In this post, I’me taking a deep dive into why Israel has become the ultimate testing ground for next-generation security, the capital flooding into the space, and where the biggest opportunities lie for founders and investors alike.

The Numbers: Mega-Rounds and Blockbuster Exits

Israel’s defense industry was born out of survival. Facing daily security threats from hostile states and terrorist groups, the country was forced to build technological independence — and that necessity produced a structural advantage rarely seen elsewhere: tight collaboration between the military, academia, and industry that translates theoretical ideas into operational systems at remarkable speed.

Israel’s defense industry is now exporting that combat-proven technology and operational experience to the world. Driven by conflicts from the Middle East to Ukraine, global demand for next-generation, cheaper, faster-to-produce weapon systems has skyrocketed, propelling Israeli defense exports to a record $14.7 billion in 2024.

The venture capital flowing into Israeli defense tech is staggering. Early-stage innovation is still thriving, but we’re now seeing growth rounds and exits that rival traditional enterprise SaaS:

• Massive funding rounds: Secretive battlefield-AI startup Airis Labs raised $60 million during wartime. Kela, building an operating system to integrate modern military systems, is raising $200 million at a $1 billion valuation. Shifters raised a $10.2 million seed round to build autonomous battlefield robots for high-risk environments.
• Blockbuster M&A: The exit market is red hot. In 2026, U.S. giant Motorola Solutions acquired Israeli counter-drone pioneer D-Fend for $1.5 billion. Offensive cyber intelligence firm Paragon was acquired by AE Industrial Partners for up to $900 million, and military software firm Omnisys was bought by Ondas for $200 million.

The Entry of Anduril and U.S. Giants

Global aerospace and defense giants have long recognized Israel’s talent pool. Now, a new breed of defense tech giant is making more aggressive moves.

Anduril Industries, the Silicon Valley juggernaut recently valued at $61 billion, is in advanced talks with Israeli officials to establish a local R&D and operations hub. Founded by Palmer Luckey, Anduril is reportedly shortlisting military veterans to lead its Israeli operations, eyeing both organic growth and local acquisitions to fuel its international expansion and future IPO ambitions. Its arrival would be a major validation of Israel’s talent pool, and is likely to spark more M&A activity as U.S. primes look to absorb battle-tested Israeli IP.

Specialist Funds vs. The Dual-Use Appeal

The capital landscape is evolving to match this demand. Dedicated, specialist entities are emerging, like the Kinetica defense-tech fund, Aurelius Capital, and the government-backed MAFAT for Startups, which fast-tracks companies into IDF procurement pipelines.

But one of the most interesting trends is the influx of non-specialist, generalist VCs entering the space through “dual-use” deep tech. Because many traditional funds have mandates restricting investment in kinetic weapons, they’re pouring capital into dual-use applications: technologies built for the commercial sector that also carry vital defense applications. Areas like AI-powered underground mapping from Exodigo, autonomous maritime navigation from Orca AI, and satellite weather intelligence from Tomorrow.io are bridging that gap, letting generalist VCs capitalize on defense budgets without violating their ESG constraints.

Opportunities for Startups

For founders looking to build in defense and national security, several massive greenfield opportunities stand out, areas where military budgets are increasingly being allocated (aka necessity is the mother of invention):

1. AI & Autonomous Systems: Militaries want to remove humans from the line of fire, driving immense demand for autonomous drone swarms, loitering munitions (such as those pioneered by UVision), and unmanned ground vehicles (UGVs) built for complex urban warfare and tunnel operations.
2. Counter-UAS (Unmanned Aerial Systems): As drones come to dominate modern warfare, the shield matters as much as the sword. Startups developing AI-powered electro-optical tracking, spoofing defences, and non-kinetic cyber takeover systems (like D-Fend which recently sold for $1.5 billion) are in high demand from both military and civilian infrastructure buyers.
3. Intelligence, Fusion & Electronic Warfare: The modern battlefield is flooded with data. Opportunities exist for startups building platforms that turn unstructured video into real-time intelligence (like Senai), map the invisible electromagnetic spectrum (like Tenna Systems), or create hardened, AI-optimized communications that survive in GPS-denied environments.
4. Human Resilience and Medical Tech: Defence tech isn’t just hardware and software, it’s about the warfighter. Startups drawing on academic research to build remote cardiopulmonary sensors, new PTSD treatments, and advanced camouflage nano-materials are uncovering a lucrative intersection between med-tech and defence.
5. Space & Maritime Domain Awareness: The innovation race is rapidly expanding beyond land and air. In the maritime sector, startups like Orca AI and Skana Robotics are developing AI computer vision and autonomous surface and underwater vessels to protect naval operations and infrastructure. Simultaneously, the space frontier offers massive opportunities for sovereign intelligence, with companies like Remondo building high-resolution, low-cost microsatellites and Tomorrow.io deploying proprietary radar constellations for global tactical awareness

Israel’s defence tech ecosystem is no longer just a quiet frontline of national security, it’s a global venture capital powerhouse. For startups that can navigate the complexities of government procurement and dual-use commercialisation, the potential for scale has never been greater.

The original version of #Firgun was published on Linkedin to 8,100+ subscribers. Sign up for free to get the next edition in your inbox.

