Despite the global COVID pandemic of 2020, which affected nearly everyone on the globe, Tel Aviv high-tech companies and startups flourished, according to a new report published by the Tel Aviv-Jaffa Municipality and the IVC Research Center, which reviewed data about the city's innovation ecosystem as of Jan. 15 2021.
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According to the Tel Aviv Innovation Ecosystem Report 2020, Tel Aviv-based tech companies accounted for 20% of the Israeli tech workforce and generated nearly half of the total volume of investments and exits value in 2020.
An assessment of the Tel Aviv tech ecosystem by technology type of technology shows that the city is in continuous transition, from start-up city to deep tech capital. The leading tech clusters in Tel Aviv in 2020 were AI (Artificial Intelligence), Fintech, Big Data and SaaS. AI was the leading tech cluster in Tel Aviv, capturing 43% of all Israeli AI companies, followed by fintech companies (42% of all fintech companies). AI and cyber security cluster were the leaders in terms of investments and exits' volume.
The report also found that in 2020, a record $6.839 billion was invested in 416 Tel Aviv companies. This is 48% of the total investments in Israel and reflects an increase of 34% from 2019. Tel Aviv-based companies comprised 48% of all investments in Israeli tech companies.
In addition, the average round tripled over the past three years from $5.1 million to $16.4 million.
The report found that 60% of the investments in Tel Aviv companies went to scale-up companies, and 30% of the investments to the pre-scale companies. Early-stage companies attracted just 10% of the volume of capital, in line with same trend across Israel.
Over two-thirds (68%) of all investment in Tel Aviv companies was made by foreign investors based in 35 countries, led by the US, followed by the UK, China, and Germany.
When it comes to exists, Tel Aviv tech startups and companies hit a record exit value of $4.43 billion in 53 deals in 2020, 46% of all Israeli exits for the year by value and an increase of 20% over 2019 and a huge leap compared to 2016, which saw $883 million in 36 exits.
Three Tel Aviv companies completed IPOs in leading stock exchanges: NYSE, Nasdaq and Euronext in 2020.
In addition, the report noted that of Tel Aviv's 20 tech unicorns (companies valued at $1 billion or more), 14 reached unicorn status during the pandemic year.
Tel Aviv Mayor Ron Huldai said that "The Tel Aviv-Jaffa innovation ecosystem enjoyed a remarkable year, breaking many records. Throughout the report, it is clear that outstanding human capital is one of the main reasons for the success of the ecosystem.
"Tel Aviv's talent is a magnet for multinational corporations and foreign investors who join the growing local scene of innovators. The tech industry demonstrated its value to our city and country throughout this challenging year, while its cutting-edge ideas and developments remain at the forefront of global innovation. Tel Aviv-Jaffa will remain an international center of attraction for human capital and financial capital," Huldai added.
Taking a broader look at the Tel Aviv tech scene, the report says that 29% of all tech companies in Israel are based in Tel Aviv, which also hosts 115 multinational R&D centers. In the past five years, the number of tech companies active in Tel Aviv grew by 25% compared to a 16% increase in all of Israel, the report notes.
Meanwhile, the years 2016-2020 have seen 44% growth in the number of Tel Aviv-based investors, notably in VC funds and investment groups. According to the report, Tel Aviv witnessed 89% increase in the number of VC funds and 70% increase in the number of venture capital management companies. Foreign investors, who account for 68% of all investors in Tel Aviv companies during 2020, are based in 35 countries, led by the US, followed by the UK, China, and Germany.
Guy Holtzman, founder and CEO of IVC Research Center said, "With 50% of Tel Aviv startups currently at growth stages of development, the city becomes very attractive for foreigners, as shown by the growing number of multinationals and investors involved in Tel Aviv's tech life."
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