Israel’s climate tech sector holds steady amid global investment slump, new report shows

Despite a turbulent year marked by global economic uncertainty and a regional war, Israel’s climate tech sector has remained resilient, according to a new report published Sunday by the Israel Innovation Authority and PLANETech.

The 2024–2025 Climate Tech Status Report offers a comprehensive overview of Israel’s climate innovation ecosystem, which today includes 946 active companies—49 of them established in the past year. Although investment levels have dropped significantly, mirroring global trends, the report points to steady activity, strong international backing, and record public sector support as signs of sectoral stability.

Total investment in Israeli climate tech fell from $1 billion in 2023 to $613 million in 2024—a 39% decrease closely aligned with the global decline of 41%. The number of funding rounds also dropped by 33%, from 135 to 90. However, over 90% of those rounds included participation from international investors, underscoring continued global confidence in Israeli innovation.

“Climate tech is not just a response to the climate crisis—it is a frontier of innovation that will shape tomorrow’s economy,” said Dror Bin (pictured), CEO of the Israel Innovation Authority. “Especially against the backdrop of a challenging security and economic environment, the data in the report highlights the resilience of Israel’s ecosystem: even as global investments sharply decline, Israel maintains relative stability, continues to establish dozens of new companies, and enjoys sustained international trust. Over 90% of investments involve foreign partners—a clear message of global confidence in Israeli innovation. We are committed to providing early-stage companies with the tools, funding, and access to expertise they need to establish themselves, grow, and make an impact—both in Israel and around the world.”

Much of that support has come from the government. In 2024, the Israel Innovation Authority allocated a record $105 million to climate tech, part of a $257 million investment over the past three years. Israeli companies also secured €105 million in funding from the Horizon Europe program between 2021 and 2023.

The report highlights three key trends: global positioning and investment dynamics, ecosystem development, and resilience amid geopolitical disruption.

Globally, the climate tech sector attracted $32 billion in investment in 2023, with projections estimating the market could grow to $2 trillion by 2030—roughly 1–2% of global GDP. In Israel, climate tech accounted for 14.5% of all tech investments in 2023. That figure dropped to 6.4% in 2024, though analysts note that the decline reflects broader shifts in investor focus, not necessarily a loss of confidence in climate tech specifically.

The Israeli investor landscape has evolved rapidly. While fewer than 10 local venture capital and family office entities focused on climate tech in 2021, that number now exceeds 50. At least 10 international funds made repeat investments in Israeli climate tech startups in 2024. Corporate venture capital activity also continues to grow, with firms such as Microsoft, the Volkswagen Group, Doral Group, and Ormat Technologies participating in deals.

The report also underscores the growing role of early-stage ventures, with 58% of startups currently in the Pre-Seed or Seed phase. Among the 49 new companies founded since mid-2023, 27% are developing advanced food technologies, while 10% each are targeting smart agriculture and food waste reduction. Nearly 25% of those startups have already raised a total of $15.36 million.

Rotem Trivitsky, Director of PLANETech—the climate tech community of the Israel Innovation Institute and the investment group CBG—emphasized the importance of ecosystem-wide support during uncertain times.

“Despite the complex security situation, Israel’s climate tech ecosystem continues to demonstrate exceptional resilience, and to grow even during times of uncertainty,” Trivitsky said. “In a world where the climate tech sector is grappling with challenges of growth and maturity, this resilience is exactly what is needed to achieve a real breakthrough. Now is the time to rally additional players such as government, industry, investors, and academia to support startups and seize the new opportunities the ecosystem offers.”

Despite the October 7 war’s disruption to workforce and supply chains, the sector showed strategic adaptability and recovery through late 2023 and into 2024. An additional 18% of companies have reached later fundraising stages—Series A and beyond—indicating that many ventures are progressing toward commercial viability.

Since 2018, Israeli climate tech companies have collectively raised $9.5 billion, according to the report. As global attention turns to scalable solutions for climate resilience and sustainability, Israel’s continued innovation and international collaboration suggest that the small nation may remain a key player in one of the world’s fastest-growing tech sectors.

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