continued geopolitical uncertainty, with cybersecurity and AI companies capturing the majority of investment. However, the shekel's strength to a 33-year high against the dollar has reduced the effective value of dollar-denominated funding by up to 20%, shortening startups' cash runways and forcing difficult decisions about costs and hiring.
Israeli startups raised approximately $8.6 billion in the first five months of 2026, representing a 45% increase compared to $6 billion in the same period of 2025, according to data from Poalim Tech and Dealigence covering 1,685 startups employing 161,730 people. The funding continued to flow even during March's full-scale war with Iran, marking the strongest half-year period since 2021. However, the number of funding rounds declined by 35% year-over-year, indicating that capital concentrated among fewer companies, with cybersecurity and AI startups receiving the lion's share. Simultaneously, the shekel's appreciation to a 33-year high versus the dollar has created a paradoxical challenge: while dollar-denominated funding appears robust, its value has eroded by approximately 20% when converted to shekels, the currency in which Israeli startups pay most operating costs including salaries. This currency headwind is forcing startups to accelerate fundraising timelines, cut expenses, and consider hiring abroad to preserve their financial runways.
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- Times of IsraelCenter
Despite war, Israeli startups snag $8.6 billion, as strong shekel cuts cash runway
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