Israel Innovation Authority

Together with the Ministry of Defense's Directorate of Defense Research & Development DDR&D (MAFAT), we've launched a NIS 150 million initiative to establish a national R&D infrastructure for integrated photonics in Israel.

Photonic chips are gradually becoming one of the most important building blocks of next-generation technology. Until now, access to the critical R&D capabilities needed to develop them has been limited. This initiative changes that.

The new infrastructure will support the full development cycle of photonic technologies, giving startups, industry, and academia a shared foundation to move faster from research to real-world products.

Israel has long been a leader in deep-tech innovation. This is about making sure we're positioned for what comes next.

Click here for more: https://innovationisrael.org.il/en/press_release/integrated-photonics-rnd/

Israeli startups raised $8.6 billion in the first half of 2026.

A 45% increase compared to the same period last year. That's a striking number for any ecosystem, let alone one navigating ongoing security and economic uncertainty.

The latest report by Poalim Tech and Dealigence highlights the surge of investment volumes as well as the number of funding rounds, which actually dropped by 35%. Investors are writing bigger checks to fewer companies, focusing on more mature businesses with proven teams .

Perhaps the most interesting signal is that AI-native startups are emerging with remarkably lean structures, sometimes built around a single founder. The economics of building a company are changing, and Israeli entrepreneurs are adapting faster than most.

The picture that emerges is of an ecosystem that has recalibrated around attracting more capital with sharper focus and continuing to produce the kind of companies global investors want to back.

Read more on The Jerusalem Post: https://www.jpost.com/business-and-innovation/banking-and-finance/article-898956



**Disclaimer: As an Authority dealing with the innovation ecosystem, we bring this information to your attention. However, this is not the Authority's report therefore all matters pertaining its content should be referred to Poalim Tech.

Israeli startups raise $8.6b. in first half of 2026 despite war, report finds | The Jerusalem Post Funding increased 45% year-over-year even as the number of investment rounds fell sharply, reflecting growing investor selectivity and a focus on larger, more established companies.

Advancing technology and protecting the planet aren't competing priorities. They have to move together.

As we invest in the next generation of innovation, we must invest just as intentionally in the solutions needed to address the climate challenges of tomorrow.

That's the thinking behind the Authority's Climate Tech Fellows Program, launched in collaboration with the מרכז חדשנות כנרת - Kinneret Innovation Center and מעוז MAOZ. A NIS 12 million national initiative bringing together researchers, entrepreneurs, investors, and policymakers to build the next generation of climate leaders and turn breakthrough ideas into real solutions.

Because the same urgency driving the tech industry forward needs to show up in how we tackle what it leaves behind.

Read more via JNS: https://www.jns.org/news/israel-news/israel-launches-climate-tech-fellows-program-to-tackle-climate-crisis

Israel had a record-breaking year in high-tech. $84 billion in exits. A 30% jump in early-stage fundraising. Output per employee at an all-time high.

But at the Eli Hurvitz Conference on Economy and Society, Dror Bin, CEO of the Israel Innovation Authority, made clear that the numbers only tell part of the story.

Presenting the latest State of Israeli High-Tech Report, Dror laid out what's working and what deserves serious attention. R&D headcount in Israel declined for the first time in a decade. Employment growth has stalled and more activity is moving abroad.

The conversation wasn't just about celebrating what Israel has built. It was about what comes next. As AI reshapes industries globally, Israel enters this moment with genuine strengths, such as world-class talent, a proven track record of building category-defining companies, and an innovation ecosystem that has consistently outperformed expectations.

The foundation and opportunity are there. And the decisions being made today around talent, investment, and long-term competitiveness will determine how far Israel can take it.

Read more here: https://ejewishphilanthropy.com/at-idi-conference-israel-debates-its-economic-future-and-who-gets-to-share-in-it/

At IDI conference, Israel debates its economic future — and who gets to share in it Artificial intelligence, its promise and peril, served as the throughline for the Israel Democracy Institute’s economics conference this week, connecting many of the discussions throughout the two-day event in Jerusalem.  Assaf Patir, chief economist at RISE Israel Institute and visiting fellow a...

Every new generation of AI requires more computing power, and more computing power means more heat.

Israeli company Zutacore has announced a $100 million funding round to expand its advanced cooling technology for AI data centers. As next-generation AI systems drive unprecedented computing requirements, efficient thermal management is becoming one of the industry's most critical challenges.

Founded and developed in Israel's south, ZutaCore is helping address this challenge through innovative liquid-cooling technology designed to improve energy efficiency and support the growing demands of AI and high-performance computing infrastructure.

