July 25, 2018 | Israeli startups and high-tech companies raised $1.61 billion in the second quarter of the year, with 170 deals, a report by IVC Research Center and ZAG S&W Zysman, Aharoni, Gayer & Co law firm announced Tuesday. This brought the total of the first half of 2018 to a record $3.2 billion.
The second quarter was enhanced by the $300 million investment in Landa Digital Printing, which made up 19 percent of the total amount raised in the second quarter. Even without Landa’s funding round, the overall amount in the first half of 2018 is still the highest since the beginning of the decade.
Four additional deals of over $50 million took 35 percent of the toal amount this period. One of them was Gett, the Israeli ride sharing mobility company, with $80 million, which accounted for the second largest deal in the second quarter of 2018.
Early-stage companies (or those completing Series A funding rounds) raised $200 million in 39 deals. Companies completing Series B and C rounds raised $857 million in 47 deals, which made up 53 percent of the total funds raised in the second quarter.
According to ZAG managing partner Shmulik Zysman, the growth is due in part to an increase in investments from Chinese and European investors who are interested in Israeli tech, particularly automotive.
“We expect these trends to continue, both in terms of capital-raising and foreign investors entering the Israeli high-tech industry,” he said.
Early-stage companies in 2017 experienced a decline in investments, but 2018 is expected to be a good year for early-stage firms. IVC data indicates the declining trend is on its way back up, with 186 early-stage deals for companies raising seed and Series A funding, by the end of the first six months of 2018.
“Since 2012, the number of investors involved in the Israeli high-tech market has grown exponentially, reaching a peak in 2017,” said Marianna Shapira, IVC research director. “In H1/2018 the number has already reached 60% of this number,” she added.
Ninety-four deals backed by VCs amounted to $841 million while the non VC-backed deals reached $765 million. According to IVC, this means that growth is associated with increased involvement of non-VC investors in the Israeli tech sector.
According to IVC, software firms raised the most funds in the second quarter, with $584 million in 65 deals, which accounted for 36 percent of the total capital raised for the second quarter. Life science companies raised $267 million in 39 deals, which was lower than the amounts raised by life science companies in the previous quarter. Artificial intelligence was the leading vertical, with startups raising $426 million in 45 deals. Cybersecurity companies raised $394 million in 30 deals mostly for companies raising Series B funding.
IVC Research Center provides reports and comprehensive information on Israel’s high-tech, venture capital and private equity industry.