The report shows that investment in Israeli technology companies continues at a dizzying pace, the volume of capital raising has grown to an all-time high: $ 25.4 billion, a figure that represents a 136% increase compared to $ 10.8 billion in 2020.
Also in comparison with the global trend, Israel shows an increase in the volume of recruitment compared to last year. Capital raising during 2021 recorded an increase of 136%, compared to the global average of 71%. This figure is also an increase in the volume of recruitments compared to countries such as the USA (78%), the United Kingdom (105%) and Singapore (95%). According to comparative data in the PitchBook database * updated to the end of November 2021.
The three leading technological sub-fields in Israel in 2021 are fintech, security technologies, mainly cyber companies, infrastructure IT/ Organizational data, Emphasis on software companies that are able to provide fast solutions and are usually not affected by the distance from the target market. These three sub-areas together represented 65% of the total capital raising in 2021, compared with 52% of the total capital raising in 2020.
The surge in mega-spin recruits is another marker of market maturity And for investments in Israeli technology companies. In 2021 the number of mega-rounds – capital raising higher than $ 100 billion – stood at 47 rounds, more than double their number last year. These rounds raised a total of $ 14.77 billion – a 310% increase from $ 3.6 billion last year – and accounted for more than half of the total amount raised in 2021. In addition, the median round size increased from $ 6 million to $ 14 million.
33 new members join the Israeli Unicorn Club – More than $ 11 billion – slightly less than half of the total funding raised this year – has been invested in the “Israeli Unicorn Factory”. 33 unicorns (privately owned companies worth over $ 1 billion each) were born this year, and in total there are now 53 such companies, more than double their number last year. The Unicorn Club in Israel is controlled by companies belonging to information security solutions – cyber (12), fintech (11), and IT and enterprise data infrastructure (10).
Record year also in issues and acquisitions– 57 companies were issued This year compared to 22 companies in 2020. Total funding was $ 4 billion compared to a cumulative $ 1.7 billion. Despite the great ‘hype’ in the matter IPOs SPACIn practice, only 10 SPAC mergers were made this year, raising a total of $ 4.9 billion. 119 companies were acquired this year – a relatively modest increase compared to 91 acquisitions made in 2020. The cumulative value of these companies has almost doubled from about $ 4 billion to $ 7.6 billion. Another trend that stood out this year was the increase in the number of Israeli start-ups acquired by Israeli companies. 39 such transactions were made in 2021, an increase from 21 acquisitions in 2020 and the highest number ever recorded – further evidence of the maturity of the Israeli ecosystem.
Foreign investment entities control investments- The massive increase in capital raising in 2021 is also reflected in a major change in the identity of the leading investors, in the scope and amount of their investments in Israel. According to data collected by Start-Up Nation Central, leading investors are participating in more rounds than in previous years.
In the past, Israel served as a niche market for international investment bodies, trends that have been seen in the last two years and accelerated in 2021 – show that Israel has become a preferred source of solutions in the eyes of the world’s major investors in technology. Many of the leading funds have significantly increased the number of investments in Israeli companies. Another trend that has emerged this year is the strong presence of foreign venture capital funds, which are currently seven of the 20 most active funds and four of the top 10. Some of the most active investors in 2021 were international venture capital funds, which are among the largest investors in the world in the field of technology, including Insight Partners (participated in 49 rounds), Entree Capital Bessemer Venture Partner, and Tiger Global Partners – this trend indicates the level of attractiveness Of Israeli companies in the eyes of foreign investors and their growing impact on the ecosystem.
An increase in initial investment rounds, but at a slower pace than before- Although investments in lime rounds increased in absolute numbers, from $ 670 million to $ 794 million, the increase was smaller compared to the increase in investments in later stages. The number of lime rounds also continued to decline, a trend that has continued since 2018 – then a record of 361 rounds was recorded, and now it is only 188 rounds. The average lime round currently stands at $ 510,000. This is the only area where we see a continued slowdown in activity in the industry. It is important to emphasize that sometimes reports of these investments are reported late and therefore there may be changes in the final total.
CEO Start-Up Nation Central, Avi Hasson: “Two years after the outbreak of the corona epidemic, the Israeli technological ecosystem is stronger than ever. In a world where digital has become the default, Israel is a significant source of technological solutions to global challenges. “Our ability to produce unicorns has all led to the question of whether Israel has already made the transition from Start-Up Nation to Scale-Up Nation.” The boom in the industry creates challenges, the companies continue to struggle to recruit workers, while Israel suffers from a shortage of tens of thousands of workers in the industry. The increase in salaries and the increase in the value of the shekel against the dollar are also biting into the operating costs of companies, a trend that has a sharper impact on companies in the early stages. Start-Up Nation Central works to help the Israeli technology community overcome its obstacles, by developing career training and placement programs, influencing government policy through its research institute, and creating connections between Israeli entrepreneurs and governments, multinational corporations and investors, in order to ensure their growth. The ongoing Israeli ecosystem and the Israeli economy. “