First-order effects

• Israeli startups raising in October faced a much smaller pool of deployed venture capital and fewer completed transactions than in September, increasing pressure on companies already in market for funding.
• VCs active in Israel had to reassess deal timing and diligence amid war-related disruption, while IVC's figures made the funding shock measurable for founders and policymakers.

Second-order effects

• A thinner funding market increases the importance of foreign investors and alternative support: subsequent reporting showed both increased foreign participation and a government effort to enlist private capital through startup-shielding measures.
• Capital is likely to become more selective across Israeli startups, favoring companies able to secure investor conviction despite heightened operating uncertainty.

Third-order effects

• If conflict-driven interruptions recur, Israel's venture ecosystem may become more dependent on cross-border capital and public-private backstops rather than relying solely on a continuous domestic deal cadence.
• The episode illustrates how geopolitical disruption can abruptly alter startup-finance availability even where investor networks publicly signal support; the durability of that effect depends on whether funding and exits recover.