There is a popular narrative that venture capital has dried up. That software is not investable as moats collapsed.
That is only partially true.
What is really happening is more nuanced: capital has become significantly more concentrated. It is not flowing evenly across the ecosystem, and it is certainly not rewarding “AI wrapper” stories indiscriminately. But for a small number of companies sitting in the critical layers of the AI economy, the checks are still very large.
In the past three months alone, from March to early June 2026, 13 Israeli and Israeli-founded startups raised rounds of $100 million or more. Together, these companies raised approximately $3.41 billion.
The rounds were not concentrated in generic SaaS. They were clustered around AI infrastructure, data security, networking, observability, defense tech, healthcare AI, quantum computing, cloud optimization, machine identity and data center cooling. In other words, the capital is flowing into the picks and shovels of the AI era, the trust layer around enterprise adoption, and the physical infrastructure required to keep the whole system running.
This is not a broad-based boom. It is a flight to category leaders.
The $100M+ Club: March–June 2026
| Company | Amount | Sector | Date |
|---|---|---|---|
| Vast Data | $1B | AI Infrastructure | Mar 9 |
| DriveNets | $410M | AI Networking | Jun 1 |
| Cyera | $300M | Data Security | Jun 2 |
| Decart | $300M | AI / World Models | May 18 |
| Tomorrow.io | $210M | AI / Space / Weather Intelligence | May 18 |
| Coralogix | $200M | Observability | Jun 3 |
| Kela | $200M | Defense Tech | May 5 |
| Aidoc | $150M | Health AI | Apr 29 |
| Wonderful | $150M | Enterprise AI Agents | Mar 12 |
| Quantum Art | $140M | Quantum Computing | Apr 27 |
| ScaleOps | $130M | Cloud / AI Infrastructure Optimization | Mar 30 |
| Oasis Security | $120M | Cybersecurity / Machine Identity | Mar 19 |
| ZutaCore | $100M | Data Center Cooling | Jun 2 |
Total: approximately $3.41B across 13 companies
Average round size: approximately $262M
What the Mega-Rounds Tell Us
The Israeli tech market has split. On one side, late-stage category leaders with strong traction, real customers, strategic relevance and a credible path to becoming large independent companies are able to raise large amounts of capital. On the other side, many early and growth-stage startups are still facing a much harder fundraising environment, especially in crowded software categories where AI is compressing differentiation.
This is the K-shaped venture market in action.
The companies at the top of the K are benefiting from three tailwinds at once:
- The global AI infrastructure buildout
- Enterprise urgency around security, data and automation
- Strategic investor appetite for companies that can become foundational platforms
The companies at the bottom of the K are discovering that “we use AI” is no longer enough. AI has moved from novelty to table stakes. Investors are asking harder questions: What is the durable moat? What is the distribution advantage? Why does this need to be a venture-backed company? What happens when the model providers move into your market?
Israel’s AI Infrastructure Moment
The most striking feature of the list is how much of the capital is tied, directly or indirectly, to AI infrastructure.
Vast Data’s $1 billion round is the most obvious example. The company sits at the intersection of data, storage and AI workloads. As model training and inference become more data-hungry, the infrastructure layer becomes more valuable. The same is true for DriveNets, which is building networking infrastructure for the AI era, and ZutaCore, which tackles one of the least glamorous but most important bottlenecks in AI: cooling the data centers that power it.
ScaleOps is another example of the same pattern. AI has made compute both more strategic and more expensive. Companies are under pressure to do more with limited GPU and cloud capacity. The winners in this category are not just reducing cost; they are helping enterprises make AI economically viable at scale.
This is an important shift for Israeli tech.
Historically, Israel’s biggest technology outcomes have often come from cyber, semiconductors, enterprise software and deep technical domains. AI infrastructure brings those strengths together. It rewards systems thinking, technical depth, military-grade engineering cultures and global go-to-market ambition. Those are areas where Israeli founders have historically punched above their weight.
Cybersecurity Is Becoming AI Security
Cyber remains central, but the category itself is changing.
Cyera’s $300 million round at a reported $12 billion valuation is a clear signal that data security is becoming one of the most important layers in enterprise AI adoption. AI systems are only as safe as the data they can access. As enterprises connect LLMs and agents to internal systems, the old perimeter-based security model becomes less relevant. The key questions become: Where is sensitive data? Who or what can access it? Can we enforce policies across humans, machines and agents?
Oasis Security points to the same trend from another angle. Machine identities already outnumber human identities in many enterprises, and AI agents will accelerate that imbalance. The more software acts autonomously, the more important it becomes to govern non-human identities, permissions and access.
This is why Israeli cyber continues to attract large rounds. The category is not static. It keeps expanding into adjacent layers of the technology stack. Cloud security became data security. Data security is becoming AI security. Identity is becoming machine identity. SOC automation is becoming agentic security operations.
The underlying theme is trust.
Enterprises want to deploy AI, but they cannot do it blindly. The companies that make AI adoption safer, more governable and more compliant are becoming critical infrastructure.
Defence Tech Has Entered the Mainstream
Kela’s reported $200 million round is another sign of a broader change: defence tech has moved from a niche VC category to a mainstream strategic priority.
