How did Israeli high-tech survive the events of July 10 and the storm of war that followed? A Startup Nation Central report analyzing the nearly six months since Hamas's horrific attack finds that the industry has It shows that it may not be growing, but it is certainly functioning amidst two unprecedented challenges: about 15% of its workforce is drafted into the Israeli Defense Forces Reserve; , will be drafted into the military in the near future. -Complete air travel blockade against Israel makes business travel difficult.
SNC points out that despite the difficult situation, Israel's investment trends in the high-tech sector over the past six months have been consistent with US investment trends.
SNC said 220 private investment rounds have been announced since Oct. 7, raising an estimated $3.1 billion. The average investment was $19 million, with pre-war investments including Next Insurance's $265 million financing led by foreign venture capital funds and $118 million raised by VAST data worth $9 billion. was skewed by several huge fundraisings completed in the.
SNC recorded 12 total funding rounds of more than $50 million in the past six months. The most prolific sector was cyber, which raised $1.1 billion, showing that its image remains intact despite the massive July 10 intelligence failure. Another standout area of funding was fintech and enterprise software, each raising a total of $500 million.
The M&A market was busier than usual, mainly due to the consolidation of the cyber sector that began last summer. Israeli Cyber benefited from this trend, facilitating $3.7 billion in transactions. But its biggest and only $1 billion exit came from a sector that isn't exactly high-tech, selling mattress retailer Resident to Ashley Home for $1 billion in early March.
The second biggest exit was the sale of cyber startup Talon to Palo Alto Networks for $625 million. Other cyber M&A include Dig Security (acquired for $350 million), Avalor (acquired for $350 million), and Gem (acquired for $350 million). Flow Security and Spera Security were acquired for $200 million and $130 million, respectively.
A total of nine companies have been sold for more than $100 million since the war began. These are clearly short-term successes, but in the long term, Israel may be returning to a pattern of developing technology and selling it to large companies at an early stage, without growing large companies. Questions arise.
Although most investments and acquisitions were made by foreign companies, more than 20 new venture capital funds were established in Israel and raised $1.7 billion, according to SNC data. Notable funding includes Team8, which raised $500 million, and his two Red Dot Capital funds, which raised $250 million. Eleven of the new funds are emergency funds established to support startups affected by the war, including the Google Support Fund, Iron Nation Fund, and 1948 Ventures.
Overall, SNC's report shows that since the war, the rate of investment in startups has stabilized at $500 million per month, while mergers and acquisitions peaked at $2.6 billion in March and are likely to continue increasing. It shows. Because many businesses will start running out of cash in the coming months. The missing piece for Israel's high-tech industry remains public funding, and no IPO is expected at this stage, with the window not expected to actually open until early 2025.
