Startup Nation Central's report for the first half of 2024 found that although mergers and acquisitions of Israeli companies totaled $4.1 billion, the highest figure since 2018, and up 70% from the second half of 2023, the number of actual deals was low, reflecting large acquisitions of cybersecurity companies. In nine deals Israeli cybersecurity companies were acquired for $1.5 billion, representing 35% of all mergers and acquisitions.
The amount raised by privately-held Israeli tech companies in the first half of 2024 amounted to $5.1 billion in 322 deals, up 31% from the first half of 2023, with the cybersecurity industry representing 52% of this amount. Estimates are that this amount could be as high as $6.7 billion including deals that were not reported.
The second quarter of 2024 was particularly strong with $3.3 billion raised compared with $1.8 billion in the first quarter. 56% of the money raised in the first half of the year was in mega financing rounds of $100 million or more.
Cybersecurity has become Israel's dominant tech sector with Wiz, now in talks to be acquired by Google for $23 billion, raising $1 billion in May in the biggest financing round ever raised in Israel.
Major gap between the US and Israel
The report compared global trends, including the importance of cybersecurity in local ecosystems, finding a significant gap between the US and Israel. "In 2018, the cybersecurity sector accounted for 20% of investment activity in both ecosystems. Over the years, the rate in the US has dropped to about 13%, while in Israel it has grown to 25%. In the first half of 2024, cybersecurity funding in Israel has jumped to more than 50%," the report said. These findings, according to the report, emphasize the critical importance of cybersecurity for Israeli tech and the attractiveness of the field for investors. The report adds, "Cybersecurity services consolidation trends in the world have led to a wave of acquisitions by the leading companies in the field - a trend that is even more pronounced in Israel due to cybersecurity dominance."
The report concludes, "Overdependence on cybersecurity in the long term may come at the expense of other significant trends and opportunities for the ecosystem."
Startup Nation Central CEO Avi Hasson said, "Huge fundraising, mega-rounds and activity in the field of cybersecurity have succeeded in overshadowing the regional risk in Israel."
Published by Globes, Israel business news - en.globes.co.il - on July 17, 2024.
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