Israeli startups and high-tech companies have raised $1.6 billion in 131 deals in the third quarter of 2018, bringing the total capital raised so far this year to over $4.5 billion, according to a new report released Monday by the IVC Research Center and the law firm ZAG S&W Zysman, Aharoni, Gayer & Co.
While the amount invested in Q3 was high, there were fewer deals compared with the previous quarters, according to the report, marking a noted trend quarter after quarter in recent years. A related trend has been the increase in capital raised per round for more mature companies with a decrease in the number of deals and amount raised for seed and A rounds.
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“Mature-stage companies raised almost six times more capital compared with early-stage companies,” IVC found. In terms of number of deals, investors favored seed and R&D stages until 2016 while in 2017 and 2018, “the trend shifted, as investors turned to more mature companies (initial growth + revenue growth stages),” the report read.
“Investors’ preference for mature companies has negatively affected the levels of seed financing, which continues to shrink similar to US patterns,” said Marianna Shapira, research director at the IVC Research Center. “Nevertheless, we expect capital raising in 2018 to achieve the levels of 2017.”
According to the report, deals above $20 million this quarter reached a record level of $1.1 billion, and while the number of deals under $5 million decreased, those larger than $10 million continued to rise.
Software companies nabbed a majority of the funds this quarter, raising $760 million in 12 deals, each larger than $20 million. Artificial Intelligence (AI) companies were the main attraction, according to IVC.
Only one mega-deal was recorded in this quarter, with Israeli inventory management startup Trax Image Recognition raising $125 million.