Israeli startups raised a record $25.6 billion during 2021, up almost 150% from 2020, which was itself a record, IVC-Research - Meitar law firm reports. The money was raised in 773 financing rounds in what IVC - Meitar called not so much a 'new normal' as a 'new reality.' Israeli startups raised $8 billion in 206 deals in the fourth quarter of 2021.
IVC - Meitar added that it was an extraordinary year for Israeli exits as well, which skyrocketed to $22.2 billion, with almost equal shares of IPOs and M&As. There were 75 IPOs, 23 on Wall Street. In terms of M&As, there were163 deals totaling $12 billion, making 2021 perhaps the most active year ever for Israeli exits.
IVC-Meitar said, "Deep-pocketed global financial players and more mature and innovation-savvy markets have contributed to the Israeli tech growth sector’s steep gains over the startup arena. This year’s report shows that growth stage numbers have risen hugely from 2015 to 2021, while those for early-stage companies haven’t changed much."
The report added, "Are the valuations we’re seeing sustainable? While the future remains untold, we are seeing a certain correction on Wall Street over the last few months, effecting also companies that went public during 2020-2021. This may affect valuations of growth companies seeking an IPO; however, we do not expect it to significantly affect the technology industry in Israel and its attractiveness to investors.
"Nevertheless, high growth companies will find more money to deploy in order to move faster. These companies' financial and operational matrices have more in common with public companies than with the traditional start-ups, and as such, will attract the same kind of liquidity suppliers we once saw solely in public markets."
"2021 was the year of the SPACs, the special financial vehicles that raise money for future deals (blank check). Thirteen Israeli companies chose to go public via this route last year on Wall Street. However, with the SEC calling for tougher regulatory procedures, the motivation to use this vehicle could be reduced substantially."
IVC CEO Guy Holzman said, "Clearly, 2021 has registered record volumes in the Israeli high-tech market. Yet, there are some aspects to be considered by the Israeli tech companies - they will have hard time proving their value, and growing their revenues next year. Moreover, it looks like the Israeli high-tech market has reached a certain ceiling with approximately 9,300 active tech companies, when foreign multinational corporations and Israeli companies with high resources continue to attract additional local workforce."
Published by Globes, Israel business news - en.globes.co.il - on January 3, 2022.
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