The Israeli high-tech industry has broken funding records again in 2021, with local companies raising $17.78 billion in 575 deals since the beginning of the year, according to a report published last week by the IVC Research Center and law firm Meitar.
The funding raised is an increase of 71 percent from the $10.3 billion raised in 2020. The report showed the amount was due in part to 53 deals of over $100 million, accounting for $9 billion or a 51 percent share of the total sum for the first three quarters of the year.
In the third quarter alone, Israeli startups saw 177 investment deals totaling $5.89 billion, continuing the uptrend from the first quarter this year first quarter of the year, where Israeli companies attracted over $5.38 billion in investments. The second quarter saw an upsurge to more than $6.5 billion over a total of 230 deals.
Early round investment (seed + A round) deals increased in the first three quarters of 2021, while capital investment volume also continued to climb, the report said. The overall amounts in the first three quarters of 2021 already surpass the 2020 amounts for both seed and A round deals. There were 293 seed and A round deals in the first nine months of 2021 alone, which raised a total of $2.5 billion. In comparison, early stage startups raised $1.86 billion in 343 deals in all of 2020.
Growth rounds raised $15.3 billion in 282 deals.
Israeli high-tech exits soared to $18.92 billion in the first nine months of 2021, up 92 percent from annual 2020 results. IPOs skyrocketed in the first three quarters with 65 deals that amounted to $9.78 billion.
“While we see a certain slowdown of IPOs of Israeli tech companies, we expect to continue to see significant equity financing activities as well as growth in M&A transactions due to an increasing number of companies that have raised significant amounts, whether through public markets (including through mergers with SPACs) or through private equity rounds. In addition, we have recently been witnessing acquisitions of Israeli companies by other Israeli companies, which did not constitute a significant exit channel a few years ago; we expect this trend to become more common in the near future,” said Adv. Mike Rimon, a partner in Meitar Law Offices.
Amounts raised by cybersecurity, fintech, food tech and IoT companies peaked in the first quarter of 2021, with the number of deals in these verticals declining in the third quarter. With cybersecurity companies bringing in $1.5 billion, and fintech firms $1 billion, these companies accounted for 50 percent of the total volume for the quarter.
“We see the continued effect of Covid-19 on our lives. The technology sector accelerated with the world digitizing and transitioning to cloud in all areas, and along with the the increased demand for cyber solutions. In addition to continued growth of mature companies, we see two main trends – first, the increase in early stage and seed rounds, and second is the increased participation of US investors, in all stages of investments in Israeli companies. We expect these trends to continue for the remainder of this year and next year,” said Adv. Shira Azran, a partner in Meitar Law Offices.