Analysis
$82B and counting: A new generation of Israeli cyber exits
"2025 will be remembered not just for record-breaking exits, but for the polarization and maturation of the sector," writes Dorin Baniel, Head of EMEA Office at NightDragon.
Israeli cybersecurity has entered a new era: in just eight months of 2025, startups have notched 20 exits worth $59 billion, more than the combined total of the previous four years. Two mega-deals, Google’s $32 billion acquisition of Wiz and Palo Alto Networks’ $25 billion purchase of CyberArk, have redefined the scale of what success looks like in Israeli cyber, accounting for nearly all of this year’s exit value and cementing Israel’s status as a global powerhouse.
Mega-deals reset the benchmark
Our new report, State of Israeli Cyber Exits: A New Generation is Born, shows that the cumulative total of cyber exits since 2019 has reached $82 billion. An Israeli cyber exit happened every other week this year so far.
We analyzed how two transactions have completely reset what “winning big” looks like.
- Google’s $32B acquisition of Wiz, the largest cybersecurity M&A ever and the biggest VC-backed exit in history.
- Palo Alto Networks’ $25B acquisition of CyberArk, the second-largest exit in Israel’s history.
Together, they account for 98% of this year’s exit value and 70% of total exit dollars since 2019.
Polarization beneath the surface
However, while mega-exits dominated headlines, the broader market is polarizing, splitting into two extremes. On one end, we have record-breaking billion-dollar exits like Wiz and CyberArk, plus an unprecedented number of $100M+ transactions. Already, more than half of all deals this year have crossed that mark, showing that buyers are willing to pay premium prices for quality, differentiated companies.
On the other end, nearly half of all exits are still happening in the “tens of millions” range, often representing acqui-hires or pressured outcomes for bubble-era companies founded between 2019 and 2021 who may have raised at inflated valuations and are now exiting at compressed multiples.
The middle ground — deals in the $100M–$500M range — is thinning out. This is also apparent in our analysis of time to exit: both larger, $100M+ exits and the “tens of millions of dollars” exits are taking approximately 4.4 years to exit.
We believe this “barbell effect” reflects two forces working in parallel: consolidation at the top among the strongest players that are AI-first, and a flushing out of weaker startups at the bottom. In our view, this is a sign of a maturing ecosystem: capital is concentrating in the companies that can truly scale, while inefficient firms are being cleared out.
AI-first startups gain the edge
We see that post-2022 startups are proving far more capital-efficient, exiting at ~12× invested capital, compared to just ~4× for companies founded in the COVID bubble. In our opinion, this speaks to a healthier, more disciplined ecosystem taking shape.
Unicorns becoming main acquirers
Another theme our report highlights is the rise of unicorns as acquirers. In fact, 40% of all exits this year were on behalf of Israeli unicorns or emerging unicorns. Israel now has 22 cyber unicorns worth $58B, including new entrants Pentera and Dream. These unicorns have shifted from being targets to becoming buyers themselves, rivaling public companies in M&A activity. This marks a fundamental change in the structure of the ecosystem, where unicorns are keeping up via acquisitions of emerging, AI-first startups.
Global context: resilience and reliance
The report analyzes macro drivers – from inflation to public markets – as they shape investor confidence, valuations, and IPO/M&A windows, ultimately determining exit timing, size, and frequency.
From 2020–2025, Israel and the U.S. have moved in near-parallel, with inflation spikes in 2021–22 forcing rate hikes to 4.5% and temporarily narrowing IPO windows. Now, with inflation cooling, stability is returning. Israel stands out with projected 3.2% GDP growth in 2025 and 2.9% unemployment — among the lowest worldwide and despite all odds as Israel is still in the midst of Operation Rising Lion. But equally important, we see that Israel’s cyber ecosystem continues to rely heavily on foreign capital flows, particularly from the United States, its strongest ally. In our view, this international funding is not a weakness but a sign of Israel’s deep integration into global SecureTech.
The road ahead
In our perspective, 2025 will be remembered not just for record-breaking exits, but for the polarization and maturation of the sector. The combination of mega-deals, disciplined capital efficiency, foreign investment, and unicorn-led consolidation points to an ecosystem entering a new global league.
We believe that startups born in the AI revolution will scale faster, need less capital, and set the competitive tone for the decade ahead. This is not just Israel’s strongest year yet — it is the year that redefined what Israeli cyber means on the world stage. This new generation of startups will define the next decade of Israeli cyber leadership.
Dorin Baniel is Head of EMEA Office at NightDragon.
