2024 was a pivotal year for Israel’s early-stage investment ecosystem. Despite a challenging geopolitical backdrop, Israeli startups showcased remarkable resilience, with early-stage funding surging by 84%. AI remained at the center of investment decisions, reshaping how pre-seed and seed investors assess opportunities.
To better understand these shifts, we surveyed 25 of Israel’s leading early-stage VCs, gathering insights on investor sentiment, key trends, and expectations for 2025. This report presents our findings, F2’s key investment takeaways, and reflections by Meitar on what the past year means for Israeli founders looking to raise in the year ahead.
Participating Early Stage VCs
Report Highlights:
Israel's Pre-Seed Investment Trends for 2024
2024 was an active year for pre-seed investments, with investors reporting an uptick in deal volume compared to 2023. As AI startups flooded the market, investors became more discerning, and founders increasingly recognized the strategic value of pre-seed rounds—using them to build conviction, validate their ideas, and enter the seed stage with stronger positioning.
- Investors closed an average of 4.4 pre-seed deals per fund, with an average check size of $840,000.
AI's Prevalence in Pre-Seed Deals
87% of investors reported that 75-100% of their pre-seed investments were in AI-driven startups.
Pre-Seed Deal Structure
SAFE agreements accounted for 94% of pre-seed deals.
Pre-Seed Investment Timeline
77% of investors reported closing pre-seed deals within 2-3 weeks to a month.
Israel's Seed Investment Trends for 2024
Investors reported rising expectations for closing a seed round, with founders needing to demonstrate traction, clear market demand, and strong unit economics in an increasingly competitive landscape. While capital remains readily available, the AI hype has made investors more selective—focusing on founders who are building beyond the buzz and proving real, defensible value.
- Investors closed an average of 3.5 seed deals per fund, with an average check size of $3M.
AI's Prevalence in Seed Deals
74% of investors reported that 75-100% of their seed investments were in AI-driven startups.
Seed Deal Structure
80% of investors reported equity-based deals at seed.
Seed Investment Timeline
The majority of seed investments closed within a month, with 2-3 weeks following closely behind.
Investor Perspectives
AI’s Impact on Israel’s Early-Stage Investment Landscape
Early-stage investors in Israel shared how AI has influenced the way they approach due diligence and investments:
"AI has raised the bar significantly - it's no longer enough to just integrate AI. Startups must demonstrate strong, defensible use cases that can stand out in an increasingly crowded market."
"Since AI reduced the technological moats for most companies, we put more focus on GTM abilities and scaling potential."
“AI has made us more cautious about evaluating a company’s offerings. We focus on understanding how they differentiate in an increasingly saturated market.”
Early Stage Investor Insights on Sector Trends in Israel
“We saw significant untapped potential in DevOps. Meanwhile, the market overestimated the immediate value of consumer AI applications.”
“Sectors like Defense Tech and Vertical AI surprised many with their resilience. However, some areas of Cybersecurity reached a plateau.”
“Cybersecurity remains a sector with high-growth potential as AI advancements and rising digital threats drive continued innovation. Meanwhile, consumer-facing generative AI apps with low technical barriers are often overestimated with high valuations outpacing defensibility.”
Perspectives on Shifting Expectations Among Investors and Founders
“Founders are looking to raise larger seed rounds compared to 2023 while investors are expecting startups to be more efficient and do more with less.”
“Investors have become more cautious, demanding stronger evidence of PMF and tangible traction. Founders, in turn, are increasingly focused on capital efficiency and validating their product with real users before raising significant rounds. There’s a greater push to show real-world use cases and a clear go-to-market strategy rather than relying on hype alone.”
“We’re seeing a dual market emerge: in some domains, founders face tough fundraising conditions and are adjusting their expectations and valuations accordingly. Meanwhile, areas like AI infrastructure and Cybersecurity are attracting significant capital from both domestic and international investors, creating an almost bubble-like dynamic. It’s a unique scenario where there’s both a bear and bull market.”
F2's 5 Key Takeaways Going into 2025
1. AI is Now Table Stakes
"The question for founders isn’t whether to adopt AI, it’s how to apply it in ways that create sustainable value and defensible market positions."
Barak Rabinowitz, Managing Partner, F2 Venture Capital
2. Vertical AI Will Continue to Gain Momentum
"Israel’s deep technical talent pool and industry-specific expertise give its startups a unique edge in designing Vertical AI solutions tailored to real-world constraints."
Jonathan Saacks, Managing Partner, F2 Venture Capital
3. Foundation Models are Becoming The Fastest-Depreciating Product in Tech History
"The rise of DeepSeek has reinforced a fundamental reality: the LLM layer is rapidly commoditizing, and no single model is likely to maintain dominance for long. Open-source advancements, API-based accessibility, and the declining cost of model training have turned foundation models into a highly competitive, rapidly evolving landscape where providers are locked in a race on price, scale, and specialization."
Maor Fridman, General Partner, F2 Venture Capital
4. Pre-Seed Funding Will Matter More
"Pre-seed funding is becoming an increasingly strategic tool for founders in 2025. In a selective market, pre-seed rounds offer founders the opportunity to validate ideas, build early traction, and refine go-to-market strategies."
Roi Elad, Associate, F2 Venture Capital
5. Seed Funding Will Continue to Expand in Scale and Reach
"Seed funding in Israel has grown significantly, with the average round size increasing from $1.7 million in 2015 to $7 million in 2024. This upward trend, driven by strong global investor interest and robust VC capital reserves, is set to continue in 2025."
Roi Elad, Associate, F2 Venture Capital
Meitar: Reflections on Israel's High Tech Sector in 2024 and the Road Ahead
"The reputation of Israel’s elite intelligence units, which faced scrutiny following October 7, 2023, saw a significant recovery in 2024. A series of high-profile operations, marked by advanced technological capabilities and precision execution, reaffirmed their effectiveness and strategic importance."
"While some foreign investors took a wait-and-see approach, those with deep knowledge of the Israeli market saw an opportunity. Many doubled down, confident in the sector’s track record of resilience and its long-term growth potential."
Tomer Shani, Managing Director, Meitar NY Inc.
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