This is not just an Israeli story. Across the US and Europe, governments are increasing defence budgets, modernising procurement, and looking for software-first solutions in areas like autonomy, command and control, cybersecurity, drones, logistics and battlefield intelligence. Israel, for obvious reasons, has a unique density of founders with relevant operational experience.
The question for Israeli defense tech startups is whether they can translate local urgency into global scale.
That requires more than technical capability. It requires procurement expertise, regulatory fluency, long sales cycles, trusted partnerships, and often a US or European market entry strategy. The opportunity is enormous, but the bar is also high. Defense tech companies need to be both startup-fast and institutionally credible.
AI Is Moving from Demos to Deployment
Wonderful, Aidoc, Decart and Tomorrow.io represent different versions of the same broader shift: AI is moving from impressive demonstrations to production-grade systems.
Wonderful is building enterprise AI agents. Aidoc is applying AI in clinical workflows, where the cost of failure is high and adoption depends on trust, validation and integration. Decart is pushing into real-time AI infrastructure and world models. Tomorrow.io combines weather intelligence, satellites and AI to deliver operational resilience.
These are very different companies, but they have one thing in common: they are not just selling a chatbot interface.
They are applying AI to domains where accuracy, latency, reliability, data, workflow integration and domain expertise matter. That is where venture-scale AI companies are more likely to emerge. The value is not in the model alone. It is in the system around the model.
This distinction matters because the market is becoming flooded with thin AI applications. Many of them can generate early revenue. Far fewer can build durable advantage.
The Israeli companies raising the largest rounds are not necessarily the ones with the flashiest demos. They are the ones addressing painful, expensive, mission-critical problems.
The Return of Deep Tech
Quantum Art’s $140 million round is a reminder that not all of the action is in near-term enterprise software.
Quantum remains a technically difficult and commercially uncertain category, but the strategic importance is obvious. Countries, corporations and investors are racing to secure positions in the next generation of computing. Israel has a strong academic and defense-adjacent talent base, making it a credible player in areas like quantum computing, photonics, sensors and advanced materials.
The same deep tech logic applies to data center cooling and AI infrastructure. The next wave of software will increasingly depend on hardware, energy, cooling, networking and specialized compute. The clean separation between “software” and “infrastructure” is starting to break down.
For investors, this means the venture playbook is also changing. The best opportunities may require more technical diligence, longer timelines, more capital intensity and stronger strategic partnerships. But they may also produce companies with deeper moats than yet another workflow automation tool.
The Market Is Strong, But Not Easy
The $3.41 billion raised by these 13 companies is a positive signal for Israeli tech. It shows that global investors remain willing to back Israeli founders at scale, even in a more selective funding environment.
But it should not be mistaken for a broad recovery.
Many startups are still struggling to raise. Many software categories are under pressure. Many growth-stage investors are reserving capital for only the clearest winners. The IPO window remains selective, M&A is uneven, and the path from Seed to Series A has arguably become harder, not easier.
The mega-rounds tell us where conviction is highest. They do not tell us that capital is widely available.
For founders, the lesson is not to “raise bigger.” It is to build something that earns the right to raise bigger.
That means solving a large and urgent problem. Showing real usage or revenue momentum. Building a credible wedge into a massive market. Demonstrating why AI makes the company stronger rather than more vulnerable. And, perhaps most importantly, proving that the company can become strategically important to customers, not just interesting to investors.
What It Means for Israeli Tech
There are three practical takeaways from this recent wave of mega-rounds.
First, Israel’s core strengths are becoming more relevant, not less. Cyber, infrastructure, data, AI, defense, healthcare and deep tech are all areas where Israeli founders have a credible global edge.
Second, the AI boom is not only about model companies. Some of the most valuable companies will be built around the infrastructure, security, data and workflow layers that make AI usable in the real world.
Third, capital concentration will define the next phase of the market. The strongest companies will continue to raise large rounds. Everyone else will need to be more disciplined, more capital efficient and more precise about their category, positioning and go-to-market.
The market has not closed. It has become more demanding.
What can we expect going forward
The signal from the past few months is clear: Israeli tech is adapting to the AI shift. As software becomes easier to build, the market is rewarding companies with deeper technical moats — AI infrastructure, chips, networking, cooling, robotics, cyber, space, healthcare and defense. That was once a “hard tech” thesis. In 2026, it is quickly becoming consensus.
Recent Israeli exits and mega-rounds in semiconductors, photonics, drones, RF defense, data center cooling and AI networking show that the ecosystem has both the founders and the capital to compete in the layers that matter most. The next wave of Israeli winners may not look like the SaaS companies of the last decade. They may be the companies powering the AI economy, securing it, cooling it, connecting it and defending it.
Capital is still here. It is just choosing its targets much more carefully.
He is a former General Partner at Google Ventures (GV) in Europe, former head of Google for Entrepreneurs in Europe, and founding head of Campus London, Google's first startup hub. Eze writes on Israeli tech, venture capital, artificial intelligence, and founder strategy.
He is also the founder of Techbikers, a nonprofit that brings together the startup ecosystem on cycling challenges in support of Room to Read.
