125 companies, over $10 billion raised: Mapping Israel’s Physical AI ecosystem

A new analysis by Israeli VC firm 10D identifies 125 Israeli startups in the "Physical AI" ecosystem, combining AI with hardware to interact with the real world. These companies have collectively raised over $10 billion, produced eight unicorns, and generated 24 exits. The landscape shows a significant concentration in defense technologies, with 37 companies focused on autonomous defense systems and spatial intelligence. Mobility is the second-largest cluster with 15 companies. Rotem Eldar, Managing Partner at 10D, noted, "The number of companies is significant, but the distribution tells a more interesting story." The report suggests that as AI models become more accessible, competitive advantage is shifting towards integrating AI with specialized hardware, sensors, and proprietary data, an area where Israel has decades of experience.