H1 2024 REPORT
Israeli Tech Ecosystem
July 17, 2024
Content
Introduction
Executive Summary
Israel’s Risks Overshadowed by Growth in Mega Rounds and Cybersecurity
Despite Israel’s risks, the investment landscape remains robust and dynamic. One might expect the “Israeli factor” to have a stronger impact, but the data suggests otherwise. While some investors are hesitant, others are attracted by high-quality companies and appealing valuations and instead seek to increase their investments. ‘Rising stars’ in the startup landscape continue to secure funding, especially those in popular sectors, while early-stage and early-growth companies in less-trending verticals do face greater funding challenges. Recent investment activity, the rebound of the Finder Nasdaq Index (see below), and M&A activity highlight the resilience and uniqueness of Israeli tech, showcasing groundbreaking solutions and continued global relevance. Innovative technologies, attractive valuations, and global consolidation in the cyber sector contribute to maintaining Israel’s status as a global innovation hub, drawing investors seeking high-quality opportunities.
Rebound in Private Funding Driven by Mega Rounds
Private funding in H1 2024 saw a 31% increase compared to H2 2023, amounting to $5.1 billion raised across 322 rounds. Further estimates suggest this figure could reach $6.7 billion when accounting for unreported rounds and undisclosed amounts. Q2 was particularly strong, with funding rising from $1.8 billion in Q1 to $3.3 billion in Q2. Fourteen mega-rounds (those above $100 million) contributed $2.8 billion, representing 56% of total private funding, overshadowing weaker sectors and providing much-needed funding for many early-stage and mid-stage companies.
Cybersecurity’s Increasing Dominance
The Cybersecurity sector played a crucial role in the Israeli tech ecosystem, representing 52% of private funding in H1 2024. This prominence was highlighted by Wiz’s record $1 billion round. Additionally, Cybersecurity M&A exits totaled $1.5 billion across 9 deals, accounting for 35% of 2024 H1 exits.
Examining global trends in cybersecurity funding reveals a notable divergence between the US and Israel. In 2018, cybersecurity accounted for 20% of the funding in both ecosystems. Over the years, the share in the US declined to approximately 13%, while in Israel it grew to 25%. By H1 2024, cybersecurity funding in Israel had surged to just over 50%. These trends underscore the sector’s critical importance and attractiveness to investors.
However, it is difficult to separate this from the global context. The consolidation of solutions worldwide has led to an acquisition spree by both Palo Alto Networks and CrowdStrike, whose duration is uncertain. Notably, we have seen Cisco’s $28 billion takeover of cybersecurity and analytics company Splunk earlier this year, and discussions about Google potentially acquiring Wiz as part of its Cloud strategy. Additionally, we observe the significant ambitions, progress, and acquisitions of Wiz, SentinelOne, and Check Point. This global competition is felt strongly in our ecosystem because of our relative advantage in cybersecurity. However, if the ecosystem remains overly dependent on cybersecurity in the long term, it risks missing out on other significant trends and opportunities.
Global Funding Comparison
Israel’s private funding growth of 31% in H1 2024 outpaced other regions. The US saw a 28% increase, while Europe and Asia experienced declines of 6% and 18%, respectively. Israel’s significant Q2 surge was notably higher than the more gradual trends observed in the US, Europe, and Asia.
Surge in M&A Exit Activity Despite Low Number of Deals
M&A exits in H1 2024 surged to $4.1 billion despite fewer deals, a 70% increase from H2 2023. Aside from H2 2021, this marks the highest value since 2018 and continues the upward trend from H1 2023. Notable deals included two acquisitions each exceeding $1 billion. Looking at all M&A activity, total transactions reached $7.1 billion, matching the previous half.
Global Investor Participation is Pivotal
Global investors took a key role in H1, accounting for 46% of the 217 active investors in Israel. These investors participated in rounds accounting for 93% of all funding, a seven-year peak. Of note are leading global investors Insight Partners and NFX Capital, each of whom conducted seven rounds, while Sequoia and Greylock reopened local offices.
Finder Nasdaq Index Signals a 2024 Rebound in Private Funding
The new Finder Equal-Weight (EW) Index, based on Israeli tech companies traded on NASDAQ, has revealed significant trends correlating with Israel’s tech ecosystem private funding. Notably, the Finder Nasdaq Index may serve as a forward-looking indicator for Israel’s private funding approximately 6-12 months in advance, providing investors and stakeholders with an early warning system to anticipate and prepare for market shifts.
