With less than half of 2021 gone, Israeli innovative tech companies have already raised $10.5 billion in new financing, equaling the amount for all of 2020, which was itself a record, Start-Up Nation Central (SNC) reports.
The dramatic increase in investments in Israeli tech companies, most of which comes from foreign investors, is even more pronounced when compared with investment performance worldwide. Israel saw a 137% increase in capital raising in the first five months of 2021 compared to the first five months of 2020, SNC reports, while the increase globally was only 89%. Europe recorded an increase of 123% over the same period, while the US saw an increase of 91% and Asia saw an increase of 69%, according to PitchBook data.
Uri Gabai, the incoming CEO of Start-Up Nation Central's new Research and Policy Institute said, "The record funding in 2021 indicates that the growth in 2020 was not a short-term Covid-related boost but reflects top investors’ increasing trust in the Israeli innovation ecosystem. The significant increase in median deal size reflects a maturing ecosystem that is able to maintain its competitive edge as a global hub of technological innovation and offering problem-solving solutions. We hope a new budget by the expected incoming government will focus on growth-oriented policies such as enhancing the innovation ecosystem’s economic impact and tackling the chronic shortage in tech-oriented human capital."
SNC also found that the median funding round amount has more than doubled year-over-year from $6.8 million in 2020 to $14 million by June 8 in 2021. In terms of growth rounds (round B or higher), the median round size rose from $26 million in 2020 to $46 million in 2021. Early-stage companies experienced a similar boost in median funding from $4 million to $8 million.
However, the dramatic rise in investments in Israeli high-tech and innovation in 2021 has been mainly due to very large financing rounds in the more advance stages, with Series C rounds and later contributing to 64% of the total capital raised.
2021 has already set a record for the number of financing rounds of over $100 million, with 30 having been completed so far this year, compared to 21 such rounds in all of 2020. These rounds represent 53% of all capital raised, and for the first time they account for more than half of the total funds invested.
Cybersecurity, fintech and enterprise solutions were the top three sectors, attracting $6.2 billion or 60% of all investments. These sectors are all software, strongly B2B oriented and saw huge increases in demand for their solutions over the last year as work practices changed, says Start-Up Nation Central, which is a one-stop-gateway to the Israeli innovation ecosystem. Established in 2013, it is a non-profit organization that leverages its knowledge, resources, and network of key industry and government ties to connect innovative Israeli technological solutions with multinational corporations, governments, investors, and NGOs worldwide.
Published by Globes, Israel business news - en.globes.co.il - on June 9, 2021
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