Israel has quickly become a global leader in artificial intelligence (AI), with its technology ecosystem now attracting more investment per capita than the United States and Europe. The country’s AI startups have seen unprecedented growth, surpassing 173% over the past decade, while the rest of the tech sector has only grown 12%.
According to a Startup Nation Central report titled “Israel’s World-Class AI Powerhouse: Leading Through Applied Innovation,” although AI companies make up only 30% of the ecosystem, they get 47% of total investments and 40% fundraising, highlighting their central role in innovation. Since 2018, Israel’s share of AI investment has consistently exceeded that of the United States and Europe, sometimes by three to four times. Despite the recent increase in AI investment in the United States due to high-profile deals, Israel maintains a unique competitive advantage in the global AI landscape.
“Israel is at the forefront of global AI innovation, powered by an extraordinary ecosystem of startups, universities and multinational support,” said Avi Hasson, CEO of Startup Nation Central. “Large companies like NVIDIA, Microsoft, Google, Amazon, Meta and Apple have invested significantly in the Israeli AI landscape, highlighting its global impact. Yet to fully harness this momentum, additional government investments are essential to develop academic talent and research, both to advance public-interest technologies and to support this essential engine of growth.
The report also notes that despite a decline in the number of new companies founded in Israel over the past year, AI remains one of the most important investment sectors today. The proportion of funding allocated to AI companies continues to exceed their representation in the Israeli ecosystem. The share of private fundraising and the total amount raised systematically exceed the share of companies active in AI. In 2024, even though AI funding fell to 30% of total investments, AI companies still accounted for more than 40% of fundraising.
Israeli AI startups excel at early fundraising, consistently outperforming non-AI startups at least 10% in capital raising in their first two years. Another indicator of AI companies’ fundraising advantage is the gap between companies that have raised capital and those that have not. More than 50% of non-AI companies failed to secure any funding, while only 32% of AI startups fall into this category.