Israel’s hi-tech companies raised just $2.6 billion in the three months to the 30th of September – less than half the amount in the same period last year.
Analysts blamed the downtrend in the global capital markets, and warned of further uncertainty in coming months.
The Startup Nation raised $5.9 billion in 177 deals during Q3 of 2021, an average of $33.3 million per deal.
During the same quarter this year the $2.6 billion it raised across 143 deals averaged at just $18.2 million per deal.
The figures were reported by the Israeli Tech Review, the first report of its kind in Israel that provides a comprehensive analysis of the country’s hi-tech industry activity.
The quarterly report evaluates fundraising, mergers and acquisitions, and the capital markets, as well as comparative data from previous years and insights into future trends.
In the first nine months of 2022, the report found that Israeli tech companies raised $12.3 billion, 30 per cent less than in Q1–Q3/2021, but still the 2nd largest amount ever in this period.
The numbers for the first nine months of 2022 show the extent of the slowdown in almost all parts of the Israeli tech economy, except in early-stage companies.
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It is estimated that 580 hi-tech companies were established in 2022. The final number of companies established during 2021–2022 is still not known, but the report suggests that 746 companies were established last year.
The Israeli Tech Review is published by the IVC, Israel’s largest research center of hi-tech and venture capital, and by LeumiTech, the banking arm of Leumi Group, which specializes in banking for high-tech companies and VC Funds.
Marianna Shapira, IVC Data Senior Analyst, said: “The downtrend in the global capital markets continued to influence Israeli high-tech activity in the third quarter of 2022.
“On the bright side, some of the assets’ inflated valuation generated in 2021 has subsided in the first nine months of 2022, returning to average figures similar to what we saw in the last few years.
“However, this change in pricing took place alongside a massive departure of foreign investors from the Israeli tech market, thus affecting the available liquidity for fast-growth Israeli companies.
“Currently there is a high uncertainty regarding the 4th quarter of 2022, as well as for 2023. As long as the activity scope and capital raising figures for Israeli-early-stages-companies has not been impacted (as we have seen so far), we can be optimistic about the high-tech performance for this period.”