As of December 26, Israeli tech fundraising in 2023 totaled $6.9 billion in 392 deals. Compared to 2022, this reflects a 44% decrease in the number of deals and a 56% drop in the amount of raised capital, with a return to the levels of investment and volumes of activity in 2018 and 2019.
These insights are from a preliminary report by IVC Research Center and LeumiTech on fundraising activity in the Israeli tech ecosystem during 2023. The full Israeli Tech Review is expected to be published in January.
In the fourth quarter of 2023, characterized by war with Hamas in Gaza, Israeli companies raised $1.45 billion in 75 deals and seed rounds climbed to $220 million in 31 rounds.
The figures for Q4/2023 are similar to the range of fundraising activity in 2018-2019. Although a stabilization trend was seen in Q2 and Q3/2023, fundraising activity in Q4/2023 decreased by 15 percent, and the number of deals decreased by 16% compared to Q3/2023.
“We continue to see in the third quarter’s data the first signs of stabilization in the amount and scope of capital raising, which bring us to the levels of 2018-19,” saidLeumiTech CEO Maya Eisen-Zafrir, adding that this is in line with global trends in the tech market.
“Although there is still a decrease in initial investments [early rounds], it is more moderate compared to what we saw in previous quarters. In addition, we recognize a stabilization in the rate of follow-on investments, an indication that the companies are beginning to adjust their value to the new interest rate environment.”
Tzafrir said that while “the difficult events and the fighting of the challenging global macro environment in the last few months have raised the challenge for Israeli high-tech in its global environment,” the relatively moderate decrease of 15% and clear increase in the investment figures in the seed stages “are an indication of the high durability of the Israeli high-tech industry and an important reminder of the role this sector in the Israeli economy has, especially these days.”
IVC CEO Ben Klein said, “The year 2023 was challenging for the Israeli economy in general, and local high-tech in particular. The results of the entire year, especially the fourth quarter, support an optimistic approach towards the local industry. Despite the complexity, foreign investors’ participation level is a clear sign of the attractiveness of Israeli high-tech companies, even in difficult times.”
The report reveals that the war in Gaza did not deter foreign investors. Their participation in funding Israeli tech companies increased at a relative rate, following the trend from the beginning of the year, compared to a sharper decrease in the scope of participation of local investors in transactions in Q4/2023. The presence of foreign investors is a significant indication of the availability of funds for investments, the authors say.
IVC Research Center is Israel’s most comprehensive high-tech and venture capital online database, providing information and analysis since 1997.
Produced in association with ISRAEL21c
