Israeli high-tech companies saw record capital investments in the first three quarters of 2021, raising $17.78 billion in 575 deals, the IVC-Meitar Israeli Tech Review report, published this week, reveals.
Follow Israel Hayom on Facebook and Twitter
The amount raised in Q1-Q3 2021 was 71% larger than in the same period in 2020, an increase mainly attributable to deals over $100 million, which accounted for a 51% share of the total amount raised in this tri-quarter period.
In Q3 alone, Israeli start-ups saw 177 investment deals worth a total $5.89 billion.
Attorney Mike Rimon, a partner at Meitar Law Offices, which co-published the report, noted that despite a "certain slowdown in IPOs for Israeli tech companies," his firm expected to see "significant equity financing activities as well as growth in M&A [merger and acquisition] transactions due to an increasing number of companies that have raised significant amounts."
Rimon said that recently, Israeli companies have been acquired by other Israeli companies – an exit channel that even a few years ago was marginal.
"We expect this trend to become more common in the near future," Rimon said.
The first three quarters of 2021 were notable for mega-founds of fundraising (defined as rounds yielding $100 million or more), with 53 such rounds completed in the same period worth a combined $9 billion.
Early fundraising rounds (seed and A) also increased in Q1-Q3 2021, with 293 such deals bringing in a combined $2.5 billion, 35% more than in the same period in 2020. Median amounts raised in seed and A rounds reached $4 million – evidence of growing capital intake in early rounds.
Later rounds raised $15.3 billion (85% of total) in 282 deals in Q1-Q3, due mostly to foreign investors involved in Israeli capital raising. Q3 saw $4.3 billion invested in later rounds alone, compared to a quarterly average of $1.86 billion in 2020. Israeli investors also upped their involvement in deal-making, although the increase was significantly more modest.
From seed rounds to exits
The first three quarters of 2021 also saw record Israeli high-tech exits, with 180 transactions accounting for a total $18.92 billion. The majority of capital volume derived from IPOs – 52% of total amount, exceeding M&A proceeds.
A total of 65 Israeli high-tech companies went public in Q1–Q3/2021 in IPOs that totaled $9.78 billion, a 225% increase in number and 506% increase in capital from 2020 annual figures. Their overall post valuation reached $76.4 billion. The two most prominent IPO proceeds in Q3 2021 were made by Riskified ($418 million) and REE Automotive ($288 million). A total of Israeli high-tech companies opted to go public on the Tel Aviv Stock Exchange.
Subscribe to Israel Hayom's daily newsletter and never miss our top stories!
Attorney Shira Azran of Meitar Law Offices noted that the COVID pandemic continued to make its effects felt, explaining that "The technology sector accelerated with the world digitizing and transitioning to cloud in all areas, and along with the increased demand for cyber solutions."
"In addition to continued growth of mature companies, we see two main trends – first, the increase in early-stage and seed rounds, and second is the increased participation of US investors, in all stages of investments in Israeli companies. We expect these trends to continue for the remainder of this year and next year," Azran added.
Gilad Zwick contributed to this report.