A closer look at changes to the index reveals significant divergence coinciding with the government’s introduction of the Judicial Reform, which led to a decline in the index, followed by further underperformance due to the outbreak of war in October 2023. This war-related underperformance narrowed, reaching parity with the NASDAQ EW index by March 2024. However, following S&P’s downgrade of Israel’s credit rating, the gap widened again, underscoring the geopolitical and economic challenges faced by Israeli tech companies.
Public Companies and PIPEs
PIPE (Private Investment in Public Equity) funding increased by 90% to $359 million, maintaining its status as a primary source of investment for public companies amidst a dry IPO market.
Sector Private Funding Analysis Reveals
– Cybersecurity: Reached its fourth all-time high.
– Agrifood and Climate Tech: Grew beyond 2020 levels.
– Fintech: Stabilized at 2018 levels.
– Health Tech: Continued its decline from 2021 highs.
– Business Software: Reached a seven-year low in funding while accounting for 25% of total M&A exits.
In summary, with 7,158 active startups and 217 active investors, private funding rebounded and M&A activity surged. Global investors continued to play a pivotal role. This growth underscores the confidence in Israeli tech innovation but should not obscure the challenges of raising capital and growing companies across funding stages.
Yariv Lotan,
VP of Digital Products, Development, Data and Insights
Ecosystem perspective
Zohar Alon
Cybersecurity entrepreneur and investor
H1 2024 will be remembered for the crazy times we live in. As Israel fights on literally all fronts, its startups are experiencing a positive period, where the cyber-security sector, which I focus on as an investor and an active board member, is topping the charts, in both exits and funding rounds.
We saw our first $1B up round (Wiz), followed by a $1.5B acquisition (Venafi by Cyberark), Wiz made its first 9-digit acquisition (Gem for $300M) and, the under three years old toddler, Avalor, was acquired by Zscaler for $315M.
Our industry proved that Made-in-Israel categories like DSPM will continue and generate positive returns, with the 5th Israeli acquisition in the space (Tenable acquires Eureka.) Yes – that’s 5 Israeli cybersecurity exits in the DSPM category that generated positive (sometimes very positive) returns. And if that wasn’t enough, it was topped by Cyera’s $300M mega round reminding us that we still spawn Unicorns.
The seed arena was only quiet on the surface, behind the stealthiness things got very busy – one of the common themes I’ve heard more than once was, that “It feels like 2021 all over again!”. The VC supply keeps increasing with new players emerging and hitting the ground running like Picture Capital, together with new mega funds raised by the likes of Team8 and supported by the renewed interest of tier-1 global VCs that decide to up their game and set up local presence.
What to expect now? H2 will be dominated with AI security stories across funding, dream teams forming and the first cyber AI blue and white exit(s).
Irit Kahan
Managing Director Goldman Sachs Growth Equity
Despite the incredibly difficult challenges our country is facing, the Israeli tech ecosystem has shown tremendous resilience in 2024 with investment volumes being on par, and even slightly topped, the capital contributed during the first six months of last year. The amazing people of Israel have helped to keep the ecosystem intact and have united during the most tragic period in our country’s history. We have witnessed the strength and resilience of our ecosystem with players around the world reestablishing or opening offices in Israel. Local and foreign investors have been active in early and late-stage opportunities, and we anticipate this momentum will continue into the second half of the year. We’ve seen a number of serial entrepreneurs launch new ventures in 2024, as well as several high-profile M&As and large funding rounds. Foreign capital continues to be allocated here, with several new investors making an entrance into Israel. We will see a continued focus on cyber security and defense tech, and we should continue to prioritize talent and know-how in AI, ensuring Israel is a leader in AI innovation. I’m continually amazed by the strength and unity of the Israeli tech community.
*This communication is for informational purposes only. It may discuss general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.
Ecosystem Analysis
Landscape
Tech Companies
Active Investors
H2 2023
H1 2024
Events
Amount
Events
Amount
Private Funding
314
$3.9B
322
$5.1B
Public Funding
31
$915M
36
$825M
M&A Exits
25
$2.4B
29
$4.1B
IPO's
1
$0.4B
1
Undisclosed
* Active Investors are defined as investors with at least 1 investment round in H1 2024 and which meet the Investors criteria in the Finder Glossary
Private Funding
Reported private funding in H1 2024 was $5.1 billion, a 31% growth compared to the prior half. Accounting for yet-to- be-reported rounds and rounds with undisclosed amounts, it is estimated at $6.7 billion (which is a 42% increase from H2 2023’s $4.7 billion estimation). This surge was driven by a strong Q2, with reported funding rising from $1.8B in Q1 2024 to $3.3 billion, the highest since Q2 2022. The estimated number of rounds also increased to 362, up from 345 in H2 2023. Startup Nation Central remains unique in estimating unreported rounds and undisclosed amounts, providing a comprehensive view of the investment landscape.
