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A “stealth mode” startup develops a product or service in secrecy, often to protect its intellectual property, unique business model or funding.
By Shula Rosen
While many startups boast about their products and funding rounds, others prefer to remain discreet.
This quieter approach to building a business appears to be gaining traction in Israel, with a 30% increase in “stealth mode” Israeli startups, according to Dealigence.
A “stealth mode” startup develops a product or service in secrecy, often to protect its intellectual property or unique business model.
Dealigence, which specializes in analyzing startups, completed its survey with the assistance of Google for Startups.
According to the findings, 1,054 entrepreneurs are operating in stealth mode in Israel out of the 5,000 analyzed in the study.
Although startups may have more than one founder, this is an increase of 30% compared to numbers in 2023-2024, indicating that there could be a “baby boom” of early-stage startups, according to Adam Lazovski, founder and CEO of Dealigence.
The increase in companies starting out in “stealth mode” should alleviate concerns about the apparent decline in startup formation, as the trend peaked in 2021.
“The abundance of entrepreneurs quietly building companies signals an upcoming surge in early-stage funding rounds and new company announcements,” the report notes.
Of these stealth mode entrepreneurs, a third held prior senior roles in companies, 60% were employed in technical or developmental roles, and 3.5% worked for tech giants such as Amazon, Microsoft, Intel, and Meta.
In addition, a large percentage of them performed extended IDF service.
Despite its smaller size, Israel has as many stealth entrepreneurs as the UK and 5.5 times more than the US.
The reasons these business owners may choose stealth mode include the financial risks posed by the war and the unstable economy, as well as the threat to intellectual property and the risk of imitation facilitated by the advancement of AI technology.
Additionally, analysts expect underreporting of funding in the startup sector.
After Q1 2025, just 96 funding rounds were publicly reported, totaling $2.13 billion. However, analysts estimate that nearly 200 rounds took place, raising approximately $3 billion.
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