IVC-Meitar: Israeli startups raised $11.9b in H1 2021

Startups have already beaten the annual record set in all of 2020, while Israeli tech companies raised an additional $8.4 billion in IPOs in the first half of the year.

Israeli tech companies continue to break records in terms of the capital raised in the first half of 2021. Startups including Transmit Security, Wiz, Trax and Melio raised a whopping $11.9 billion, according to the latest IVC-Meitar report.

Just as a recent research by Start-Up National Central found, so IVC also confirms that the capital raised by Israeli tech companies in the first half of 2021, easily outstripped the $10.3 billion raised in all of 2020, which was itself a record year.

There were 38 capital raisings of more than $100 million in the first six months of the year, IVC-Meitar reported.

The rush to invest in Israeli startups can also be seen in early stage companies completing seed and Series A financing rounds, which traditionally characterized by relatively small amounts of money. These are usually high risk investments in companies that have not yet launched a product and have yet to generate major sales. Despite this these rounds also broke new records, both in the number of deals and the absolute amount of money raised. This hints that a bubble is being created.

Overall investments in seed and Series A financing rounds saw $1.04 billion raised in 126 deals. Investments in Series B and later stage financing rounds usually involve $40-$50 million per round. In the second quarter these financing rounds totaled $5.48 billion, up 18% from $4.66 billion in the first quarter.

Series B and later stage financing rounds are also important financing rounds for startup's employees by putting cash in their pockets through secondary deals allowing them to sell their share options. "Globes" estimates that 33% of the capital raised by Israeli startups in the first half of 2021 went to employees and entrepreneurs through these financing rounds, rather than into the companies' coffers. In other words, in the first half of 2021, employees received $3.3 billion before tax. IVC-Meitar declined to comment on this estimation.

The most impressive figure of all was the amount of capital raised in flotations on Wall Street and in Tel Aviv. The total value of Israeli companies, which raised money on stock markets, including ironSource, Payoneer, Innovid, SentinelOne and monday.com amounted to $62 billion, compared with just $8.3 billion in all of 2020.

Of the 48 public offerings which raised an overall $8.42 billion in the first half of 2021, seven were accomplished through a SPAC merger in which an overall $2.41 billion was raised. The Tel Aviv Stock Exchange (TASE) saw the largest number of flotations with 35 tech IPOs with 12% of the overall capital raised by Israeli tech companies in the first half of 2021. The TASE has thus proven that it can be a platform for tech companies wanting to go public and raise capital up to a certain amount.

The positive atmosphere on the capital market has inevitably brought a fall in the number of merger and acquisitions deals. Such deals amounted to $4 billion in the first half of 2021 and the companies acquired included MyHeritage, which was bought by Francisco Partners for $600 million, and Prospera Technologies bought by Valmont and Vdoo bought by JFrog, for $300 million each. In 2020, Israeli companies were acquired for a total of $8.2 billion, and for $14.3 billion in 2019.

Published by Globes, Israel business news - en.globes.co.il - on July 14, 2021

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