‘Ma nishtana?’: What has changed in Israel’s hi-tech sector this Passover?

That’s why the tech industry is increasingly focused on tools and platforms that unify organizational data, making it usable for business AI. One example is the rise of unified data infrastructures – frameworks that consolidate data across systems and contexts. At SAP Labs, this led to the development of our Business Data Cloud (BDC), which helps AI access accurate, up-to-date, and well-structured information.

Israeli start-ups adapted to isolation by expanding global footprint

In a year shaped by conflict and uncertainty, Israeli start-ups demonstrated remarkable agility and resilience. With far fewer international delegations and tech leaders visiting the country, start-ups had to adapt to the loss of what had been a key engine for partnership and growth. Instead of waiting for global players to come to them, tech founders went out into the world.

They met investors and customers abroad, often operating across multiple time zones. One CEO I work with was in a different country almost every time we spoke. A strong global presence became essential, and Israeli entrepreneurs quickly adjusted.

Once again, the Israeli tech spirit – driven by creativity, adaptability, and persistence - rose to the occasion. While “normal” never fully returned, a new mode of operation took shape, and Israeli start-ups found ways to grow, expand, and scale – even under the toughest conditions.

Cyber resilience takes center stage in next wave of security innovation

According to a Rubrik Zero Labs State of Data Security report, 74% of cyberattacks on surveyed organizations’ data backups were at least partially successful. This illustrates a shift in the cybersecurity threat landscape, in which prevention alone is no longer enough: Organizations must assume that a breach is inevitable and prepare for that day, adopting a cyber resilience approach.

This shift is influencing the entire cybersecurity ecosystem and brings to light a new focus: help companies bounce back from cyberattacks with minimal downtime and disruption to business continuity.

Security companies are evolving their offerings, expanding beyond perimeter defense into full-stack protection and rapid recovery. We’re seeing accelerated investment in cloud-based architectures that support scalable detection, isolation, and data recovery.

Another major trend is the rise of data security posture management) (DSPM), which helps organizations with the visibility and control needed to proactively reduce the risk of data exposure and exfiltration, thereby minimizing the damage of inevitable cyberattacks.

AI handles code, humans handle vision

One of the most significant transformations we’ve witnessed is the emergence of AI agents in software development. This shift impacts the entire development life cycle – from product managers to architects, developers, and QA teams.

Today’s AI tools are evolving at a breathtaking pace, providing capabilities that were unimaginable just months ago. The most striking aspect isn’t just the acceleration of innovation but how these tools are fundamentally redefining productivity benchmarks. Teams that fail to adopt AI agents will find themselves at a severe competitive disadvantage, potentially delivering just 10%-20% of what AI-augmented teams can accomplish with identical headcount.

The implications are profound but nuanced. Routine coding tasks that once consumed days of developer time are now handled automatically by AI agents. This liberation allows teams to focus on the truly human aspects of development – creative problem-solving, complex architectural decisions, and delicate system integrations where judgment and experience remain irreplaceable.

However, this isn’t simply about automation. The real transformation lies in how these tools extend human capability rather than replace it. They amplify the impact of skilled professionals by eliminating cognitive friction and mundane tasks. In Israel’s tech ecosystem specifically, we’re seeing start-ups leverage these tools to achieve development velocities that would have required triple the headcount previously.

Therefore, it’s crystal clear that the relevant question is no longer whether AI will transform development roles but how quickly professionals can adapt their workflows to this new paradigm. Those who master the symbiosis between human creativity and AI capability will define the next generation of breakthrough innovations.

Israeli tech proves it is worth the investment amid uncertainty

The Israeli tech ecosystem showed remarkable resilience in 2024, navigating global economic challenges and regional instability. After an initial slowdown in funding following October 7, investment in Israeli technology companies surged to $10 billion in 2024, cementing Israel’s position as the world’s third-largest tech fundraising hub. Foreign venture capital played a key role in driving this growth, accounting for more than half of all initial investments in Israeli start-ups this past year.

Several leading international VC funds have expanded their presence in the country, while M&A (mergers and acquisitions) activity continues to rise - most notably with Google’s record-breaking $32 billion acquisition of Wiz. This momentum has continued into 2025, fueling the rapid expansion of cyber and defense tech ventures.

The healthcare and life sciences sectors also experienced growth in 2024, with VC firms significantly increasing their investments over 2023 levels. This surge was driven by heightened funding for biotech, medical devices, and digital health start-ups.

Despite the ongoing geopolitical challenges, Israeli research institutions, universities, and medical centers continue to operate at full capacity, achieving groundbreaking scientific advancements. At Arieli Group, we believe in the entrepreneurial spirit of Israeli researchers and scientists, which is why we launched the SHAAR Hub together with Shaare Zedek Medical Center (SZMC) and announced our partnership with BIRAD, Bar-Ilan University’s commercialization arm.

Looking ahead, I am optimistic about the increased availability of funding and the fresh inflows of capital, ensuring that Israeli hi-tech continues to lead the way in innovation.

Defense tech enters start-up era

The defense tech sector is undergoing a revolution. What was once considered a conservative, heavy, and highly regulated field is now attracting private capital and attention at an unprecedented pace. The recent conflicts – notably, in Ukraine, the Middle East, and the Indo-Pacific – have heightened the need for fast, effective, and dual-use technologies, both military and civilian. Start-ups are no longer just developing features for existing systems; they now offer complete solutions with independent operational value. Whereas in the past military technologies would later be adapted for civilian use, today the trend is reversed: Civilian technologies are being integrated into defense systems. With Europe’s renewed rearmament and the entry of major investment funds into the field, a new market is emerging, one that seeks innovation, agility, and boldness - exactly the areas in which Israeli hi-tech excels.

Privacy considerations reshape product architecture, industry standards

Forget buried terms and conditions. Privacy is no longer a legal checkbox; it is becoming integral to the architecture of modern technology. With regulations like the EU AI Act and Israel’s evolving privacy landscape, the question has shifted from “Are we compliant?” to “How do we design for data control?”

AI is accelerating this shift. When products rely on personal data, privacy becomes a core engineering challenge. Questions like where data is stored, who has access to it, and whether AI decisions can be explained are no longer abstract. They shape how products are built, how investors assess risk, and how global customers measure trust.

For Israeli tech start-ups to remain competitive, privacy must be embedded into infrastructure, workflows, and company culture. That means collaboration across teams, clear accountability, and systems designed for visibility and adaptability. It is not a policy layer – it is part of the product.

Engineering for data control is not about slowing down. It is about building with intention. As AI becomes deeply integrated into the tools we use and build, companies that prioritize transparency and responsible data practices will not just earn compliance. They will earn a lasting advantage in trust, adoption, and long-term growth.■