Israeli companies and startups raised nearly $9.5 billion in capital so far in 2020, breaking all previous records despite an unprecedented global pandemic that has wreaked havoc on the world economy. According to a new report by Start-Up Nation Central (SNC), investments in Israeli companies went up by over 20 percent compared to 2019 and capital poured into local firms more than tripled in just six years.
Israeli companies are on track to break $10 billion in capital raised by the end of the year, SNC said. The report, which tracked funding rounds and investments from January to the first week of December, was published on SNC’s Finder, a comprehensive database of the Israeli tech ecosystem.
The report says the $9.5 billion figure is compared with $7.7 billion from last year and that the Bank of Israel’s figures for 2019 add up to a higher amount, noting that the discrepancy is due to different definitions of what constitutes an Israeli company. The IVC research center reported in early January that companies raised a total of $8.3 billion in capital in 2019.
According to its latest report in October, the IVC research center put the figure for capital raised by the third quarter of 2020 (September) at $7.5 billion.
This year, top investment deals in Israeli companies have included Via’s Series E round of $400 million in March; Appsflyer’s Series D funding of at least $210 million; Next Insurance’s $250 million funding round in September followed by another $350 million investment in November; SentinelOne’s $200 million Series D round in February; and Gong.io’s $200 million round in August.
The SNC report put the number of investment deals at over 400 over the course of 2020, with a majority of rounds (86) and capital ($2.5 billion of the $9.5 billion) going to cybersecurity companies. Digital healthcare companies and startups followed with the second highest number of rounds – 70 – and with nearly $800 million in capital. Meanwhile, fintech companies raised $1.7 billion in 70 rounds in 2020 and smart mobility companies generated $1.3 billion in investments in 49 rounds.
Companies offering coronavirus-related solutions raised $621 million in 38 rounds this year, according to the report, including Israeli-founded remote care startup K Health that raised $48 million in March followed by $42 million in November, and Israeli telehealth firm Tyto Care that raised $50 million.
Late-stage investments and acquisitions
A majority of the investments in 2020 went to late-stage startups and companies, following a trend in the high-sector that has been on the rise for several years. Seed-stage and early-stage companies have generated fewer investment deals and have suffered a major blow since the COVID-19 pandemic hit earlier this year.
The IVC report from October noted that between the first and third quarters of 2020, later-stage rounds attracted some $3.2 billion – an increase of 34 percent above the capital amount attracted in 2019 in these types of rounds.
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Investments in larger funding rounds for growth-stage companies have also largely come from foreign investors.
The SNC report also showed 113 M&As and IPOS in 2020 so far, down 12 percent from last year. These included the acquisition of Checkmarx at a $1.15 billion valuation, the acquisition of Armis at a $1.1 billion valuation, and the acquisition of Moovit by Intel Corp for $900 million.
“The impressive investment figures are remarkable at the time of global crisis,” said SNC CEO Professor Eugene Kandel. “They indicate the global investors’ trust in the maturing ‘Start-Up Nation.’ The support for the Israeli tech innovation sector over the last decade has paid off.”
However, he warned, “the number of new startups founded annually is on the decline for the last three years, and in 2020 we witnessed a decline in the number of the early-stage rounds. These developments must be watched carefully so that Israel can maintain its tech position in the coming decade as well.”
Aviv Alper, senior director of research at SNC, says the excess performance of the Israeli tech ecosystem can be attributed to the growing demand for technologies led by Israel, as well as to the unique qualities of the Israeli innovation industry.
The increase in investments in Israeli companies is even more pronounced when compared with investment performance across the globe, the SNC report noted. While Israel recorded an increase in investments of over 20 percent from last year, tech companies in the US saw a more modest increase of 5 percent increase, while Europe recorded an increase of a mere 1 percent.
Investment in Asia-based technology companies, meanwhile, fell by 15 percent, and South America experienced a 21 percent decline from the beginning of the year through the beginning of December 2020, according to the report.