Firgun (pronounced ‘feer-goon’) is an Israeli term describing genuine, unselfish joy in someone else’s success… It’s basically the opposite of “schadenfreude”. Every week since March 2020, we celebrate the wins of our startup community. Read more about why Firgun matters. If this was forwarded to you and you’d like to subscribe, previous editions are on VC Cafe.

This week in Israel, the public debate was dominated by deep skepticism around the newly signed U.S.-Iran 14-point memorandum of understanding, which critics argue defers the hard questions on nuclear enrichment, ballistic missiles and Iran’s regional proxies, while exposing visible friction between Prime Minister Netanyahu and President Trump. Yet against the backdrop of geopolitical uncertainty, security pressures and market volatility, Israel’s tech engine continued to show resilience: high-tech reportedly accounted for roughly half of the country’s economic growth over the past year, Tel Aviv held its position as the world’s fourth-largest startup ecosystem, and Dream’s $260M round at a $3B valuation underscored how tightly AI, cybersecurity and national security are now intertwined.

In the wider tech world, the defining story was Anthropic being forced to disable Fable 5 and Mythos 5 outside the U.S. after a sudden U.S. national-security export-control directive, turning AI sovereignty from policy talk into platform risk; SpaceX is reportedly buying Anysphere / Cursor for $60 billion… OpenAI hired former Google / Gemini co-lead Noam Shazeer to lead architecture research ahead of its IPO; Z.ai’s GLM-5.2 emerged as a new open-weights model to watch; Midjourney surprised the market with its first hardware product, an ultrasound-based full-body scanner which will roll out as a network of Spas; Amazon Web Services (AWS) launched new AI agent tools while Microsoft’s Azure reportedly continued benefiting from ByteDance’s $1B+ annual AI spend; Databricks said annualised revenue hit $6.9B, up more than 80%, while AI-agent usage pressures margins; Odyssey raised $310M for Hollywood-grade world models with Amazon and AWS among the backers; CuspAI reportedly raised $400M for AI materials discover. General Intuition was reportedly raising $300M from Jeff Bezos and others; Accenture pushed deeper into cyber with a $4.18B OT-security package including Dragos, runZero and NetRise;; Fox Corporation reportedly agreed to acquire Roku for $22B; Snap Inc. unveiled new Specs AR glasses and the stock took a 20% hit; Waymo recalled nearly 4,000 robotaxis after construction-zone incidents; Google rolled out Android 17 and Gemini-powered Pixel updates; France announced €655M in AI investments and a Mistral-powered public-services chatbot; Finally, PayPal Ventures is reportedly shutting down after $850M in investments.

QUOTE OF THE WEEK

“The purpose of knowledge is not knowledge itself, but what it leads us to do.” — The Lubavitcher Rebbe

NEW FUNDING DEALS

• Congratulations Shalev Hulio and team Dream on your $260M series C at a $3 billion valuation to addresses national cyber systems, governments and national infrastructure companies – nuclear reactors, gas, oil, water and electricity threats.
• Well done Zohar Alon and team NewCore on coming out of stealth with a $50M series A (as well as a previously undisclosed $16M seed round) to create the identity management system for the new era!
• Way to go Itai Hirsch and team Turnout on your $35M series A for your AI-powered consumer advocacy service!
• Kudos David Priev and team Limitless Labs on your $20M series A to scale your Agentic Physical AI for precision manufacturing!
• Mabruk Shahaf G. and team Mars Security on coming out of stealth with $8.5M seed funding raised to date for your autonomous threat hunting and detection engineering platform!
• Good stuff Barak Sternberg and team Tenet Security on your $6M seed round for your runtime protection for autonomous systems accessing sensitive data and workflows!
• Big congrats Ben Fuxbruner and team Kimba on coming out of stealth with a $5.4M seed round to elevating health and sleep through AI and scent technology!

EXITS

• Well done Rom Carmel ? and team Apono on the acquisition by 1Password for a reported $250M-$300M for your AI-powered, cloud-native Privileged Access Management (PAM) platform that eliminates standing privileges by enforcing Just-in-Time (JIT) and Just-Enough access.
• Congrats Itzik Alvas and team Entro Security on the acquisition by SailPoint for a reported $200M to secure non-human identities, API keys, secrets, and credentials across cloud and on-premises environments!
• Well done Michael Grosman and team NextVision on selling $200M worth of shares for your stabilised camera for drones!
• Way to go Eran Sarouk and team GMT – Advanced Financial Services on the acquisition by Western Union for an estimated $70M to scale your international and local money transferring services!

NEW FUNDS

• Congrats Aviel Ichaï and team monday.com on announcing Monday Ventures a new $200M corporate fund to invest in Israeli AI startups!

LINKS FOR YOUR BROWSER

VC CAFE/ REMAGINE VENTURES/ ISRAEL VC

• The Power of Small Tickets: When “Getting In” Matters More Than the Model – Ownership matters in venture. But in a market where capital is concentrating into fewer companies, access may matter even more.
• Israeli Startup M&A in H1 2026: Strategic Buyers Are Back – From Apple, Nvidia and Cisco to Mobileye, Fireblocks and Cyera, the first half of 2026 shows that Israeli tech remains high on the global M&A agenda.
• The Modern GTM Stack for AI-Native Startups – Why the winning 2026 motion is a signal system, not a bigger sales machine.

