The Evolution of Digital Health Companies in Israel: From Military Tech Spillover to Market-Driven AI-based Innovation
By: Shira Eting, Partner, Vintage & Dr. Nadav Shimoni, Managing Director, Arkin Digital Health
Often called the “Startup Nation,” Israel has become a global tech leader, punching far above its weight in areas like cybersecurity, enterprise software, gaming, and fintech. But for many years, digital health lagged behind. That is now changing.
Israel’s digital health ecosystem has undergone a remarkable transformation, that could be marked by four waves of innovation. Each wave builds on the last, from military tech spillovers to market-first, GenAI-native startups – and reflects the ecosystem’s growing maturity and commercial success.
A new generation of mission-driven founders has built compelling healthcare companies that are attracting capital from top-tier global VCs. These startups are succeeding not just because of strong tech, but because they are solving real business problems, a meaningful departure from the “tech-first” approach of earlier waves.
As active investors in this space, we’re excited by what we’re seeing and even more optimistic about what’s ahead. Below, we unpack what we see as the four waves of digital health innovation in Israel and spotlight the startups leading the charge.
The First Wave (2016-2017): Military Tech Meets Health Data
The first wave emerged around 2016, rooted in the deep technical expertise developed in Israel’s military. Technologies honed in the Israeli Defense Forces (IDF), especially in computer vision and data analysis, were adapted for healthcare. This was not entirely new; earlier examples include Biosense (using satellite imaging know-how for cardiac mapping, acquired by JNJ and today it’s cardiac ablation division) and Given Imaging (applying missile navigation to create the pill cam, acquired by Medtronic).
A key differentiator was access to comprehensive, structured data from Israel’s Health Maintenance Organizations (HMOs), which maintain decades of longitudinal patient data. This provided fertile ground for machine learning applications in healthcare.
Zebra Medical Vision, Viz.AI, and AIDOC were among the pioneers, applying computer vision to radiology. Their solutions aimed at enhancing diagnostic accuracy and workflow efficiency in hospitals worldwide. Other companies like K Health utilized anonymized patient data from Maccabi, the 2nd largest HMO in Israel(which covers 25% of the Israeli population) to build an AI-driven symptom checker for a-synchronous virtual care.
Zebra was acquired for $200M in 2021, while Viz.AI and AIDOC continue to lead in Radiology AI, building a foundation of talent, IP, and global credibility.
The Second Wave (2018-2019): Business Use Cases meet Intelligence and Cyber
The second wave continued to build upon military-derived technologies but with a sharper focus on identifying and solving specific business use cases. This was a crucial shift: technology was no longer the major focus, and business application became a major consideration as well.
During this phase, companies expanded computer vision applications beyond radiology into digital pathology and began integrating methodologies from other sectors, such as cybersecurity and intelligence into healthcare.
Nucleai and Ibex built on Israeli hospitals’ early adoption of digital pathology, using computer vision to detect cancer with greater precision. At the same time, companies like Navina, Nym, and Sensi applied intelligence-grade methodologies to solve thorny data problems – like unstructured EHRs, clinical coding, and home care monitoring.
This period marked an inflection point. The focus shifted from technology alone to a more integrated view of business models, clinical workflows, and go-to-market execution. In healthcare, unlike other sectors, the best technology alone isn’t enough. It must be paired with the right business model and go-to-market motion.
The Third Wave (2020-2022): Addressing Unmet Business Needs
By 2020, more founders had operational experience in U.S. healthcare, and Israel’s VC ecosystem had developed real healthtech expertise. This led to a reversal of the earlier model: startups started with the business problem and then designed the tech.
In parallel, we saw another shift: companies expanded their target customers beyond hospitals to include payers (health plans and insurance companies), pharma, and medical device companies.
Examples include:
- Eleos Health: Born from rigorous customer discovery, Eleos built ambient AI scribes to improve documentation and efficiency in mental health clinics, targeting the operational rather than the clinical side.
- OneStep: Drawing on the founders’ military experience, OneStep is using smartphone sensors to analyze gait and movement. This solution uncovers insights into fall risk and cognitive decline, conditions that are difficult to diagnose and monitor remotely. Their go-to-market spans providers, pharma, and device firms.
- Laguna Health: Founded by a founding member of Vim Health and a team with Microsoft experience, Laguna became a leader in AI-powered case management, selling directly to payers.
- PhaseV and Rhino Health: Both companies identified pressing needs in pharma in areas related to real-time data utilization. PhaseV focuses on adaptive clinical trials, while Rhino offers federated compute infrastructure to enable real-time, privacy-preserving data utilization across sites.
The Fourth Wave (2023-Present): Generative AI and Creative Applications
Today, we’re in the early days of a fourth wave, defined by the creative use of GenAI. While it holds massive potential for efficiency, few playbooks exist for applying it in healthcare. In this era of uncertainty, attributes like creativity, agility, and execution matter more than ever. These qualities are deeply embedded in Israel’s startup DNA from our perspective.
This latest wave also reflects the growing sophistication of the Israeli ecosystem. Startups are increasingly attuned to the intricacies of healthcare workflows, reimbursement models, and regulatory frameworks, allowing them to build more robust and scalable solutions.
While it is too early to spot leaders, we are seeing existing startups successfully integrating GenAI capabilities. Examples include:
- Eleos: Leveraged agentic workflows early, well before it was trendy.
- Laguna Health: Pivoted toward conversational AI for care managers, building frictionless integration capabilities.
- OneStep: Embedded advanced documentation tools directly into its clinician portal.
We expect to see GenAI-native startups that combine business-first thinking with hard technological advantages based on proprietary data, military spillovers, state-of-the-art algorithms, or novel hardware.
Summing it all up
Israel’s healthcare ecosystem has long had powerful ingredients- vibrant tech ecosystem, military tech and talent spillover, and unique datasets. What it lacked was business depth and GTM execution. That’s changing.
As generative AI reshapes the global healthcare landscape, success will hinge on combining technical creativity with clear business logic. The Israeli ecosystem is now positioned not just to participate, but to lead, in this next frontier.
We’re excited to see where the next wave takes us.
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