The company was supported by the Authority through grant funding programs aimed at helping technology companies develop and commercialize innovations. We congratulate ZutaCore on this milestone and look forward to its continued impact on the future of AI infrastructure.

More on Zutacore here: https://zutacore.com/

Read more here: https://www.calcalistech.com/ctechnews/article/ryzxms2ezx?utm_source=calcalistech.com&utm_medium=Share&utm_campaign=whatsapputm_term=ryzxms2ezx&utm_content=Article%20Top

Israeli AI cooling startup ZutaCore raises $100 million Series C at estimated $600 million valuation | CTech Samsung, Mitsubishi Electric and Carrier back data center infrastructure company from Sderot.

While much of the climate conversation is focused on emissions in the air, Groundwork BioAg is focused on the health of the soil.

The company is developing biological solutions centered around mycorrhizal fungi, underground fungal networks that play a critical role in nutrient uptake, soil resilience, and carbon sequestration. By restoring these systems to agricultural soils, Groundwork BioAg aims to help farmers improve yields, reduce fertilizer dependency, and increase long-term carbon storage in the ground.

Advancing technologies at the intersection of agriculture, climate, and biology will play an important role in shaping more resilient food systems for the decades ahead, and the Authority is proud to support companies contributing to that effort.

More on Groundwork BioAg: https://groundworkbioag.com/

Industrial decarbonization has a heat problem.

Most renewable energy storage focuses on electricity, but heavy industry needs continuous high-temperature heat. Batteries can't deliver sustained process heat at 500-1000°C for steel production, chemical manufacturing, or sustainable fuel creation.

Brenmiller Energy stores thermal energy directly. The company captures heat from renewable sources and industrial waste, stores it at high temperatures, and releases it when needed. This eliminates conversion losses and provides the sustained heat that heavy industry requires.

Bren Energy's system can deliver industrial-grade heat at scale across these applications. Long-duration thermal storage is infrastructure for industrial decarbonization. Here at the Authority, we are proud to support companies that make renewable-powered heavy industry viable without sacrificing reliability.

Learn more about Bren Energy: https://bren-energy.com/

Increase in GDP, Fundraising, Exits, and Exports characterizes the Israeli high-tech in the past year

Our newly released 2026 High-Tech Status Report paints a striking picture of resilience and growth. $85 billion in exports. $84 billion in exits. Nearly $15 billion raised. Output per employee reached NIS 827,000, the highest productivity figure in the entire Israeli economy. Israel ranked as the world's fourth-largest startup investment hub, behind only San Francisco, New York, and Boston. Thirty-five new multinational companies chose to plant roots in Israel in 2025 alone, bringing the total to more than 500 since 2000. All this in a year still marked by a war on multiple fronts.

The report also captures a deeper transformation underway. Hardware manufacturing surged, adding NIS 16 billion to output in a single year after years of minimal growth. Defense Tech, quantum technologies, space, and AI infrastructure are increasingly defining where the next generation of Israeli companies is being built. Thirty-five percent of all investments flowed into Core AI companies.

But the report doesn't shy away from harder questions. For the first time in over a decade, the number of R&D employees based in Israel declined. The share of Israeli high-tech employees working inside the country has dropped from 69% in 2019 to 62% today. Management and decision-making are gradually shifting abroad.

As Dror Bin, CEO of the Israel Innovation Authority, put it: "Israeli high-tech is at a crossroads. The challenge now is not only to continue generating innovation, but to ensure that this innovation continues creating value, jobs, and growth here in Israel."

The full online and PDF report is available here: https://innovationisrael.org.il/en/press_release/israeli-high-tech-report-2026/

Israel’s high-tech ecosystem thrives when innovation is backed by smart, forward-looking policy.

In a feature published by Haaretz.com, Yael Mazuz Harpaz, VP and Head of Policy Division at the Innovation Authority, outlines how Israel’s new tax reform is designed to strengthen the country’s global competitiveness and support long-term growth across the innovation ecosystem.

Developed in collaboration with the Innovation Authority, the רשות המסים בישראל (Israel Tax Authority), and the משרד האוצר (Israeli Ministry of Finance), the reform introduces a broad set of incentives aimed at:

• Expanding R&D activity in Israel
• Providing up to 30% R&D tax credits for eligible companies
• Increasing certainty around multinational acquisitions and IP retention
• Supporting returning Israeli talent through updated stock-option taxation policies
• Creating a clearer and more transparent framework for venture capital investment

“These new tax policies are designed to make a real difference at all levels of the ecosystem,” says Mazuz Harpaz. “We are working closely with the industry to ensure that we are aware of their needs and are committed to solving their problems and preserving their competitiveness.”

Read more:

New Tax Incentives Drive Growth ***