ISRAEL

• Tel Aviv ranked world’s No. 4 startup hub with ecosystem value of $250B – Startup Genome’s annual global report says Tel Aviv’s ecosystem value surged 162% from its previous ranking, driven by AI, big data, analytics, cyber and life sciences, placing the city behind only Silicon Valley, New York and London
• The most promising Israeli startups for 2026 according to Globes – Majestic Labs ai takes the top spot followed by Quantum Art and Port.io.
• Sovereign AI – Israel has a New AI directorate

GLOBAL

• Americans and AI 2026: Chatbots, Smart Devices and Views on Impact – new report by Pew Research Center
• Future of the Web 2026: AI Brand Visibility Research – based on research from 2,000 decision-makers and consumers.
• Y Combinator’s Winter 2026 batch is its most technically complex cohort yet — here’s what it signals about physical AI

MEDIA OF THE WEEK

Israel’s energy tech landscape and report was added to my 2026 Israeli startup landscape collection on VC Cafe. (source)

The International VCs backing Israeli tech so far in 2026 – by Israel VC (source)

Who are the VC investors backing israeli healthtech, medtech, biotech and medical devices in 2026? Another infographic by Israel VC (source)

Interesting website – the capex investment in AI vs. revenue (source) – so far it hasn’t paid off…

What’s next in wellness? the 2026 scouting report by FITT Group (source)

Pharma should have produced dozens of iconic software companies by now. Instead it’s produced one: Veeva ($3B+ rev). The AI in pharma market map by Sapphire Ventures (source)

Along the same lines MMC Ventures published the AI x Bio market map – where AI is being used for drug discovery (source)

I’ve shared this map by Battery Ventures before, but thought it might be worth re-sharing as the GTM for AI-native startups is changing rapidly. The AI-native GTM stack (source)

More Americans are using chatbots, and some are adopting AI summaries and smart speakers. But views about AI and how fast it’s advancing tilt negative – even for younger adults

The Winter 2026 Y Combinator batch is the most technically complex yet by CB Insights (source – see links section)

That’s all for this week. Thank you for tuning in. There’s a lot to celebrate in our “small” community! Keep on Creating!

Shabbat shalom,

Eze Vidra

AI-native companies increasingly sell into a different reality. The buyer may test the product before speaking to anyone, run a proof of concept in a few days, and arrive at the first call with an informed view of the product’s quality, integration effort and likely ROI.

That changes the job of GTM. The goal is not simply to create more meetings. It is to identify real intent earlier, help a prospect reach value quickly, and turn product usage into a stronger sales and expansion motion. In many cases, the decisive moment is a 30-day pilot with clear success criteria, not a long sequence of human hand-offs.

Signals and Data Enrichment

The old model began with a list. The modern one begins with a signal: a relevant hire, new funding, a technology change, a visit from a target account, a sharp rise in product usage, or public evidence that a company has the problem you solve.

Clay is the best-known example of the new enrichment layer: it lets teams combine multiple data sources, web research and workflows rather than accept the limits of one database. Apollo remains a pragmatic option for contact data and basic outreach. Common Room is useful once you have enough channels and community or product activity to turn into actionable buyer signals.

The key idea is a data waterfall. Rather than relying on one provider for every email, job title or technology tag, query several in sequence and keep the best verified answer. That is useful. Buying every possible intent-data package before you know your triggers are not.

What this means for a founder: Choose three to five signals that reliably precede a good conversation. A list of 200 relevant accounts is more valuable than 2,000 generic names.

Outbound and Inbound Orchestration

This is the noisiest layer of the stack. Tools such as Apollo and Amplemarket make outreach more assistive: they help identify accounts, prepare research, draft messages and coordinate follow-up. Agentic offerings such as Artisan and 11x are aiming at a more autonomous model, from prospecting to meeting booking.

Both models can be useful, but they are not interchangeable. An autonomous agent works best when the audience, trigger, offer and message are already well understood. It is not a substitute for discovering them. Handing an unproven message to an agent merely automates your uncertainty.

Inbound is a better early use case for autonomy. Qualifying a form fill, answering routine questions, routing a lead, suggesting a meeting time and preparing an account brief are structured tasks with immediate feedback. The cost of delay is high and the brand risk is lower.

What this means for a founder: Let AI remove research and first-draft work. Keep a human close to strategic accounts, senior buyers and new messages until you know they earn a response.

Content, SEO and Distribution

AI has made publishing cheap. It has also made undifferentiated content close to worthless.

Every company can now produce a competent article, a week of social posts and a set of SEO pages. The output often looks polished but says nothing a buyer could not find elsewhere. That is not a content engine. It is a treadmill.

Use tools such as Claude for drafting and repurposing, Ahrefs for search research and AI-visibility monitoring, and Beehiiv or a similar platform when an owned audience matters. But begin with one original input: a customer insight, product benchmark, non-consensus opinion, data set, or story from the field. AI can multiply that input across formats; it cannot manufacture the underlying point of view.