* Estimation for rounds with an undisclosed amount is based on the median amount of the same round type in the same year
** Estimation for latest quarters also considers historical patterns of the delay in publishing rounds and thus attempts to account for additional rounds that are not known yet
Private Funding - Global Comparison
Private Funding - Top Rounds
In H1 2024, the Israeli tech ecosystem saw 14 mega rounds (above $100 million). This is an increase from 8 mega rounds in H2 2023. These mega rounds accounted for $2.8 billion out of the total $5.1 billion in private funding, representing 56% of the total compared to 32% in H2 2023. This marks the highest ratio of mega rounds to all private funding since H2 2021, which stood at 59%. Wiz stands out with a $1 billion round, representing 20% of all private funding. Notably, 8 of these mega rounds were in the cybersecurity sector.
Here is a list of all companies that raised funds during H1 2024.
Private Funding - Investors Origin
The Israeli tech investment landscape featured 217 active investors in 2024 H1, 54% of whom are Israeli. Deals typically involve multiple investors, prompting our unique analysis categorizing rounds into Israeli-only, global-only, and mixed investments.
Over the past year, share of funding from investments solely by Israeli investors has seen a decline, with the median round size rising to $5 million in H1 2024. In contrast, rounds involving both Israeli and global investors have significantly higher median sizes, rising to $20.5 million. Investments by global investors alone also show substantial rounds, with a median of $5.5 million. This trend underscores the increasing importance of global collaboration to secure larger funding rounds in Israel’s tech ecosystem. This difference in the median can be explained by the fact that 85% of solely Israeli investor rounds were in early rounds, while rounds with both Israeli and global or just global investors where evenly spread between early, medium and late rounds. Global investors have reached their highest point in the past seven years in terms of the share of rounds they participated in (both and only global investors).
Share of private funding of rounds based on the origin of the investors participating in the round. Round classification: Israeli (only), Global (only), or Both (Israeli and global investors)
Median round size, when classifying the rounds according to Investor Origin: Israeli (only), Global (only), or Both (Israeli and global investors)
Private Funding - Leading Investors
OurCrowd continues to be the leading investor with 52 investments in H1 2024. Iron Nation an emergency impact fund continued the momentum with 13 investments. Among the global investors, Insight Partners and NFX Captial, two American VCs, lead the chart with 7 investments each.
Here is a list of all investors who participated in funding rounds during H1 2024.
Israeli Investors
Global Investors
Merger and Acquisitions
M&A Exits
In H1 2024, Israeli tech M&A exits surged to $4.1 billion, a 70% increase from H2 2023’s $2.4 billion. The number of M&A rounds rose to 29 from 25 in H2 2023. This marks the highest value since at least 2018, excluding H2 2021, and continues an uptrend from H1 2023. This growth reflects a robust and dynamic M&A environment, highlighting strong demand for Israeli tech companies.
All M&A
Considering all M&A activity (not just first time), the total transaction amounts reached $7.1 billion. The period saw several high-profile acquisitions, particularly in the Cybersecurity and Business Software sectors, which were pivotal in driving the overall growth. Noteworthy deals included WalkMe’s $1.5 billion acquisition by SAP and BioCatch’s $750 million acquisition by Permira, highlighting the increasing interest and investment in Israeli tech solutions from global enterprises. This uptick in M&A activity reflects the robust innovation and value proposition of Israeli tech companies in the global market.
Top M&A Exits
One notable exit in H1 2024 is Resident Home which was acquired by Ashley Home for $1B. The most prominent sector among M&A exits was Cybersecurity with 5 out of the 10 top M&A exits.
First time M&As only
Public Companies
Public Companies - IPO exits
In H1 2024, IPO activity in Israel’s tech sector was minimal, with only one undisclosed IPO event. This marks a continuation of the trend from H2 2023, which also saw a lack of significant IPOs. The low IPO activity highlights the cautious market sentiment and preference for other funding mechanisms during this period.
