The marked increase in investments in Israeli tech companies (most of which originate from foreign investors) is even more pronounced when compared with investment performance worldwide. While Israel recorded an increase of 137% for the first five months of 2021 compared to the first five months of 2020 (according to Start-Up Nation Finder), the increase globally was only 89%. Europe recorded an increase of 123% over the same period, while the US saw an increase of 91% and Asia saw an increase of 69%, according to PitchBook data*.
Uri Gabai, the incoming CEO of Start-Up Nation Central's new Research and Policy Institute commented: "The record funding in 2021 indicates that the growth in 2020 was not a short-term Covid-related boost but reflects top investors' increasing trust in the Israeli innovation ecosystem. The significant increase in median deal size reflects a maturing ecosystem that is able to maintain its competitive edge as a global hub of technological innovation and offering problem-solving solutions. We hope a new budget by the expected incoming government will focus on growth-oriented policies such as enhancing the innovation ecosystem's economic impact and tackling the chronic shortage in tech-oriented human capital."
The median funding round amount more than doubled year-over-year from $6.8 million in 2020 to $14 million by June 8 in 2021. In terms of growth rounds (round B or higher), the median round size rose from $26 million in 2020 to $46 million in 2021. Early-stage companies experienced a similar boost in median funding from $4 million to $8 million.
The significant rise in investments in Israeli high-tech and innovation since the beginning of the year focused on the more advanced stages, with most of the capital (64%) invested in rounds C or later.
2021 has already set a record for the number of mega-rounds (investments of over $100 million) raised, with 30 having been completed so far compared to 21 mega-rounds throughout all of 2020. These rounds represent 53% of all capital raised, and for the first time they account for more than half of the total funds invested.
Bulk of funding goes to Cybersecurity, FinTech, and Enterprise Solutions companies
The top three sectors pulled an accumulated $6.2 billion or 60% of all investments. These sectors are all software, strongly B2B oriented and saw huge increases in demand for their solutions over the last year as work practices changed.
Start-Up Nation Central is the one-stop-gateway to the Israeli innovation ecosystem. Established in 2013, it is a non-profit organization that leverages its knowledge, resources, and network of key industry and government ties to connect innovative Israeli technological solutions with multinational corporations, governments, investors, and NGOs from around the world.
Start-Up Nation Finder is a free online platform for identifying and engaging Israeli tech organizations based on customers' specific interests. This Innovation Business Platform is a comprehensive knowledge hub on Israeli startups, investors, acceleration hubs, multinational corporations, and technology-based innovation associated with academic research. The open-source platform provides up-to-date information and insights on thousands of active Israeli tech companies.
*Start-Up Nation Central query submitted June 8, full access requires subscription.
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