Israeli health tech startup investment plunged 40% in 2025, report finds

Investment in Israel's health technology sector saw a dramatic 40% decrease in 2025, falling to $1.6 billion, the lowest point in five years. This sharp decline, detailed in a joint report by the Israel Advanced Technology Industries Association, the Israel Innovation Authority, and PwC Israel, contrasts with a broader trend of growth in the Israeli tech industry.

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When we look at the trends for the tech industry as a whole, we see that three areas, which are cybersecurity, defense tech, and AI, mainly attracted investment, and for more traditional tech industries, including health tech, 2025 was a significantly challenging year in terms of fundraising volumes.

While the health tech sector struggled, overall investment in Israeli tech startups and firms rose by 24% to $15.6 billion in 2025. Cybersecurity, defense tech, and AI were the primary beneficiaries of this increased investment. Omer Gavish, life sciences leader and partner at PwC Israel, explained that health tech faces unique challenges due to the extensive funding required for long development phases and the need for technological validation.

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Overall for health tech it is always more challenging than other tech industries as huge amounts of funds need to be invested, since the development phase of technologies is much longer until validation and investors can see a product.

Gavish noted that geopolitical uncertainty exacerbated these challenges, making it harder to attract investments. The ongoing conflict, stemming from the October 7, 2023, Hamas attack, has led to frequent reserve duty call-ups for many in the tech workforce, further complicating business operations. Despite these hurdles, Gavish pointed out that merger and acquisition deals show continued global interest in more mature Israeli companies.

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Therefore, in times of geopolitical uncertainty, it was even harder to attract investments.

Health tech, encompassing digital health, medical devices, and pharmaceuticals, represents about 20% of Israel's tech ecosystem, with 1,800 companies employing 81,000 people. The establishment of new health tech companies in 2025 reached its lowest number since 2023, with only 67 new companies founded.

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Israel is separate from the global trend right now, when it comes to private equity investments, when it comes to IPOs, or even public companies raising money.