Public Companies - Funding
In H1 2024, PIPE (Private Investment in Public Equity) funding reached $359 million, a notable increase from $189 million in H2 2023. Public Offerings also rose to $466 million from $303 million in the previous half. The number of PIPE events held steady at 2023, and Public Offering events remained stable at 12, indicating consistent interest in public market funding.
Public Companies - Finder-Nasdaq Index
Tracking public companies is essential for a comprehensive understanding of the Israeli tech ecosystem. It provides insights into the sector’s maturity, market trends, and the economic impact of these companies. Nasdaq’s significance to the Israeli tech scene lies in its role as a leading global stock exchange that attracts substantial international investment, offering Israeli startups access to a vast pool of capital and increased visibility. Establishing an index of SNC’s Finder companies listed on Nasdaq would enhance transparency and provide a valuable benchmark for investors and stakeholders, reflecting the ecosystem’s performance and growth potential.
Current Distribution of Israeli Public Tech Companies
Number of Israeli Tech Companies Traded on Nasdaq Over Time
An equal weight (EW) index is more suited for evaluating Israeli tech companies’ performance in Nasdaq as Nasdaq is largely influenced by major companies like the “Magnificent Seven.” Examining the performance since October 2023, one can see that despite an initial underperformance due to the October war, the Finder EW Index reached parity with an equivalent Nasdaq EW Index by March 2024. However, the gap widened again likely due to S&P downgrading, in April 2024. This illustrates the challenges faced by Israeli tech companies amidst geopolitical and economic pressures.
Finder Nasdaq Index - since October 7th
The Finder EW Index appears to be a predictive indicator for trends in private funding within Israel’s tech ecosystem. As illustrated by the attached graph, the index signaled a decline in private funding as early as 2020, which then became more pronounced in 2021. This correlation suggests that tracking the Finder EW Index could offer valuable foresight into the movements of private funding. Notably, the index and private equity funding both exhibited significant declines after peaks in 2021, highlighting their interconnected dynamics and potential as a forecasting tool for investment trends. Furthermore, the Finder Nasdaq Index seems to be indicative of trends in Israel’s ecosystem private funding a year in advance, providing an early warning system for investors and stakeholders to anticipate and prepare for market shifts.
Finder Nasdaq Index - since October 7th
Sector analysis
We have recently made improvements to the Finder Sector Classification system to enhance its structure and accuracy. Please note that some of the sector names have changed and figures in this report may be different than the figures in prior published reports.
Health Tech
The Health Tech sector remains a cornerstone of Israel’s tech ecosystem, demonstrating resilience and innovation. Private funding in Health Tech reached $455 million in H1 2024, down from $712 million in H2 2023, reflecting broader cautious investment trends yet sustained interest. Public companies in Health Tech saw an increase in PIPE funding to $359 million and public offerings to $466 million, indicating robust market presence. Leading investors such as OurCrowd, Peregrine Ventures, Iron Nation and Vertex Ventures Israel continue to support the sector, while most-watched companies like Evinature, TailorMed, and TytoCare highlight the innovative solutions emerging from Israel, addressing critical health needs. This aligns with the broader Israeli tech ecosystem, maintaining strong global investor interest despite fluctuating investment volumes, highlighting Health Tech’s adaptability and sustained growth within Israel’s technological landscape.
Here is a list of all Health Tech companies that raised funds during H1 2024, and a list of all investors who invested in Health Tech companies during H1 2024.
MOST WATCHED COMPANIES
Leading Active Investors
Climate Tech
The Climate Tech sector demonstrates steady growth within Israel’s tech ecosystem. In H1 2024, private funding in these sectors reached $566 million, up from $413 million in H2 2023, showing resilience and increased investor interest from key players like OurCrowd, DIVEdigital, Iron Nation, Entrée Capital and Next Gear Ventures. Public companies also saw notable funding activities, with PIPE funding reaching $47.48 million and public offerings totaling $88 million. Leading companies such as CleanFlare (Energy Tech), Hailo (Climate / Industrial Tech), and PoLoPo (Ag Tech and Food Tech) are gaining significant attention, addressing critical issues in agriculture, food production, and climate technology.
Here is a list of all Climate Tech companies that raised funds during H1 2024, and a list of all investors who invested in Climate Tech companies during H1 2024.
MOST WATCHED COMPANIES
leading active investors
Fintech & Insurtech
In H1 2024, the Fintech & Insurtech sector in Israel showed robust activity with $447 million in private funding, slightly down from $481 million in H2 2023. Public companies raised $62 million through public offerings showing investor interest from key players like Union Tech Ventures and Aleph. Prominent companies such as Bounce, eToro, and BridgeWise are gaining significant attention with innovative solutions in debt recovery, social trading, and financial research technology.