What this means for a founder: Your moat is not publishing velocity. It is a perspective that compounds because your company sees something others do not.

Sales Engagement and CRM

Your CRM should be the company’s memory, not a reporting chore for a future sales team.

HubSpot is often the sensible default for an early sales-led motion because it gives a small team CRM, marketing and customer context in one place. Attio is compelling when the business does not fit a clean, linear pipeline: product-led expansion, partnerships, developer relationships, or usage-based accounts with multiple stakeholders.

The practical distinction is not “legacy” versus “AI-native.” It is whether the CRM contains enough trusted context for AI to do useful work. An agent cannot prioritise an account, produce a useful brief or recommend a next step when key information is scattered across Slack, email, product analytics and a founder’s memory.

What this means for a founder: Pick a simple source of truth early. Do not choose Salesforce because it looks grown-up, and do not customise any CRM until the motion is repeatable.

Customer Success, Expansion and Retention

For an AI company, customer success increasingly begins in the product data.

The most useful signals are rarely vanity metrics. Look for whether a customer has reached the high-value workflow, added teammates, expanded use cases, increased usage steadily, or hit a recurring point of friction. Those are the events that should trigger onboarding, support, a renewal conversation or a commercial expansion.

Vitally can help a lean team turn health scores into action. Intercom’s Fin is a strong example of where an AI agent can take on routine support, letting humans focus on difficult cases and strategic customers. But a health score is only useful if it changes a behaviour: alert an owner, trigger a playbook, or surface an expansion opportunity.

What this means for a founder: Instrument the journey to durable value before hiring a large customer-success function. Product usage is not a dashboard metric; it is a commercial signal.

Analytics and Attribution

Traditional attribution separated marketing, sales and product. That has always been an artificial division, and it is especially misleading when a buyer discovers you, tries the product, invites colleagues and only then starts a sales conversation.

PostHog is a sensible seed-stage choice because it brings product analytics, session replay, experimentation and feature flags closer together. Later, a warehouse stack may make sense. At the beginning, the goal is not perfect multi-touch attribution. It is being able to answer basic questions: which accounts activate, which actions predict conversion, where do pilots stall, and what usage predicts expansion?

What this means for a founder: Start with a data model, not a dashboard. What you instrument now determines which decisions you can make a year from now.

The Assistive-versus-Autonomous Line

The most useful debate is not whether agents replace SDRs. It is which work is structured enough for autonomy and which work still benefits from human judgment.

Full automation is already credible for enrichment, account research, inbound qualification, meeting scheduling, data hygiene, routine support and first drafts. These are repetitive workflows where speed matters and errors are relatively easy to catch.

Human judgment still wins in complex discovery, pricing, objection handling, strategic relationships and brand voice. The reason is not sentimentality about salespeople. It is that these moments require context, judgment and occasionally the ability to say something unexpected.

The hybrid model is therefore not an interim compromise. It is the best operating model for most seed and Series A companies: agents prepare, qualify, route and follow up; people make the consequential calls.

The Mistakes to Avoid

• Over-tooling before product-market fit. A 12-tool stack does not compensate for an unclear ICP, a weak proof point or an untested message.
• Buying “all in one” too soon. Consolidation is valuable after you understand your operating system. Before that, it can lock you into mediocre workflows and hide what is actually broken.
• Automating outbound without review. An agent can scale relevance, but it can also scale a stale message or an awkward tone directly into the inboxes that matter.
• Confusing activity with pipeline. More sequences, content and dashboards do not create demand. Relevance, timing, proof and follow-through do.

A Lean Stack for Seed Stage

Battery ventures published the modern AI native GTM landscape capturing the transitional move from manual labor to agentic AI.

For a seed-stage B2B AI company, I would keep the stack deliberately small:

• Clay + Apollo for enrichment, contact data and targeted outreach.
• HubSpot Starter or Attio as the account and relationship system of record.
• PostHog for the product signals that should shape acquisition, pilots and expansion.
• Claude, Search Console and Ahrefs for research, original-content production and measurement.
• Intercom with Fin or Vitally only when support or customer complexity is sufficient to justify a dedicated layer.

I would not add a fully autonomous AI SDR platform until the company has one repeatable outbound play, clear qualification criteria and a message that founders are proud to send themselves.

The Stack Will Keep Changing

Over the next few years, individual categories will blur. Enrichment will move into CRM, support agents will become onboarding and expansion agents, and product usage will become a more important GTM signal than a form fill.

The durable advantage will not be owning the newest tool. It will be building a system that connects signals, product value and human judgment faster than competitors can.

For founders building GTM infrastructure, AI agents or AI-native companies with an unusual path to market, Remagine Ventures would love to hear from you. We invest early in founders using AI to reimagine how people spend their time, attention and money.

According to the Israel Innovation Authority’s State of High-Tech 2026 report, Israeli high-tech generated approximately $84 billion in exits in 2025, alongside $85 billion in exports and nearly $15 billion in fundraising. High-tech output grew by 8.2%, and the sector accounted for 58% of Israel’s total exports.

Given that backdrop, the natural question entering 2026 was whether Israeli M&A would slow down after such an exceptional year.

So far, the answer is: not really.

