Source: Unsplash
If there is something that is not difficult to miss in the Israeli ecosystem in general, and in the capital raising sector in particular, it is that 2022 is not 2021. A new summary report by IVC and Lumitech reveals that the capital raisings of Israeli startups since the beginning of the year stand at $12.3 billion, a 30% decrease in Capital compared to last year. Despite the negative figure, it is still a higher amount than the capital raising in 2020 as a whole – and more than any year that came before it.
However, if we analyze the third quarter only – the picture is less positive. The Israeli startups raised $1.375 billion in the quarter, which is a 57% decrease in the amount raised compared to the corresponding quarter last year ($3.145 billion).
And what is expected next? According to the report, in the last quarter of this year capital raisings are expected to reach 1.25 to 1.5 billion dollars – numbers we have not seen in the Israeli ecosystem since 2019.
Source: IVC
One of the reasons for the unflattering picture of the capital raisings is the significant decrease in the amount of raisings of the unicorns, which have become a rare animal again. In the last quarter, the unicorns raised only 467 million dollars, less than 20% of the amount they raised in the corresponding quarter in 2021 ($2.483 billion). Megafundings of $100 million or more also fell, and there were only 3 of these in the entire quarter for a total of $512 billion. This is also a significant decrease – 53% – compared to the corresponding quarter last year.
Even in the exits sector, the picture is not very flattering, and so far since the beginning of the year, transactions totaling 7.4 billion dollars have been made (minus the giant purchase of Tower by Intel, which has not yet been completed). The IVC states that they have identified 100 purchase transactions of Israeli startups since the beginning of the year, which means a decrease of almost 50% in the total number of transactions compared to 196 carried out in the first three quarters of 2021.
Not everything is black
Compared to all these data, it is important to note that the investment in young companies – in the pre-seed, seed and A stages – remains positive. The startups in these stages raised 880 million dollars in the third quarter of 2022, a slightly lower number compared to the previous quarter but similar to the number raised by the startups in the third quarter of 2021. According to IVC, alongside these figures, you can also see a continuous increase in the median investment in the seed rounds of the Israeli startups.