Despite our image situation in the world, despite the lack of manpower recruited for the reserves, despite the air blockade that makes business travel difficult, the recruitments in the last six months (since October) by the companies in Israel reached 3.1 billion dollars in 220 rounds. Since the beginning of the war, 9 companies have been sold for 100 million dollars or more.
Israeli high-tech manages to function in the shadow of the difficult events of October 7 and the war that has continued since then – a report by the Startup Nation Central (SNC) organization that analyzes the six months that have passed since Black Sabbath shows that the industry in Israel is also functioning in the shadow of two dramatic challenges that have never been seen before: the fact that About 15% of its manpower was drafted into the reserves and the almost complete air blockade on Israel makes business travel difficult.
Since the outbreak of the war, 220 investment rounds have been completed in private start-up companies in which 3.1 billion dollars were raised. The average investment amount was $19 million, but it is skewed by a number of huge fundraisings that were actually closed even before the war, headed by a fundraising of $265 million for Next Insurance led by foreign venture capital funds and a fundraising of $118 million for the VAST company at a value of $9 billion. SNC mentions a total of 12 fundraisings of more than 50 million dollars in the last half of the year. Most of the fundraising was done in the cyber sector, which attracted 1.1 billion dollars, which signals that his image was not tarnished despite the major intelligence failure on October 7. Another area that stood out in the fundraising is fintech and corporate software, which raised half a billion dollars.
The field of mergers and acquisitions was actually busier than usual, mainly because of the consolidation in the cyber sector that started last summer. Israeli cyber benefited from this trend and was among the main drivers of $3.7 billion in transactions. However, the largest and only exit in the amount of one billion dollars actually came from a very non-high-tech sector – the sale of the mattress marketer Resident for one billion dollars to Ashley Home in early March. The second largest exit was the sale of the cyber startup Talon for $625 million to Palo Alto. A total of nine companies were sold for an amount of 100 million dollars or more since the beginning of the war. Although in the short term it is a success, in the long term the matter raises the question of whether Israel is not returning to the pattern of developing technology and selling it at an early stage to a major player without developing into a major company.
Although most of the investments and purchases were made by foreign players, SNC data shows that more than 20 new venture capital funds were established in Israel and raised 1.7 billion dollars. The most notable fundraisings are that of TEAM8, which raised half a billion dollars for two funds, and Red Dot, which raised 250 million dollars. 11 of the new funds are emergency funds established to help startups affected by the war such as the Google Fund, the IRON NATION Fund and 1948 Ventures.
The SNC report indicates that the pace of investment in startups has stabilized at half a billion dollars a month since the war. Mergers and acquisitions reached a peak of $2.6 billion in March, in what appears to be a trend that will only increase as many companies begin to run out of money in the coming months. The missing leg in Israeli high-tech is still public funding, without IPOs at this stage and with the expectation that the window will open towards the beginning of 2025.
