Israel's tech ecosystem is an innovation powerhouse, tackling global challenges with out-of-the-box, scalable solutions. The high-tech sector fuels 14% of Israel’s GDP, contributes 30% to tax revenues, and constitutes 48% of exports. Plus, with the active presence of 450 world-leading multinationals, Israel’s impatient innovators are a main vector of the nation’s economy.
The aftermath of October 7th tested Israel like never before, yet we know that historically it's during difficult times that Israeli tech rises to the occasion. This snapshot examines ecosystem metrics during the first six months of the current conflict, spotlighting investment trends, venture capital dynamics, and breakthroughs.
Israel continues to attract investors looking for bold and determined solutions to shared global challenges with high potential opportunities. With attractive valuations and significant growth potential, the Israeli tech ecosystem is showing characteristic resilience – no matter what.
There were 220 private investment rounds announced since October 7th with $3.1 billion raised. The average investment amount was $19M. The most notable investment was in Next Insurance where two foreign VCs invested $265 million.
Leading sectors (in number of rounds) are Health Tech (47), Enterprise Software Solutions (42), and Security Technologies (39).
Leading sectors (in the amount raised) are Security Technologies with $1.1B raised and Fintech and Enterprise Software Solutions with above $0.5B each.
Since mid-2022 private investments are in decline worldwide. Analyzing the 4-month moving average in order to reduce monthly volatility shows that despite the proposed judicial overhaul and the Gaza war, the downward trend in investment in Israel is on par with the US; Israel did just as bad and not worse.
The sum of M&As since October 7th stands at $3.7B. Two very large M&A deals were finalized with the total acquisition amount nearing $1 billion.
Nine acquisitions deals of over $100m were finalized. Six of these acquisitions were in the Security Technologies sector: Talon Cyber Security was acquired for $625M and Dig Security, Avalor and Gem were acquired for $350M each. Flow Security and Spera Security were acquired for $200M and $130M respectively.
Health Tech had the third largest deal with CartiHeal acquired for $330M and the sector accounted for $425M of total M&A value. Enterprise Software Solutions M&As amount reached to $240M.
Since October 7th, over twenty new funds were established, raising a total of $1.7B over the course of six months.
Eleven of these funds were established to address urgent funding needs for startups impacted by the war and to show confidence in the Israeli tech ecosystem. These funds include: Iron Nation; 1948 Ventures; OurCrowd – Israel Resilience Fund; SYN Ventures – Cybersecurity Seed; Trendlines – Startup Shield SPV; TechShield; Google Support Fund, and more.
Since the war, private funding was stable and averaging ~$0.5B per month. M&A exits peaked in March at $2.6B while public funding was low, with no major IPO’s.
This spotlight was composed by Aaron Gefen, Senior Business Data Analyst at Startup Nation Central.