- Venture capital in Israel hasn’t slowed during the war, but where the money is going has changed dramatically.
- A small group of startups are still raising aggressively, while most others are struggling to secure funding.
- The companies winning right now are solving problems investors can’t afford to ignore.
It’s one thing to build a startup in a volatile market.
It’s another to do it in time of war.
Across Israel, teams are now operating with real constraints. Employees are being called into reserve duty. Flights are disrupted. Meetings with investors are harder to schedule. And nearly 71% of the country’s startups say the war is already affecting their ability to raise capital, with delays, postponed decisions, and some deals falling through entirely, according to a 2026 survey by the Israel Innovation Authority. About 42% also report significant development delays, with many already rethinking how and where they operate.
You would expect this kind of environment to slow funding to a halt.
But that’s not the case.
In January 2026 alone, Israeli startups pulled in more than $1 billion, the strongest start to a year since 2022. February followed with another $775 million across 23 rounds, one of the busiest months in years.
I kept asking myself the same question. If most companies are struggling to raise, what exactly is getting funded and why?
