The recovery in Israel's tech industry is continuing despite the war and perhaps because of the less intense fighting. Initial figures from IVC-Research - LeumiTech for the second quarter of 2024, show that after the number of foreign investors making first investments in Israeli tech companies has been consistently falling, there is now a rise.
110 privately held Israeli tech companies, including early stage and growth startups, raised $2.9 billion in the second quarter of 2024, a similar number of financing rounds to the first quarter but up from $1.62 billion raised in the first quarter and $1.47 billion in the fourth quarter of 2023.
Even when deducting the huge amount of $965 million raised by cybersecurity company Wiz in May, Israeli tech companies still raised 19% more in the second quarter than in the first quarter. Even so six companies were responsible for 62% of the overall amount raised in the second quarter, including four cybersecurity companies - Cyera, Island, Semperis and Wiz.
$2.9 billion is the most raised by Israeli tech companies since the second quarter of 2022 when $5 billion was raised. The amount of money raised in the second quarter was 47% higher than the corresponding quarter of 2023 and 78% higher than the first quarter of 2024. The figures could be distorted by a large number of cybersecurity companies announcing financing rounds for marketing strategy purposes, ahead of last month's RSA IT Security Conference in San Francisco.
Return to high company valuations
The recovery comes amid reports about a return to high company valuations being demanded by entrepreneurs from investors during negotiations for financing rounds, recalling the kind of valuations being sought until early 2022, before the tech bubble burst.
LeumiTech CEO Maya Eisen Zafrir said, "If such levels of activity continue, then at this pace the tech sector will end the year with an increase compared with last year. In the in-depth examination we did on the identity of the investors, it is encouraging to see foreign investors, who have never invested in Israel, taking part in deals, even after the start of the war."
IVC-Research CEO Ben Klein added, "The second quarter ends today with positive growth indicators. The volumes of activity in Israeli tech continued to grow moderately. This is not trivial given the circumstances. The growing presence of foreign investors shows the attractiveness of Israeli tech."
Published by Globes, Israel business news - en.globes.co.il - on June 30, 2024.
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