Israel's high-tech sector experienced a record year in 2021 as startups raised $25.4 billion from January to November, while 33 companies reached unicorn status with valuations of $1 billion or more, according to a report published Monday by Start-Up Nation Central (SNC).

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Compared to $10.8 billion raised in 2020, this year's figure represents a 136% increase.

"Two years into the COVID-19 pandemic, the Israeli tech ecosystem is stronger than ever," said Avi Hasson, CEO of SNC.

"In a world where digital has become the default, Israel is a world-class source of solutions to global challenges."

Funding in Israeli startups and companies was 71% more than the global average, as shown by data compiled by the research firm Pitchbook.

"This… raises the question of whether Israel has made the transition from being the Start-Up Nation to the Scale-Up Nation," Hasson said.

Hasson also pointed out that Israeli companies were dealing with a shortage of qualified employees, with tens of thousands of high tech jobs unfilled. According to Hasson, SNC was extending a had to Israeli tech firms by launching training programs for high-tech workers and helping connect Israeli entrepreneurs to governments, corporations, and investors.

The three largest sectors in terms of funding were fintech, enterprise IT and data infrastructure, and security technologies, the SNC report said.

Israel also saw 33 privately-held technology companies join the billion-dollar club in 2021, bringing the total number of unicorns (companies valued at $1 billion or more) in the country to 53.

The new unicorns include biotech firm Immunai; robotics startup Fabric; cybersecurity startup Wiz; fintech firm Melio; and music app maker JoyTunes.

This article was first published by i24NEWS.

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Israel's high tech sector continues to smash records, with tech startups raising a record $10 billion from January-May 2021.

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According to Nimrod Cohen, founding partner at TAU Ventures, which invests in Israeli high tech companies: "This past year, we've seen an explosion in terms of fundraising, both in terms of amounts and in terms of worth. Some might say that this is a bubble, but on the other hand, I think that the process that has taken place in the world this past year, which was accelerated by COVID, is mainly one of realizing that technology is everywhere and critical to every industry."

Cohen says that "We, our children, and our parents handle technology from the moment we wake up in the morning until we go to sleep. I assume that this realization, combined with low interest rates and a lack of investment alternatives, is part of the reason we are seeing an increased influx of funds. Like with every trend, some will ride this one and benefit from it unjustifiably, but I believe that it will straighten out in the end."

Startup fundraising in the first half of 2021 included 28 rounds by unicorns – startups valued at $1 billion or more. A total of 30 rounds comprised $100 million or more, what are known as "mega-rounds." In total, these mega-rounds made up over $5 billion of all money raised. The high tech sub-sectors that raised the most money were cyber, fintech, and organizational programs.

Mega-rounds have become almost routine. In January 2021, OwnBackup, which develops cloud-based backup and restoration solutions, announced that it had completed a round totaling $167.5 million, bringing its valuation to $1.4 billion.

Other Israeli high tech firms reported closing massive rounds in the space of 72 hours, such as Orca Security, which in three days raised $210 million, pushing its valuation to $1.2 billion – all a mere two years after it was founded.

Another aspect of fundraising that has broken records were fundraising rounds held more closely together than in the past. Whereas it used to be customary to wait two to three years between rounds, Israeli high tech companies are now closing multiple rounds in a single year. An example of one such company is Salt Security, which held three rounds in under a year, bringing in $120 million -- $70 million in the most recent alone.

Salt Security CEO Roey Eliyahu, the company had not planned to hold additional rounds, but agreed to because it saw the investors as potential strategic partners for the future.

Dekel Persi, co-founder and managing partner at TPY Capital, said that the Israeli high tech sector was undergoing "accelerated growth," which translated to companies and ventures being able to grow into giant companies rather than being acquired for a few tens or even hundreds of millions of dollars.

"Part of that accelerated growth of course has to do with COVID, and continued low interest rates in the world, which is creating demand to invest in the tech sector," Persi added.

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However, caution is needed, warned Lee Moser, managing partner of AnD Ventures.

"This past year has accelerated processes in the world of investment in high tech in general and Israeli high tech in particular. But this flood of money is causing some startup companies to grow too fast and skip important steps in building a stable company. Entrepreneurs are finding themselves with double the amount they wanted to raise, with investors who aren't necessarily a good fit strategically … Surplus money in the markets mustn't be allowed to cause entrepreneurs to lose focus on building stable companies, starting from the critical first steps to continuing to grow and joining up with the right investors for them," Moser said.

Gilad Zwick contributed to this report.

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A year into the global COVID pandemic, January 2021 turned out to be a blockbuster year for the Israeli startup scene, with Israeli startups raising a record $1.44 billion, the NGO Start-Up Nation Central reports.

