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Israeli Cybersecurity Firms Raise $4 Billion in 2024, Driven by Cloud and AI Security Demand

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Israeli cybersecurity companies raised a record $4 billion in 2024, more than double the amount raised in 2023, fueled by increasing demand for cloud protection and artificial intelligence (AI) security solutions. According to YL Ventures’ latest State of the Cyber Nation Report, cybersecurity has rapidly become one of Israel’s fastest-growing sectors, contributing significantly to the nation’s economy, which depends heavily on high-tech industries. The sector now represents 20% of Israel’s economic activity, 16% of jobs, and more than half of its exports.

Despite geopolitical challenges, YL Ventures projects that Israel’s cybersecurity industry will continue to expand globally, with Israeli cybersecurity startups gaining recognition as dominant players on the world stage. The report highlighted that 2024 saw 89 funding rounds in Israel’s cybersecurity sector, with 50 of those rounds in early-stage (seed) funding, totaling $400 million. Global venture capital firms more than doubled their funding rounds compared to the previous year.

In the growth stage, which includes Series C and higher rounds, 16 rounds raised $2.9 billion—an increase of 300% from the $888 million raised in 2023. Overall, Israeli cybersecurity firms raised $1.89 billion in 2023. YL Ventures’ Andy Ellis believes that 2024’s funding activity signals a positive trend for 2025, with greater access to funding in early (A and B) rounds, larger investments in later (C and beyond) rounds, and a continued increase in seed-stage funding.

Ofer Schreiber, senior partner at YL Ventures, attributes Israel’s cybersecurity success to the country’s military intelligence expertise, which fosters a practical, results-driven entrepreneurial culture. However, the outbreak of war in October 2023, following an attack by Hamas militants, forced many tech founders into military service, creating operational challenges. Schreiber noted that cybersecurity founders had to adapt quickly to ensure business continuity amid uncertain economic conditions and a concerned customer base.

 

AI Startups Drive VC Funding Resurgence, Capturing Record U.S. Investment in 2024

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Artificial intelligence startups have played a pivotal role in the recovery of U.S. venture capital funding, with total capital raised in 2024 increasing by nearly 30% year-on-year, according to PitchBook data released on Tuesday. AI startups alone secured a record 46.4% of the total $209 billion raised last year, compared to less than 10% a decade ago.

The surge in AI investments has been largely fueled by the explosive success of OpenAI’s ChatGPT since late 2022, which has sparked renewed interest and optimism in the sector. This enthusiasm has driven venture capital funding to bounce back from earlier market lows, particularly as companies sought to establish accurate valuations in a post-zero-interest-rate environment.

AI has captured investors’ attention across various sectors, from foundational models to diverse applications. Notable funding rounds include $6.6 billion for OpenAI and $12 billion for Elon Musk’s xAI, reflecting the immense investor optimism surrounding the potential of AI technology. Despite the hype, many of these AI startups, which are still in their early stages and yet to become profitable, face the challenge of meeting high business milestones to sustain investor enthusiasm.

James Cross, managing director at Franklin Venture Partners, highlighted the uncertainty surrounding the future of funding for foundation model firms, which require substantial capital for computing power and talent. While AI companies have enjoyed a rich funding environment, their ability to maintain access to significant capital will depend on achieving major business milestones this year.

In 2024, venture capital funds raised approximately $76 billion, the lowest figure in five years. Major venture firms, including Andreessen Horowitz and General Catalyst, claimed large portions of this capital. Despite these positive signs, exits remain challenging. The total exit value in 2024 was $149.2 billion, which, though higher than the seven-year low of $120 billion in 2023, is still a fraction of 2021’s record exit value of $841.5 billion.

The IPO market has also struggled to rebound as quickly as anticipated, although some year-end listings, such as ServiceTitan (TTAN.O), have rekindled optimism. With the upcoming U.S. presidential administration expected to bring tech-friendly policies, experts foresee a potential resurgence in mergers and acquisitions (M&A) and IPO activity, especially in the second half of 2025.

 

Blockchain Firm Movement Labs Seeks $3 Billion Valuation in $100 Million Funding Round

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Movement Labs, a blockchain development firm, is in the process of raising $100 million in a Series B funding round that could place the company’s valuation at $3 billion, according to a source familiar with the matter. The round is being led by crypto-focused investor CoinFund, with additional participation from Brevan Howard’s digital asset division.

Both CoinFund and Brevan Howard declined to comment on the details of the deal.

This funding round comes as startups in the cryptocurrency space are seeing renewed interest from investors following easing regulatory pressures and a market rebound from the lows experienced after the FTX collapse. The venture capital landscape is also benefiting from a recovery in dealmaking, spurred by interest rate cuts, which provide better opportunities for exits.

Global venture capital activity rose more than 5% to $368.5 billion last year, according to PitchBook.

Movement Labs raised $38 million in its previous funding round last year, and plans to use the new funds to enhance its product offerings, expand its presence in the Asia-Pacific region, and grow its team. The company was founded in 2022 by Vanderbilt University dropouts Cooper Scanlon and Rushi Manche, with a focus on creating a faster, more accessible blockchain. They also released their native token last month.