Iranian missiles weren’t the only things booming in Tel Aviv in 2025.

Despite war and domestic turmoil, the year that ended Wednesday saw the value of tech merger and acquisition tech deals reach record heights as foreign investors scooped up Israeli innovation and talent, and the Tel Aviv stock exchange soar again and again to new all-time highs, outperforming global peers.

With the security situation seemingly calmed, investors and entrepreneurs in the tech space are much more optimistic for the year ahead than they were 12 months ago, according to a survey presented at a recent tech conference organized by venture capital firm Fusion and the Pearl Cohen Zedek Latzer Baratz law firm.

The poll of 200 VCs, angel investors, and entrepreneurs conducted by Fusion found that only 6 percent of respondents thought political and security uncertainty posed the biggest challenge for investors in Israel, down from 43% in last year’s survey. Asked about Israel’s future, 74.5% of respondents said they were optimistic, compared to 57% the previous year.

Among conference participants, though, the mood was decidedly less sanguine, with the apparent exodus of startup talent and business — stemming from those supposedly dissipating political and security concerns — fueling worries for the future of the tech sector, Israel’s main economic driver.

The dissonance reflected what appears to be an increasing lack of synchronicity between Israel at large and its tech ecosystem, which has seen unprecedented gains even as the nation’s economy has been stunted by wartime call-ups, airport-shuttering missile attacks and geopolitical isolation.

Speaking to some 300 venture capitalists, startup founders and entrepreneurs gathered on the 53rd floor of the Azrieli Sarona Tower in Tel Aviv, investor Adam Fisher warned that the tech sector’s wins were increasingly escaping abroad, cautioning against what he described as a “virus of Israeli founders registering companies as American.”

“More than 80% of Israeli-founded companies are choosing to register in the US [compared with about 20% in 2022],” said Fisher, a partner at US-based investment firm Bessemer Venture Partners.

“This is a real disaster, and this is the main issue for the industry that worries me right now,” he added.

The move by Israeli entrepreneurs to incorporate abroad picked up pace at the beginning of 2023, spurred both by economic advantages in the US and by growing uncertainty over the Israeli government’s efforts to curtail the judiciary, according to data by the Israel Innovation Authority. The outbreak of war with Hamas triggered by the terror group’s onslaught on southern communities in Israel on October 7, 2023, accelerated the trend as the increased geopolitical risk fueled uncertainty among investors.

Outside the country, the war ignited widespread criticism and anger at Israel, with calls for sanctions and downgrading of trade ties as well as arms embargoes.

“There is tremendous interest in Israeli tech, and a growing pace of investments by leading global funds,” said Blackstone senior managing director Yifat Oron, who is heading the US........

© The Times of Israel