100 Startups, $4.5 Billion in Funding

The Web3 ecosystem, a new paradigm for the internet that includes blockchain technology and decentralized applications, has seen explosive growth over the past decade. According to Crunchbase, venture capital funding in the Web3 space has reached $100 billion globally over the years, reflecting the huge interest and potential investors in this emerging technology. The staggering investment numbers underscore Web3’s promise to revolutionize industries from finance to gaming, with decentralization at its core.

Israel, a global leader in innovation, has established itself as a powerhouse in the tech ecosystem, with a combined enterprise value of over $450 billion and over 80 unicorns according to dealroom. Traditionally considered a global leader in technology innovation—particularly in cryptography, cybersecurity, and data science—Israel has also become a key player in the Web3 sector.

Building on a strong foundation in these areas, Israeli entrepreneurs are at the forefront of Web3 innovation, leveraging the country’s robust technology ecosystem. The first Israeli companies in the Web3 space began fundraising in 2013, paving the way for a new wave of startups focused on decentralized technologies, and Israel is a global leader in both traditional and emerging technology landscapes.

Mapping the Israeli Web3 Ecosystem

With a total of $4.5 billion in Web3 funding, Israel accounts for about 4.5% of global Web3 VC funding. This is a remarkable achievement, especially considering the country’s small population (9.3 million in 2024). On a per capita basis, Israel’s Web3 funding is disproportionately large, underscoring the country’s significant influence on the global Web3 landscape.

The Israeli Web3 ecosystem, first introduced in this article, is diverse and dynamic, with over 100 startups divided into 12 sectors: Blockchain & Infrastructure, Escrow & Wallet, Cybersecurity, Developer Tools, Gaming, Hardware, NFTs, Payments, Risk Management, Real World Assets (RWA), Social, and Trade & Finance. This categorization reflects the multifaceted nature of Web3 technology and its wide range of applications. Each category plays a significant role in the broader Web3 infrastructure, collectively contributing to a dynamic and connected ecosystem.

Deep Dive into Israel’s Web3 Sectors

The recently unveiled map of the Israeli Web3 ecosystem offers a comprehensive overview of over 100 startups, meticulously divided into twelve distinct sectors. This map not only highlights the diversity and innovation in the Israeli Web3 landscape, but also shows the solid support these startups receive from venture capitalists.

Israeli entrepreneurs have made a particularly strong impact in the cybersecurity and infrastructure sectors, reflecting the country’s deep expertise in these areas. Notably, Israeli startups dominate the Custody & Wallet category, with several household names like Fireblocks, Curv (acquired by PayPal), Fordefi, and GK8 (acquired by Galaxy Digital) leading the pack. The significant number of exits in this category indicates both its attractiveness and the tendency of these startups to focus on strategic acquisitions rather than scaling to become giants.

In the Web3 fintech space, Israeli startups are primarily focused on solving the challenges of large-scale cross-border payments, a key problem in the global economy. Meanwhile, the NFT bubble, once a hotbed of activity, has burst, leaving only a handful of Israeli startups left in the category.

Surprisingly, despite Israel’s reputation as a global technology hub for hardware and firmware, there are only two Web3 hardware startups operating in the country. However, these two companies, Chain Reaction and Ingonyama, have raised more capital than most other categories, showing the high potential and investor confidence in hardware innovation in the Web3 ecosystem.

Pioneering innovation

Israel’s Web3 journey began with pioneering innovations that have since shaped the global landscape. Israeli Bitcoin
Bitcoin Embassy was founded in 2013, long before the term “Web3” became popular. In 2017-2018, some of Israel’s brightest minds turned their attention to blockchain technology, leading to breakthroughs.

For example, Bancor introduced the concept of automated liquidity provisioning via smart contracts in 2017, revolutionizing the way users interact with digital assets. StarkWare, another Israeli innovator, leveraged zero-knowledge proofs (ZKP) for blockchain scalability in 2018, significantly increasing transaction throughput and privacy. Curv, with its advanced cryptographic solutions, pioneered the use of multi-party computation (MPC) for digital asset storage, setting new standards for security and operational efficiency.

Unicorns lead the way

Israel’s Web3 ecosystem is also home to several unicorns—startups valued at over $1 billion. Among them, eToro, Fireblocks, and StarkWare stand out as examples of Israeli success in the Web3 space. eToro, a social trading platform, has seamlessly integrated cryptocurrency trading into its offering, making digital assets accessible to millions of people around the world. Fireblocks has become a cornerstone for cryptocurrency institutions, providing a secure infrastructure for transferring, storing, and issuing digital assets. StarkWare continues to push the boundaries of blockchain scalability and security, cementing its position as an industry leader.

Known Exits and M&A Potential

The Israeli Web3 ecosystem has also seen a number of successful exits, underscoring the potential for M&A in this space. Companies like GK8, Unbound, Curv, Simplex, First, and Portis have attracted significant attention from larger industry players, demonstrating the high value and innovation that Israeli startups bring to the global market. These exits are evidence of the strength and appeal of Israeli Web3 startups in the eyes of international investors and companies.

Rising Stars: Series A and B Funded Startups

In addition to established names, the Web3 ecosystem in Israel is rife with promising startups that have successfully secured Series A and B funding. Companies like Solidus Labs, Chain Reaction, Chaos Labs, Certora, ZenGo, Tres, and Dynamic are at key growth stages, using capital to expand their operations, improve their product offerings, and scale their businesses. The inflow of funds at these stages reflects investor confidence in the potential of these startups to drive future innovation and market expansion.

Seed Growth: 100+ VC-Backed Startups

Perhaps the most dynamic segment of Israel’s Web3 ecosystem is the growing number of seed-stage startups. With over 80 early-stage companies receiving venture capital backing, the potential for future Web3 innovation in Israel is solid and promising. These startups span a variety of categories, including NFTs, developer tools, risk management, and real-world assets (RWAs). VC backing not only provides the necessary capital, but also mentorship and strategic guidance, creating an environment in which these nascent companies can grow and evolve.

The Future of Israel’s Web3 Ecosystem

Looking ahead, the Israeli Web3 ecosystem is poised for continued growth and innovation. With solid foundational expertise in key technologies, a thriving startup culture, and significant venture capital support, Israel is well-positioned to remain a key player in the global Web3 landscape. Based on current market trends and dynamics, at least 20 Israeli Web3 startups are expected to successfully raise Series A and B funding rounds in the next 12 to 24 months. Additionally, a significant number of these companies are expected to issue their own tokens, exploring decentralized finance (DeFi) models and other blockchain-based applications.

In terms of venture capital funding, if the current pace of growth continues, Israeli Web3 startups could see an increase of several hundred million dollars in VC funding in 2025, driven by both domestic and international investors. This influx of capital will not only fuel the growth of existing startups but also encourage the creation of new ventures, further cementing Israel’s reputation as a global innovation hub in a decentralized world.

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Reservation:The author of this article is affiliated with Capital Entrancea prominent Israeli venture capital fund with $1.25 billion under management in 180 portfolio companies, where it is actively involved in the firm’s investment strategy in cryptocurrencies and Web3. Entrée Capital has reviewed over 300 Israeli Web3 deals and invested in seven of them. The author’s involvement in the Israeli Web3 ecosystem includes investments in several of the startups mentioned in this article and on the ecosystem map. This relationship should be considered when evaluating the insights and perspectives presented in this article.