A special report issued by the Rise Institute, led by Eugene Kendel, revealed a bleak picture for the Israeli technology sector in 2024, contradicting the apparent positive numbers, according to what Calcalist reported from the report.
Calcalist newspaper says that although investments in emerging companies amounted to $9.7 billion, an increase from $8.7 billion in 2023, analysis of the numbers reveals a worrying concentration in the cybersecurity sector, a sharp decline in the activity of foreign investors, and a noticeable halt in the growth of the number of workers in the sector. .
Overreliance on cybersecurity
Investments in the Israeli technology sector reached $9.7 billion in 2024, a number that appears positive on the surface, but the reality shows that 42% of this money flowed towards cybersecurity companies, with 10 major investment rounds accounting for a third of the total amount.
Calcalist points out that if this round was excluded from the calculations, the difference between 2023 and 2024 investments would probably be non-existent.
This large concentration indicates dependence on one sector, which threatens the stability of the technology sector as a whole and leaves other fields, such as health and environmental technology, suffering from a lack of funding and development, according to Calcalist.
Decline in foreign investor activity
Foreign investments in Israel witnessed a noticeable decline of 16% during the year 2024, which is clearly evident in the decrease in the number of investment rounds to only 1,087, which is the lowest level in 5 years.
The Rice Institute report indicated that 80% of foreign investors in Israel came from the United States, while the participation of investors from Europe and Asia declined significantly.
A special analysis by the institute shows that 15 out of 20 prominent global investment funds were previously active in Israel, but in 2024, only 8 funds participated in investments inside the country.
Employment stops and growth declines
One of the troubling aspects highlighted by the report is the lack of growth in the number of workers in the Israeli technology sector, and indicated that this stagnation represents a deep problem that reflects a lack of creativity and innovation in creating startup companies, according to what the newspaper reported.
Moreover, Israeli technology remains overly reliant on cybersecurity and enterprise applications, while other sectors fail to keep pace with global developments.
The report indicates that the state of political instability in Israel, which has worsened with judicial reforms and the ongoing war, has contributed to increasing the fears of foreign investors.
Kendel believes that the feeling of security and economic risks is the main factor that deters investors from entering the Israeli market.
Despite talk of future projects such as establishing a “National Center for Artificial Intelligence,” implementation remains the biggest challenge.
The report believes that the absence of clear and thoughtful plans hinders the progress of Israeli technology, threatening its ability to compete globally in vital fields.
The report concluded with a warning message that the positive numbers do not reflect the full truth, and Israeli technology may face more challenges in the coming years.