The first half of the year has already produced a long list of strategic acquisitions involving Israeli startups. The buyers include some of the world’s most important technology companies: Apple, Nvidia, Cisco, Palo Alto Networks, CrowdStrike, ServiceNow, Motorola Solutions, Medtronic, PayPal, Akamai, SailPoint, 1Password, Western Union, Nuvei and others.

But the more interesting story is not just that global companies are still buying Israeli startups.

It is that Israeli M&A in 2026 is becoming more layered:

1. International acquirers are buying Israeli technology to fill strategic product gaps.
2. Multinationals that already have R&D activity in Israel are doubling down through additional acquisitions.
3. Israeli and Israeli-rooted companies are increasingly acquiring other Israeli startups.

That third category, the “blue-and-white” M&A story, may be one of the clearest signs of ecosystem maturity.

The biggest Israeli startup M&A deals of 2026 so far

The largest reported transactions in 2026 so far span fintech, defense tech, AI, semiconductors, robotics, medtech and cyber.

This is not 2021-style froth. The market is more selective. But that is precisely what makes the 2026 list interesting. Buyers are not simply acquiring growth stories. They are buying strategic capabilities.

What are acquirers buying?

The 2026 list shows clear demand for several categories where Israeli startups have historically been strong — and where global strategic buyers now have urgent needs.

The common thread is that acquirers are not buying “nice-to-have” products.

They are buying capabilities they believe they need in order to compete.

AI is not a sector. It is the acquisition rationale.

One of the clearest patterns in the 2026 M&A data is that “AI” is no longer just a category. It is the logic behind many transactions.

Some deals are obviously AI-related, such as Nvidia acquiring Illumex, ServiceNow buying Traceloop and Pyramid Analytics, and Apple acquiring Q.ai.

But AI also appears indirectly across the list.

In cybersecurity, AI is changing the threat model. The rise of agents, automated workflows and non-human identities is pushing buyers toward companies that can secure machine-to-machine interactions, enterprise browsers, data access, permissions and automated response.

That explains why companies like Cisco, Palo Alto Networks, SailPoint, 1Password, Akamai, Check Point, Cyera, Torq and Silverfort are all active around AI-era security surfaces.

In commerce, AI is changing how products are discovered and purchased. PayPal’s acquisition of Cymbio points toward a world where retail infrastructure needs to work inside AI assistants, search interfaces and emerging agentic commerce platforms.

In infrastructure, AI is changing the hardware stack. The acquisitions of DustPhotonics and Teramount point to the growing importance of photonics, optical connectivity and data movement in AI data centers.

AI is not one line in the table. It is the connective tissue across the table.

Cyber is still Israel’s main M&A engine

Cybersecurity remains the most obvious export category for Israeli technology.

The 2026 acquirer list includes:

The interesting thing is that this is not simply another year of classic cyber consolidation.

The categories are shifting toward:

• non-human identity
• AI-agent security
• browser security
• data governance
• automated response
• API security
• enterprise access control

That is a strong signal for founders and investors. The next cyber wave is being shaped by AI adoption, and Israeli startups are already being acquired in the emerging subcategories.

Defense tech and autonomy are now mainstream

The acquisition of D-Fend Solutions by Motorola Solutions for $1.5 billion is one of the most important deals of the year.

Counter-drone technology has moved from a specialist defense niche to a mainstream requirement for governments, airports, law enforcement, critical infrastructure and military organizations.

Other deals point in the same direction:

The convergence of drones, robotics, autonomy, defense software and AI is becoming one of the defining technology themes of the next decade.

Israel has a natural advantage in this area because of its defense ecosystem, engineering talent and operational urgency. But the category is no longer local or niche. It is global.

Semiconductors and photonics are having a moment

For years, Israeli tech was often described through the lens of software: cyber, SaaS, fintech, gaming, adtech and enterprise software.

The 2026 M&A list shows that the “harder” layers of technology are becoming strategic again.

This matters because AI infrastructure is not only about GPUs.

As AI clusters scale, data movement becomes a bottleneck. The physical movement of data between chips, servers and data centers is now a core part of the AI infrastructure stack.

That creates demand for optical connectivity, photonics, advanced semiconductors and networking infrastructure.

This also connects to one of the themes in the Israel Innovation Authority’s 2026 report: the renewed importance of deep tech, defense tech, space, quantum and AI infrastructure in the next generation of Israeli companies.

In a world where software moats are being compressed by AI, deep technical infrastructure may become more attractive again.

The “blue-and-white” M&A story

One of the most interesting patterns in the 2026 data is not just that global strategic buyers are active in Israel. It is that Israeli and Israeli-rooted companies are also becoming more active acquirers of Israeli startups.

This matters because it points to ecosystem maturity.

In earlier phases of the Startup Nation, the classic exit narrative was simple: build in Israel, sell to a US or European technology giant, become that company’s local R&D center.

That model still exists, and it remains important. But the 2026 data shows a more layered picture.

Israeli category leaders are now using M&A to consolidate talent, product capabilities and strategic wedges.

This is a healthy sign.

A mature ecosystem should not only produce startups that get acquired by foreign multinationals. It should also produce local champions that acquire teams, absorb technical capabilities and build larger platforms from within the ecosystem.

