Israeli high-tech companies raised $3.9 billion in 254 deals in the first half of 2019, according to a new report released Wednesday by Israel-based IVC Research Center and US-Israeli law firm ZAG S&W Zysman, Aharoni, Gayer & Co.
The amount of capital raised in the first six months of the year of the year marked an all-time record and was up from 242 deals recorded in the first half of 2018.
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Deals backed by venture capital firms raised $3.16 billion in 148 deals in the first half of 2019, doubling the amount raised in the first half of 2018, which was $1.86 billion in 142 deals
In the first half of 2019, 53 deals over $20 million totaled $2.78 billion. Fifteen deals over $50 million accounted for $1.7 billion in the first half of 2019 compared to $920 million in nine deals in the same period last year.
Companies raised $2.32 billion in 125 deals in the second quarter of 2019. This is the highest amount of money raised in any quarter since 2013, according to the report.
The second quarter was marked by 10 mega deals, which amounted to $1.26 billion and accounted for 54 percent of the total capital raised in Q2/2019. Each deal was over $50 million and included Israeli InsurTech startup Lemonade, which raised $300 million in a Series D funding round, Monday.com, the Israeli team management provider, which raised $250 million, and Sentinel Labs, which raised $120 million for its autonomous, AI-powered endpoint security solution. These deals raised a total of $670 million.
There were also two “exceptional” deals, according to the report. Israel-based international defense electronics company Elbit Systems raised a PIPE (Private Investment in Public Equity) round of $186 million and data extraction manufacturer Cellebrite Mobile raised $110 million after its acquisition by Japan’s Sun Corporation.
Israeli growth-stage companies — ones that are in initial revenue and revenue growth stages — raised $2.02 billion in 70 deals, the report said. Late financing rounds raised $1.12 billion in 23 deals in the second quarter of 2019, which was nearly three times the amount raised in the second quarter of 2018.
Seventy-three deals that were backed by venture capital firms raised a record $1.81 billion in the second quarter of 2019. This accounted for 78 percent of the total amount raised this past quarter.
Deals larger than $20 million in the second quarter of 2019 dominated capital raising activity in the highest sum and number of deals since 2013. There was $1.79 billion raised in 29 deals this past quarter, in comparison to $932 million raised in 18 deals in the second quarter of 2018.
IT & software companies raised $1.02 billion in 49 deals in the second quarter of 2019, the highest quarterly amount since 2013.
Israeli life sciences companies raised $263 million in 27 deals in the same period.
Israeli investors made 174 investments totaling $704 million in the second quarter of 2019. Foreign investors also increased their activity, making 441 investments totaling $1.57 billion in the second quarter.
“Just when we thought the investment growth in the first quarter of 2019 had broken every record, along comes the second quarter and registers the most significant leap in the total amount raised in the last six years, said Adv. Shmulik Zysman, a managing partner at ZAG S&W, “Indeed, the second quarter of this year recorded the most significant leap ever in the total amount raised—$757 million, compared to the previous quarter, indicating a quarterly record and in accordance, a record high in H1/2019, unprecedented in recent years.”
Marianna Shapira, research Director at IVC Research Center adds, “The second quarter of 2019 continues the same trend from recent quarters. Israeli high-tech companies are gaining access to a larger pool of capital for growth companies, especially from foreign investors. This shows a growing appetite for the local market. The trend is driving valuations to new heights, presenting challenges both to the companies seeking capital and to local investors. The Q2 figures show that most early-stage companies are struggling to access investment capital. This discrepancy might be a cause for concern about the future of seed ventures in Israel. If the second half of 2019 continues at the same pace, this year will break previous records for capital volume.”