© Reuters There is no exit: a drop in investments in Israeli high-tech
| Uri Berkovitch, Israel Hayom |
After two years of high-tech intoxication, with glittering parties, huge IPOs on Wall Street and crazy salary celebrations – comes the phase of disillusionment: two studies published this morning indicate that the surge we saw in the last two years in high-tech was replaced in the second half of 2022 by a downward trend with no end in sight, and according to The signs are not going to stop soon either.
The reports – one by the organization “Startup Nation Central” (SNC) together with the research institute SNPI, and one by LeumiTech together with the Israeli research company IVC – examined the state of Israeli high-tech according to the amount of funds that were poured into it, the exits (sales transactions) in which they were sold companies to others or issued shares on the stock exchange.
The most significant decrease indicated by the reports is in the scope of high-tech investments. According to the SNC report, the total investments in high-tech, which reached 27.6 billion dollars in 2021, decreased by about 44% to about 15.5 billion dollars in 2022.
The investments that the report deals with are investments by venture capital funds (VC) that invest money from private investors, companies or other funds in start-up companies. In practice, startups are born or die because of the decisions made by the funds.
The decline indicated by the reports is even more serious, in view of the fact that two-thirds of the money raised in 2022 was raised in the first half of the year, which was in fact a continuation of 2021, which was an unprecedented record year in the scope of activity in the high-tech industry.
In the second half of 2022, the volume of investments has already dropped by about 50% – from about 10 billion dollars in the first half of the year to about 5 billion dollars in the second half, similar to the volume of investments around the beginning of the current decade.
Along with the decrease in the volume of investments, the reports reveal, the rates of investment transactions (funding rounds), exits (mergers and acquisitions) and public offerings on the stock exchange also fell.
According to the SNC report, the number of investment transactions decreased by 25% – from 1,103 rounds in 2021 to 826 rounds in 2022. According to IVC, the number of exits decreased by 44% – from 158 transactions in 2021 to 89 transactions in 2022. The financial scope of the exits decreased by 33% – from 7.8 to 5.3 billion dollars. The number of issuances fell back to the levels of the previous decade, and in 2022 it stood at 18 issuances compared to 76 issuances in 2022.
Read the full article on the Israel Today website