The rise of blue-and-white M&A also creates a local recycling mechanism. Founders, employees, capital and expertise do not simply leave the ecosystem after an exit. They often stay connected to it, either through the acquiring company’s Israeli operations or through the next generation of founders, operators and angel investors.

Are acquisitions still a route to multinational R&D in Israel?

Another question is whether foreign acquirers are using Israeli M&A to enter the market for the first time, or whether they are doubling down on existing Israel R&D operations.

The answer is both.

A public-source review of the 2026 acquirer list suggests that at least 40% of the international strategic acquirers already had a meaningful Israel R&D or technology operation before making their 2026 acquisition.

This group includes companies such as Cisco, Nvidia, Palo Alto Networks, Apple, PayPal, Medtronic, Akamai, ServiceNow, CrowdStrike, Nuvei, Ondas and Motorola Solutions.

That matters.

It means M&A is not only an entry mechanism. For many multinationals, Israel is already a strategic product and engineering base, and acquisitions are a way to keep feeding that base with new technology and talent.

At the same time, the list also includes buyers for whom the 2026 transaction appears to be a first or early Israeli foothold. 1Password’s acquisition of Apono was reported as its first acquisition in Israel and a basis for establishing a development center. Guardant Health’s acquisition of MetaSight was described as creating its first R&D center outside the United States.

That dual pattern is one of the defining features of Israeli M&A:

This is the real story of H1 2026. Israeli M&A is not only about exits. It is about where global technology companies choose to build, and where Israeli category leaders choose to deepen their advantage.

The macro context: strength, but also warning signs

The Israel Innovation Authority’s 2026 report gives important context for the M&A data.

On the positive side, Israeli high-tech returned to growth in 2025. The sector generated approximately $85 billion in exports, $84 billion in exits, and nearly $15 billion in fundraising. High-tech output grew by 8.2%, reached NIS 352 billion, and accounted for 18.3% of Israel’s GDP. The sector also accounted for 58% of Israel’s exports.

This is a remarkable level of resilience given the security, political and economic environment.

But the report also highlights structural concerns.

For the first time in more than a decade, the number of R&D employees in Israeli high-tech declined. The share of private Israeli high-tech company employees based in Israel has also continued to fall, from 69% in 2019 to 62% by March 2026.

That is the tension at the heart of Israeli tech today.

The ecosystem is producing valuable companies and attracting strategic buyers. But more activity, management and R&D are also moving abroad.

M&A can strengthen Israel as a global R&D hub when acquirers keep and grow local teams. But it can also accelerate the movement of decision-making abroad if local operations are not preserved and scaled.

That makes the blue-and-white M&A trend even more important. When Israeli companies acquire locally, the center of gravity is more likely to remain in the ecosystem.

What does this mean for founders?

For founders, the 2026 M&A data offers several practical lessons.

The companies being acquired in 2026 are not just “interesting startups”. Many own a strategic wedge. That is the bar in the current market.

What does this mean for investors?

For investors, the data reinforces several themes.

Cyber is still strong, but the next generation of cyber is shifting toward AI-era surfaces: non-human identity, agent security, browser control, data governance and automated response.

Deep tech is becoming more investable as the AI infrastructure buildout creates demand for semiconductors, photonics, robotics, autonomy and defense technologies.

Fintech is not dead, but the strongest exits are likely to come from infrastructure, compliance, payments, crypto rails, embedded finance and agentic commerce rather than consumer financial apps alone.

And perhaps most importantly: M&A remains a core path to liquidity in Israeli venture. The IPO window may reopen selectively, but the acquisition market is already active. Strategic buyers are still willing to pay for Israeli technology when it solves a strategic problem.

The bottom line

After a record-breaking 2025, 2026 is already showing that Israeli startup M&A remains active, strategic and globally relevant.

But the nature of the market is changing. This is not a broad, easy exit environment. It is a selective market where buyers are looking for specific capabilities: AI infrastructure, cyber for the agentic era, defense and autonomy, photonics, fintech rails, medtech, data and workflow automation.

The acquirer list is also a map of global demand. Apple, Nvidia, Cisco, Palo Alto Networks, CrowdStrike, Motorola Solutions, Medtronic, PayPal and others are showing what they believe matters. At the same time, Israeli companies like Mobileye, Fireblocks, Cyera, Torq, Check Point, eToro and Elbit are showing that Israel is not only a source of acquisition targets. It is also producing acquirers.

That is the more important signal. Israeli M&A in 2026 is not just about exits.

It is about the next structure of the ecosystem: foreign multinationals doubling down, new buyers entering Israel, and local champions consolidating from within.

One of the most repeated pieces of advice in venture capital is: own enough for it to matter. The logic is sound. Venture returns follow a power law, and if a fund does not own enough of its winners, even great investments may not return the fund.

That is why fund construction models exist. They force discipline around check size, ownership, dilution, reserves, and concentration. For emerging managers in particular, the model can feel almost sacred: write the right check, own the right percentage, and follow on in the companies that break out.

But like many useful rules in venture, this one becomes dangerous when applied too rigidly. Sometimes the question is not whether you can own 8 percent or 10 percent. Sometimes the question is whether you can get into the round at all.

