Fewer and fewer startups are closing down each year in Israel according to a new report published by the IVC research institute. The report analyzes the number of startups closing down and the amount of money they raised. According to the report, 3,307 high-tech startups terminated their activity in 2012-2017 after raising a cumulative $3.8 billion. The study did not examine the reasons why the startups closed down.
634 startups closed down in 2013 after raising $1.4 billion, 710 in 2014 ($665 million), 590 in 2015 ($327 million), 540 in 2016 ($350 million), and 352 in 2017 ($406 million). The report did not include 2018, but IVC believes that 550 startups will close down in 2018 by the end of the year.
IVC figures show that 1,147 startups were founded in 2013, meaning that the ratio between startups that closed down and startups that were founded that year was 55%. 1,353 startups were founded in 2014 (52%), 1,290 in 2015 (45%), 1,102 in 2016 (49%), and 823 in 2017 (42%).
8,360 high-tech startups are currently active in Israel, two and a half times the number that closed down starting in 2013. IVC says that the active companies raise an average of $4.43 million per year. The startups that closed down operated for an average of 5.5 years before closing down, during which they raised an average of $623 million a year. The report also shows that the companies that closed down survived an average of four years between their last financing round and the date on which they closed down.
The report states that 2,400 startups, 75% of those that closed down, did not disclose the amount they raised, assuming that they raised any money. 400 more startups raised less than $1 million each and raised an aggregate total of $120 million. Startups that raised $30 million or more before closing down raised an aggregate $2.7 billion, including $850 million by Better Place, $134 million by Quixey, $92 million by BIO Control Medocal, and $89 million by Mobli.
2,590 startups, 78% of all those that closed down, did so in the early stages. 686 startups closed down in the initial revenue stages, and only 33 closed down in the growth stages, At the same time, two thirds of all the capital raised by startups that closed down during the was raised by startups in the initial revenue stages, including $850 million by Better Place. Even excluding this amount, companies in this category still accounted for half of all the capital raised by startups that closed down.
1,228 startups, 37% of all those that closed down, were Internet companies. Due to the low development costs in this sector, IVC says, they raised only an aggregate of $468 million in capital before closing down. 432 life science startups raised an aggregate $808 million before closing down, and 828 communications startups raised an aggregate $800 million before closing down.
Published by Globes, Israel business news - en.globes.co.il - on December 24, 2018
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