Here is a list of all Fintech & Insurtech companies that raised funds during H1 2024, and a list of all investors who invested in Fintech & Insurtech companies during H1 2024.
MOST WATCHED COMPANIES
leading active investors
Cybersecurity
The Cybersecurity sector in Israel experienced significant growth In H1 2024, with private funding reaching $2.7 billion, a substantial increase from $1 billion in H2 2023. Key investors such as Sequoia Capital, CyberStarts, Lightspeed Venture Partners, and Accel played a pivotal role in this growth. Prominent companies like Wiz and Cyabra are gaining significant attention from investors, offering innovative solutions in smartphone surveillance, cloud security, and uncovering fake online content. Cybersecurity is leading Israel’s tech recovery in 2024, contributing significantly to top M&A exits and overall funding rounds.
Here is a list of all Cybersecurity companies that raised funds during H1 2024, and a list of all investors who invested in Cybersecurity companies during H1 2024.
MOST WATCHED COMPANIES
leading active investors
Business Software
The Business Software sector experienced a decline in private funding, totaling $576 million, down from $846 million in H2 2023. Despite the decline, key investors such as Aleph, Iron Nation, and Cardumen Capital remained active. Companies like Zeekit, DEEL, and accessiBe are still drawing significant investor interest with their innovative solutions in virtual fitting rooms, payroll and compliance, and AI-powered web accessibility.
Here is a list of all Business Software companies that raised funds during H1 2024, and a list of all investors who invested in Business Software companies during H1 2024.
MOST WATCHED COMPANIES
leading active investors
Methodology Notes
- We have recently made improvements to the Finder Sector Classification system to enhance its structure and accuracy. Please note that some of the sector names have changed and figures in this report may be different than the figures in prior published reports.
- The report is based on the STARTUP NATION FINDER database.
Except for US, Europe, and Asia metrics in the Global Comparison section which are based on PitchBook. - It is a snapshot of H1 2024 activity as of June 30th, 2024.
- Figures might further revise in the future as the activity continues to be revealed.
- We have recently made improvements to the Finder Sectors Classification system to enhance its structure and accuracy. Hence the figures in this report may be different than the figures in prior published reports.
- The definition and criteria for companies and investors can be found in the FINDER Glossary under the terms “Companies” and “Investors”, respectively.
- Active Investors are defined as investors with at least 1 investment round in H1 2024 and which meet the criteria in the Finder Glossary. Leading investors are selected based on the number of investments and supplementing criteria.
- Aggregative metrics may include rounds that are not visible in Finder, per the request of the profile owners.
- Climate Tech is not considered a primary sector. Hence Climate Tech companies may be included in multiple sectors.
- Funding Type definitions:
- Private Funding includes the following round types: Pre Seed, Seed, A, B, C, D, E, F, G Rounds, Convertible Debt, SAFE, Equity Crowdfunding, and Undisclosed rounds.
- Funding for Public companies includes the following event types: IPO (including IPO via SPAC or Reverse Merger), Non-Initial Public Offering, PIPE.
- The following events are excluded: Crowdfunding, Debt Financing, Secondary, and Grants.
- The Most Watched Companies in each sector is derived based on page views in Finder.
- Finder index data was calculated using data from Finder and Nasdaq stock exchange data. For explanation of precise methodology of the index creation contact the authors.
- Links to lists are dynamic and provide current snapshots, so the results might not exactly match the figures in the report.
About Us
Startup Nation Central is a free-acting NGO providing global solution seekers frictionless access to Israel’s bold and impatient innovators to help tackle the world’s most pressing challenges.
Deeply immersed in the Israeli technology ecosystem, we provide a platform that nurtures business growth, influences policies, and cultivates partnerships with corporations, governments, investors, and NGOs to fortify Israel’s economy and society.
Our free business engagement platform, Finder, grants unrestricted access to real-time, updated information and deep business insights into the Israeli tech ecosystem. Whether you are a global investor, a multinational corporation, or an Israeli startup seeking like-minded entrepreneurs, Finder enables you to discover, explore potential opportunities, and forge valuable business connections.
This report was composed by Einat Ben Ari, Head of Data and Insights; Aaron Gefen, Senior Business Data Analyst; Deema Watad, BI Developer; Odeya Hazani Cohen, Data Analyst Intern
Report Editor: Yariv Lotan, VP of Digital Products, Development, Data and Insights.