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According to SNC, six start-ups raised more than $100 million each (mega rounds) during the month, totaling 73% of the amount raised Israeli firms in January. Furthermore, the mega-rounds in January 2021 alone equaled nearly 30% of the total number of mega-rounds in the entire year of 2020 (21 total).

The companies that completed the six mega-rounds announced during January 2021 are Rapyd Financial Network (Fintech), which raised  $300 million in a D Round; Drivenets (Network Infrastructure), which raised $208 million in a B Round; OwnBackup (Enterprise solutions), which raised $167.5 million in a D Round; digital health company K Health ($132 million in an E Round); E-Commerce firm Resident Home ($130 million in a B Round); and Fintech firm Melio ($110 million in a D Round).

This marks the highest number of both mega-round and general investments made during a single month in Israeli start-ups. To compared, there were three mega-rounds in January 2020, none in January 2019 or January 2018. The mega-rounds in January were led by US investors.

The analysis by SNC concluded that the January 2021 data reflected "investor confidence in Israel's innovation ecosystem curing the COVID-19 pandemic."

Director of Research at Startup Nation Central Meir Valman observed that "The record level of fundraising in recent months is driven by two effects. One is the increasing maturity of the Israeli tech ecosystem, when rapidly growing startups are able to raise much larger rounds. The other is the effect of COVID-19 on Israeli companies, which pivot rapidly to address the challenges of the pandemic, but that will also stay relevant long after it is gone."

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The coronavirus pandemic continues to devastate communities in the US and around the world. Even in the face of PPE supply shortages; nurses, doctors, and hospital staff continue to risk their lives every day.

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The IAC Care initiative event was hosted by Israeli actress Shani Atias, and opened with a live-portrait painting of photographer Ziv Koren by artist Tomer Peretz. The concert featured songs by Israeli stars Idan Raichel, David Broza, Rotem Cohen, Shlomi Shabat, and Keren Peles, and more. Due to social distancing rules, all artists performed from their homes. 

"The IAC is grateful to these Israeli artists and more than 400 volunteers of the IAC Care nationwide community who have demonstrated a great showing of solidarity in this time of crisis," said Shoham Nicolet, CEO and co-founder of the Israeli-American Council.

 "Beyond the direct support to our heroes – the medical teams – tonight also demonstrated the strong bond between the people of Israel and the United States and the role of our community as a living bridge between the two. I'm humbled and inspired by the generosity and spirit of all the volunteers and supporters who made this effort possible."

In addition to the fundraising concert,  the IAC Care initiative has recruited volunteers to deliver supplies such as face shields, N95 masks, and hygiene kits, in addition to warm meals, to hospitals across the organization's 20 regions since the onset of the pandemic. 

To date, the organization has adopted over 60 hospitals nationwide and provided them with thousands of meals and medical supplies.

A sense of collective responsibility is at the core of the IAC Care initiative, which aims to build bridges and foster a culture of giving by matching volunteers with organizations and individuals in need of support.

The IAC has become the fastest-growing American-Jewish organization in the US, dedicated to building an engaged and united Israeli-American community that strengthens the Israeli and Jewish identity of the next generation and the bond between their people.

The Adelson family owns the company that is the primary shareholder in Israel Hayom and is a major IAC donor. 

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According to a statement from Strategic Affairs Minister Gilad Erdan, "For years, boycott promoters have disguised themselves as 'human-rights activists,' managing to raise tens of millions of euros from Western countries and citizens who thought they were contributing to causes supporting justice and equality.

"Over time, however, we have revealed that the supposed 'human-rights' NGOs are actually filled with anti-Semitic operatives with deep ties to terrorist groups fixated on destroying the State of Israel," Erdan continued.

"Our efforts have drastically undermined the boycott campaign," said Erdan, directly reducing the funding of pro-boycott NGOs and also "bar[ring them] from receiving financial services."

Included in the 10 American and 20 European accounts were the PayPal, Donorbox and Plaid accounts of the Samidoun Palestinian Prisoner Solidarity Network, after it was divulged that Samidoun maintained close ties with the Popular Front for the Liberation of Palestine and utilizes terrorists as representatives in Europe. The credit-card accounts of Al-Haq were also closed after it was discovered that the director general of the organization was a senior PFLP terrorist who had spent several terms in Israeli jails.

Erdan spearheaded the 79-page report titled "Terrorists in Suits," published by the Strategic Affairs Ministry earlier this year, which revealed more than 100 links between terrorists and organizations promoting BDS, and illustrated how terrorists hide under the guise of human-rights activism.

According to Channel 13, several NGOs, U.S. and French Jewish groups, as well as a number of foreign journalists, took part in the effort to shutter the terror-related accounts.

This article is reprinted with permission from JNS.org.

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