Israeli Startups Deepen Commercial Links With Gulf States, Study Finds

Jerusalem, 21 January, 2026 (TPS-IL) -- Five years after the signing of the Abraham Accords, Israeli technology companies are building durable commercial relationships across the Gulf states, with the United Arab Emirates emerging as the primary gateway for regional engagement, according to a comprehensive analysis of Israel’s technology ecosystem released on Wednesday.

The annual report published by Startup Nation Central (SNC) found that while capital volumes have fluctuated sharply since normalization began in 2020, deal activity between Israel and Middle East and North Africa (MENA) partners has remained remarkably consistent. The data points to what the report describes as “measured integration” rather than explosive growth, with approximately 20 percent of regional investors accounting for more than half of all recorded funding rounds. SNC is a Tel Aviv-based non-profit that promotes Israeli startups and innovation.

“The connection between active trade and technology investment indicates that cooperation is developing within a wider economic framework, supporting trust-building and the deepening of long-term partnerships,” the report said, noting that engagement extends across multiple layers, including investment, trade, and systematic market exploration.

The UAE’s role has been pivotal. According to the analysis, UAE-linked investors “participate steadily across funding years and stages, positioning the country as the central gateway for Israeli tech engagement with the region.” Other markets, including Morocco and Bahrain, appear more selectively and at smaller transaction scales, highlighting what the report calls “the asymmetric structure of current regional engagement.”

Asher Fredman, Director of the Misgav Institute for National Security and a Visiting Fellow at The Heritage Institute confirmed this pattern has persisted despite two years of war. “In the wake of Hamas’ October 7 massacre, trade continued, in some cases, to grow in 2024 and 2025, whereas in other cases it returned to 2023 levels,” Fredman told The Press Service of Israel. “Sectors which have seen sustained growth include water, agri-food, cybersecurity, fintech, and defense.”

The sectoral focus reflects regional priorities. Agriculture and food technologies lead activity, representing over 21 percent of all funding rounds involving MENA investors. The report notes this “aligns closely with regional priorities across MENA, such as food security, climate resilience, and water efficiency, where Israeli technologies offer applied, near-term solutions.” Cybersecurity, aerospace, defense, and industrial technologies follow, reflecting what the analysis describes as “diversified interest across strategic domains.”

Investment patterns suggest a deliberate, relationship-focused approach. MENA-linked investments concentrate in early funding stages and smaller rounds, “signaling a cautious, exploratory approach focused on learning and optionality rather than rapid scale,” according to the report. This stands in contrast to Israel’s broader 2025 technology landscape, which saw record merger and acquisition activity totaling $82.3 billion, driven by massive deals including Google’s $32 billion acquisition of cybersecurity firm Wiz and Palo Alto Networks’ $25 billion purchase of CyberArk.

Fredman stressed that successful Gulf-Israel business relationships combine strategic priorities with genuine competitive advantages.

“While in Israel most deals have involved private companies and investors, in the GCC they have often included sovereign wealth funds or other entities with ties to the government,” he noted. The most successful ventures, he added, are “those in which Israeli entities have shown a willingness to locate certain operations in the GCC country.”

The geopolitical environment has shaped the nature of engagement. “Many of the public-facing and people-to-people elements of the Abraham Accords have become more limited in scope or have been put on hold since October 7,” Fredman acknowledged. “Nevertheless, business deals and investments have continued, often behind the scenes.”

Looking forward, the assessments point to sustained growth in specific sectors. Water and agri-food technologies remain central, combining Gulf strategic priorities with Israeli technological strengths. Defense-adjacent technologies are positioned for significant expansion as Israel’s defense tech sector grows and regional defense spending increases.

Artificial intelligence represents a particularly promising frontier. “As both Israel and the UAE become global powerhouses in the field of AI, the opportunities for cooperation between the two countries in AI, and for three-way cooperation with the United States, India, and other partners, will continue to grow,” Fredman predicted.

The report concluded that regional partnerships through the Abraham Accords are likely to “deepen, with focus expanding into collaborative intellectual property development and regional infrastructure projects.”

For Israeli technology companies navigating a challenging domestic environment, the Gulf presents not just a market, but what the report characterizes as a foundation for “deeper economic and technological collaboration over time.”