Israeli high-tech companies raised $5.6 billion in 212 deals in the first quarter of 2022, according to the IVC-LeumiTech Israeli Tech Review Q1/2022, released Wednesday.
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As valuations of growth companies on Nasdaq collapsed in late 2021, Israeli start-up investment activity in Q1 2022 declined from Q4 2021 levels.
"After a phenomenal year for the Israeli high-tech, it seems as though 2022 started more restraint," said LeumiTech CEO Timor Arbel-Sadras.
The 212 deals closed in Q1 2022 comprised an average amount of $26 million, below the quarterly average in 2021, the report said.
Meanwhile, 14 mega-deals in Q1 2022 worth over $100 million each were responsible for 44% of the total amount raised, underscore the lessened activity of foreign investors in later rounds.
The report also noted that monthly investments had been in a downtrend since November 2021, but activity spiked in March 2022.
Early rounds (Seed and A Series) also continued to demonstrate an upward trend in Q1 2022: $1.2 billion were raised in 135 deals, with median amounts reaching $4.6 million.
However, the quarter saw foreign investment amounts decline to $4 billion, similar to the 2021 quarterly average. That decrease – mainly in later rounds investment activity – was the primary reason for the decline in the amounts invested in Q1 2022, while Israeli investment amounts remained almost intact, the report explained.
Along with the release of the report, IVC announced a new partnership with LeumiTech, the banking arm of Leumi Group. Since 2014, LeumiTech has specialized in banking for high-tech companies.
According to Arbel-Sadras, "It seems that investors have slowed pace and are waiting for a correction in valuation in the private sector same as happened in the public sector. VC managers need to react to these corrections and make sure their funds keep presenting good performances. These performances rely on the ability to sell or issue their portfolio companies with a substantial increase in valuation versus the investment stage."
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