Initial data from the IVC-LeumiTech report for the third quarter of 2023 indicates stabilization both in capital raised by Israeli tech companies and the amount of investments, from foreign investors in particular. This is in contrast to the downward trend in fund raising in the previous quarters.
The report found that Israeli tech companies raised $1.6 billion dollars in 85 deals in the third quarter, down 38% in terms of the amount and down 41% in terms of the number of deals from the corresponding quarter of 2022. But in a quarterly comparison, the declines are more moderate. The amount of money raised in the current quarter reflects a decline of only 14% compared with the second quarter of 2023, and almost no change compared to the first quarter of the year.
By neutralizing the big deals (over $200 million), from the analysis of recent quarters, it is possible to see more clearly the change in the trend - from decline to stabilization. Moreover, according to IVC's assessment, the final data for the quarter, which will be published as part of the full report next month, will reflect a volume of investments close to that of the second quarter of this year.
Recovery in seed finance raising
The were 319 foreign investors in the third quarter of 2023, compared with 478 in the corresponding quarter in 2022. In the first quarter of 2023, there were 298 foreign investors, and 355 in the second quarter. Although there is a decline compared with the second quarter, looking at all the quarters the data regarding the volume of transactions carried out by foreign investors in the current quarter also supports the emergence of a stabilizing trend.
There is also a positive trend in the seed fundraising sector. The amount raised in seed rounds increased for the first time this quarter, after five consecutive quarters of declines. Although the number of financing rounds is low compared to the second quarter of 2023, in IVC's assessment, the full data for the third quarter will indicate the same trend change in the number of companies that raised money. In the third quarter of 2023, seed investments totaled $143 million, while in the second quarter seed investments totaled $107 million. In the third quarter of 2022, seed investments amounted to $335.87 million.
LeumiTech CEO Maya Eisen Zafrir said, "We continue to see in the third quarter data, the first signs of a stabilization in the amount and number of financing rounds. Data returning us to the levels of 2018-19. Although there is still a decrease in initial investments - it is more moderate compared with the one we saw in previous quarters. In addition, we recognize a stabilization in the rate of follow-on investments, which indicates that companies are beginning to adjust their value to the new interest rate environment."
Published by Globes, Israel business news - en.globes.co.il - on September 26, 2023.
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