What AngelList’s data suggests

AngelList recently published an analysis of more than 15,000 seed investments, and one of the most interesting findings was counterintuitive: smaller checks often performed better than typical-sized checks. That does not mean small checks are inherently better. It probably means something more nuanced.

Big caveat, the latest deals considered were from 2022, so the conclusions are based on ‘pre-AI’ data (pre-chatgpt and genAI craze, that is).

From the data, two key takeaways stand out:

• Small checks were the best performers. Despite being the smallest category, they delivered the highest average returns (outperforming typical checks by 1.17x) and the strongest 75th percentile returns—even though they had slightly more “losers”.
• Large checks showed slight outperformance. On average, large checks beat typical-sized checks by just 1%, making the signal less clear.

Angelist

GPs rarely choose to write small checks into companies they do not like. More often, they are forced into smaller allocations because the round is competitive and demand is high. In that sense, a small allocation can be a signal of quality rather than a sign of low conviction.

This matters because venture is becoming even more concentrated. More capital is flowing into fewer companies, and the most attractive rounds often get crowded very quickly. In a market like that, access itself becomes a source of edge.

Capital concentration changes the game

The current venture market is not evenly distributed. LP dollars are concentrating into fewer managers, VC dollars are concentrating into fewer startups, and later-stage capital is increasingly reserved for companies that already look like category leaders. The result is a sharper divide between the companies everyone wants to fund and the companies struggling to get noticed.

For seed investors, this creates a paradox. The model says you need meaningful ownership to generate fund-level returns, but the best companies may not give you the ownership your model requires. If you insist on perfect ownership every time, you may end up with a cleaner portfolio but miss the most important companies.

This is especially true in smaller ecosystems like Israel, where repeat founders, elite technical teams, and trusted insider networks can close rounds before the wider market even sees them. By the time a company is obviously hot, the allocation may already be gone.

Why a small check can still matter

The obvious objection is that small checks do not move the needle. In many cases, that is true. A tiny position in a good company may produce a nice mark-up, but it may not return the fund.

Still, a small check can create value beyond the initial ownership. It gives the fund a relationship with an exceptional founder, a seat inside the information flow, and potentially the right to participate later if the company breaks out. It can also create network value with co-investors, operators, future founders, and LPs.

In venture, being close to the best founders is itself an asset. The first check may be small, but the relationship can compound across future rounds, future companies, and future opportunities.

The model is a tool, not a religion

This does not mean funds should abandon ownership discipline. A portfolio full of tiny checks can quickly become a collection of logos rather than a strategy. LPs do not pay managers to collect access for its own sake. They care about fund-level performance.

But the model should not become a reason to miss exceptional opportunities. The job of the investor is to know when a small allocation is a compromise and when it is a privilege. There is a big difference between writing a small check because you lack conviction and writing a small check because the company is so competitive that this is the only way in.

A useful approach is to separate the core portfolio from an access sleeve. The core portfolio is where the fund sticks to its ownership targets, does the work, and builds concentrated exposure. The access sleeve is reserved for rare cases where the company is exceptional, allocation is scarce, and the answer to “why are we lucky to be invited?” is obvious.

Small tickets need a high bar

Small checks should not have a lower bar. They should have a higher one. The round should be genuinely competitive, the founders should be exceptional, the company should fit the fund’s thesis, and the co-investors should be people the fund respects.

The check should also be capped so it does not distract from the core strategy. A small access investment should not require the same time commitment as a lead position, and it should not become an excuse to avoid making harder, higher-conviction bets.

The best version of this strategy is not spray and pray. It is disciplined access. It recognises that ownership matters, but also that in a power-law business, the cost of missing the right company can be much higher than the cost of owning less than planned.

Sometimes the small check is the right check

Venture capital loves models because they make an uncertain business feel more controllable. They are useful, but they are not reality. The best companies rarely fit neatly into the spreadsheet.

Sometimes the model says the check is too small. The market is saying the round is oversubscribed, the founders are exceptional, and you are lucky to be invited. In those moments, the right answer may not be to pass because the ownership is imperfect.

Sometimes, getting in is the edge.

The original version of Firgun was published on Linkedin. Subscribe to get the next one in your inbox.

Firgun (pronounced ‘feer-goon’) is an Israeli term describing genuine, unselfish joy in someone else’s success… It’s basically the opposite of “schadenfreude”. Every week since March 2020, we celebrate the wins of our startup community. Read more about why Firgun matters. If this was forwarded to you and you’d like to subscribe, previous editions are on VC Cafe.

This week started with rockets from Iran, continued with a number of mega rounds for Israeli tech and finished with the 2026 FIFA world cup kick-off match. I spent the week in Tel Aviv and I can honestly say, Israel has a unique energy (especially in its tech sector). It’s vibrant, honest, hardworking and ambitious. I’ve enjoyed meeting founders in stealth and spending time with Remagine Ventures portfolio companies.

