In 2025, the Israeli tech ecosystem raised $15.6 billion, while exit deals reached $74 billion. Among them, the acquisition of Wiz by Google for 32 billion dollars constitutes a landmark. Cybersecurity alone accounts for $4.4 billion invested in 130 towers. Israel is thus part of the restricted group of global centers capable of absorbing and redistributing significant volumes of capital, alongside San Francisco, New York, London and Boston.
This dynamism contrasts with the virtual absence of European funds in the funding rounds.
Dor Lee-Lo Managing Partner of IBI Tech Fund has analyzed nearly 280 cap tables of Israeli startups over the recent period and found that only around 7% of these companies count an independent European VC among their investors. Even more significant, 86% of large seed rounds (31 out of 36) do not include any European participation. From one operation to another, the configurations are repeated, dominated by American and Israeli investors.
A trajectory historically oriented towards the United States
To understand this asymmetry, we must return to the way in which American funds built their presence in Israel. For several decades, the typical path of an Israeli startup was based on the sequence: initial financing by local players, followed by a relocation (often the CEO and commercial functions) to the United States, generally as a Series A round approached.
It is in this context that funds like Sequoia Capital, Greylock Partners, Bessemer Venture Partners and Accel have gradually established close relationships with Israeli founders. These meetings did not take place in Tel Aviv, but in Silicon Valley or in New York, at a time when the companies had already validated initial traction.
Over time, these repeated interactions have produced a double effect, on the one hand, a familiarity with the profiles of founders, often from military technological units (ex 8200 – ISNU, the equivalent of the American NSA), with a strong capacity for execution. On the other hand, the creation of privileged access networks, powered by the entrepreneurs themselves, who recommend investors to following generations.
Once this knowledge had been accumulated, American funds gradually moved their entry point upstream, intervening directly at the seed stage.
Europe, outside the learning loop
European funds have, on the whole, not followed this trajectory. On the one hand because Israeli startups have rarely established themselves in Europe for their commercial development, a fact limiting the opportunities for interaction with local investors. As a result, the latter have little developed networks, references or capacity to evaluate these profiles in conditions comparable to their American counterparts.
The gap is explained by an accumulation of absences: without exposure to series A or B, it becomes difficult to position yourself upstream, without a network of founders, access to deal flow remains fragmented, and without investment history, conviction is slow to build.
This mechanism is further reinforced by the dynamic of “repeat founders”, because a significant proportion of Israeli entrepreneurs who have raised significant rounds have already experienced a first exit, often to American groups such as Palo Alto Networks, Fortinet or Akamai Technologies. These exits strengthen their ties, consolidating a relatively closed relational circle.
Economic and organizational barriers
In addition to these historical factors, there are more operational constraints. The valuation levels observed in Israeli seed rounds, between 100 and several hundred million dollars post-money, contrast with European standards, where seed tickets often remain between 3 and 5 million euros. This divergence mechanically limits the capacity of European funds to intervene as main investors.
Furthermore, Israeli deal flow has been circulating for more than ten years within structured networks (former members of certain military units, restricted circles of seed funds) which favor their existing networks.
Some European players have nevertheless circumvented these obstacles by investing in local infrastructure. Funds like Cardumen Capital or Angular Ventures have structured a presence in Tel Aviv, with teams anchored in the ecosystem.
An absence that raises questions regarding performance
This underrepresentation comes at a time when the question of venture capital performance is an increasingly controversial subject. Long-term data indicate an annual aggregate return of 8.6% for European venture, compared to 14.6% for American funds, although these figures cover heterogeneous periods and cohorts. More recent data tends to show a rapprochement, or even a one-off advantage for Europe over certain analysis windows.
In this context, access to the most dynamic ecosystems, of which Israel is a part, becomes a strategic issue for funds seeking to maintain or improve their performance.
A complementarity that is still little exploited
The European absence does not mean an absence of interest or relevance. Many Israeli startups operate in highly regulated B2B markets, where Europe is a natural outlet. Compliance with frameworks such as GDPR, NIS2 or DORA, as well as access to major European accounts, requires local knowledge that American investors do not always possess.
In certain cases, this complementarity already translates into one-off collaborations. European funds such as Index Ventures have participated in seed rounds, providing support for expansion strategies in Europe. However, these interventions still remain sporadic and do not constitute, at this stage, a structured flow.
Rethinking the role of European capital
The question that emerges is not so much that of presence or absence, but that of positioning. In an environment where towers are largely dominated by American players, entry into the Israeli market does not necessarily involve head-on competition and could be based on co-investment strategies, syndication, or on a differentiating value proposition, centered on access to the European market, industrial partners or regulatory environments.
Beyond the Israeli case, this situation highlights a broader question, that of the capacity of European venture to be part of global dynamics, not only through capital, but through the networks and trajectories that it helps to build.
