President Donald Trump said he and Israeli Prime Minister Benjamin Nethanyahu have reached a deal to end the war in Gaza. Will Hamas agree?
Two years after the Oct. 7 attack, Israel's innovation economy remains resilient. That is remarkable considering the profound disruption, tens of thousands of skilled professionals called into reserve duty and increased investor caution. But survival is not the same as renewal. The deeper challenge is that an economy powered by a single engine, no matter how strong, cannot carry an entire nation indefinitely.
Israeli tech pushed forward under fire. In the first half of 2025, the sector raised $9.5 billion across 367 funding rounds, up 58% over the previous half-year. Mega-rounds accounted for $4.7 billion across 13 deals, while mergers and acquisitions surged to $38.9 billion across 60 transactions, the strongest half-year ever recorded. Google's $32-billion purchase of Wiz marked the largest exit in Israel's history. This sent a message: the world continues to view Israel as a hub of talent and ingenuity even in times of crisis. Behind the figures were entrepreneurs pitching investors while on reserve duty, investors making commitments from bomb shelters and teams scattered across continents keeping companies alive through late-night calls and improvised solutions. The statistics are impressive, but the determination behind them is what truly defines this moment for Israeli tech. But it will not be enough.
Israel's high-tech sector expanded its contribution to GDP by 11.8% year over year, while the broader economy grew only 1.5%. That gap is a warning signal. When national growth is concentrated on one sector, the entire economy becomes vulnerable to external shocks. A sudden downturn in the global market or a pause in foreign investment would impact jobs, public services, and household stability. Israel cannot afford to let resilience mask fragility.
Wars often accelerate innovation, and after Oct. 7, Israel's national defense became a real-time testing ground for AI-driven systems, unmanned platforms and cybersecurity. These technologies are now flowing into civilian life, protecting hospitals, energy grids, and mobility networks. Yet wartime ingenuity is not a substitute for long-term policy. Government has celebrated successes without building the frameworks to sustain it. In contrast, Saudi Arabia and the United Arab Emirates are investing billions into artificial intelligence infrastructure and building partnerships with U.S. technology giants. While Israel's national AI plan is budgeted at less than $300 million, Saudi Arabia now ranks first globally in AI policy, while Israel ranks 32nd. For a country that built its reputation on technological daring, this is not a strategy, it is falling behind.
Innovation also has the potential to support regional cooperation. The Abraham Accords have already showed how shared technological and economic interests can break through political barriers, and today the opportunity is even greater. Israel's ecosystem can serve as a platform for collaboration with neighbors who face the same challenges of food security, energy transition and public health. But this potential will not materialize in an environment of isolationism and protectionism. Retreating behind our national borders, whether economic or political, risks undermining this potential. The day after, Israel must view innovation as a regional strategy for building prosperity and stability.
The challenge is deeper than defense or economics; if innovation stays locked in boardrooms and exits, society will fracture. Health tech illustrates the danger clearly. Despite being the largest sector by company count, it attracted just $630 million in the first half of 2025, its weakest showing in five years. A sector with potential to revolutionize healthcare remains chronically underfunded. Education and mobility face the same neglect. AI could help address teacher shortages and transform classrooms into more effective learning environments, and smart mobility could connect periphery communities, reduce inequality and expand access to opportunity. Yet these sectors are often treated as afterthoughts, even though they determine whether families in Be'er Sheva, Tiberias or Kiryat Shmona feel the benefits of innovation in their daily lives. These projects are the infrastructure of national cohesion and require investment with the same urgency once reserved for defense.
The past two years have proven that Israeli innovation can absorb shock, adapt under pressure and deliver results. Few nations could have raised record-breaking capital, executed billion-dollar exits, and launched new companies while fighting a war on multiple fronts. But the next phase will not be decided by venture capital rounds or by record exits. It will be defined by our ability to embed innovation across every sector of society, to invest in industries that strengthen the nation, and to compete seriously and strategically in the global race for technological leadership.
The test now is whether Israel can turn survival into renewal. Survival kept us afloat. Renewal will decide if we lead.
Avi Hasson is the CEO of Startup Nation Central, a Tel Aviv-based nonprofit organization that promotes Israeli innovation around the world. Hasson previously served as Israel's chief scientist and the founding chairman of the Israel Innovation Authority and as an investor in Israeli technology companies.