In the wider tech world, the defining story this week was Anthropic’s release of Claude Fable 5, a public Mythos-class model built for demanding reasoning and long-horizon agentic work, alongside the more restricted Claude Mythos 5 for approved customers. Anthropic faced backlash for initially applying hidden safeguards and rerouting some sensitive requests without making that clear to users, later admitting it had “made the wrong tradeoff.”. According to filings, Google has agreed to pay SpaceX $920M per month for access to Nvidia chips as part of a cloud-services deal that runs through mid-2029Apple used WWDC to put more substance behind Apple Intelligence; Google pushed new Gemini and open-model updates; and OpenAI reportedly continued moving toward an IPO while partnering with Visa to make agentic commerce real. Jeff Bezos’ Prometheus raised a massive $12 billion Series B at a $41 billion valuation to build what it calls an “artificial general engineer” for the physical world. OpenAI acquired Ona, a startup providing secure cloud environments for AI agents, to strengthen its Codex platform for long-running enterprise agents. KKR launched Helix Digital, a new vehicle to finance AI infrastructure with over $10 billion in committed capital, backed by NVIDIA and others. Anthropic signed multiple direct data center lease agreements as it continues to secure its own compute capacity. Other notable moves included PhysicsX raising $300M series C for aI infra to accelerate physical simulations for industrial clients, Genspark raising $100 million in a Series B extension at a $2.6 billion post-money valuation for its agentic workplace platform. The week underscored both the continued appetite for very large AI bets and the accelerating push toward production-grade agent systems and supporting infrastructure.

QUOTE OF THE WEEK

“Success is no accident. It is hard work, perseverance, learning, studying, sacrifice and most of all, love of what you are doing or learning to do.” — Pelé

NEW FUNDING ROUNDS

• Now it’s official: congratulations Yotam Segev and team Cyera on securing a $600M series G at a $12 billion valuation (after securing $400M in January…) for your AI-Native data security platform!
• Well done Tomer Aharoni and team Rylo on announcing your $85M series B to develop AI-powered real-time speech and sign-language translation tools for deaf and hard-of-hearing users!
• Way to go Alon Arvatz and team PointFive on your impressive $60M series B to help companies uncover and reduce wasteful cloud and AI infrastructure spending!
• Mabruk Yossi Torati and team A Security on coming out of stealth with a $37M round for your offensive security and remediation platform to protect against weaponised AI!
• Great stuff Ron Arbel and team Aryon Security on your $25M series A for your Cloud Security Enforcement Platform for pro-active cloud security!
• Congrats Guy Arazi and team Pi Security on coming out of stealth with a $25M series A and previously undisclosed $10M seed to analyse code, cloud infrastructure and workplace communications to identify real threats!
• Kudos Assaf Henkin and team Jedify on your $24M series A to build the context layer for enterprise AI!
• Big thumbs up Ido Bronstein and team Upriver on securing a $10M seed round (and previously undisclosed $4M pre-seed) to develop AI agents that autonomously manage enterprise data!

EXITS

• No new exits were recorded this week

LINKS FOR YOUR BROWSER

VC CAFE/ REMAGINE VENTURES/ ISRAEL VC

• Israel’s Space-Tech Moment: From Beresheet to Space-Based AI – Space is no longer just about rockets. It is becoming infrastructure for AI, defence, climate intelligence, communications, mining, science and the next generation of computing. Israel has a real shot to play a role.
• Agentic AI: Picks and Shovels vs. the Gold Itself – Agentic AI is really two very different bets: infrastructure and vertical applications. A Remagine Ventures take on where the value sits, and why token costs, non-determinism, and security will decide who survives.
• Quantum Computing’s Venture Moment: Is Now the Right Time to Invest? – Why Israel could become one of the important startup hubs in the next computing race

ISRAEL

• 2026 H1 Israeli startup Insights report by Bank Hapoalim ??? ??????? and Dealigence – Startup funding rose 24% to $8.6B+ and total exits reached $10.5B+. in H1 2026 – there’s also been a 2.1% growth in startup employment, driven largely by sales positions and an increasing shift toward offshore hiring (75% of new jobs).
• Why I Won’t Debate Critics of Israel A note to the Making Sense Community – by Sam Harris
• 12 moonshots for Israel -an interesting new book by Judah Taub

GLOBAL

• The 2026 Deep Tech Report – data rich report on the global state of deep tech by Drumbeat Capital
• The 2026 Tech Nation Report – a overview of UK/European tech and AI by Tech Nation
• The future of work and AI – the The Wall Street Journal interviewed economists on the impact of AI on workers, productivity and more.

MEDIA OF THE WEEK

Israel: with shockingly few people in the U.S., Israel is the #2 origin in total for foreign Unicorn founders (source)

Interesting graphic shared by former UK prime minister Rishi Sunak – Tel Aviv ranks #4 globally in terms of AI talent density… (source)

The fraud prevention market map by CB Insights

The web games market map

Who are the Israeli and international VCs investing in Agentic AI Israeli startups in 2026? infographic by Israel VC (source)

Who is funding Israeli Quantum computing startups – another great infographic by Israel VC (learn more about the Israeli quantum ecosystem on VC Cafe )

I miss proper Apple product launches. Siri AI is the latest in this time honoured tradition

That’s all for this week. Have a great weekend and Shabbat Shalom to the Firgun community. There’s a lot to celebrate in our “small” community! Keep on creating!

Eze Vidr