Israeli Startups Raise $39b in a Decade – and a Record Fifth of That in 2019

Seed money for new companies is down, but mega deals are up, and the trend is set to continue

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The "High-tech Park" office neighborhood in Raanana, Israel, February 3, 2018
The "High-tech Park" office neighborhood in Raanana, Israel, February 3, 2018Credit: Tomer Appelbaum

Israeli startups raised $39 billion in a decade, and some one-fifth of that sum – $8.3 billion – was raised last year alone, continuing a trend of record years.

There were 522 fundraising deals last year, compared to an average of 300 per year for the decade as a whole.

A new record was set in 2019 – and in the years that preceded it – for raising capital. Israeli startups raised 30% more in 2019 than they did in 2018. The increase between 2018 and 2017 was a similar percentage jump.

These figures were presented Wednesday by the law firm Zysman, Aharoni, Gayer & Co. and by the company IVC Research Center.

Last year saw a continuation of the trend of a smaller number of startups raising larger amounts of money, and fewer early-stage startups managing to raise money.

Seed money – money raised by the earliest-stage startups that are just starting out – was the only category of fundraising that was on a downward trend by the end of the decade, in terms of both the total amounts raised and the total number of deals. Only $148 million in seed money was raised last year, compared to $169 million in 2018.

In comparison, later-stage fundraising grew.

Shmulik Zissman, a managing partner at Zysman, Aharoni, Gayer & Co., calls the phenomenon “venture capital with less venturing.”

Last year also broke a record for so-called mega deals, those of at least $50 million. There were 41 such deals last year, accounting for half of all money raised.

There was also an unusual number of deals – around 20 – of more than $100 million, a figure previously reserved primarily for exits.

In previous years, there had been five deals or less at such high sums.

The CEO of IVC, Guy Holtzman, said the ongoing increase in large deals was due to the entrance of new investors such as Israeli and foreign private equity funds. The trend is likely to continue this year, he predicted.

Israeli venture capital funds make up a shrinking portion of all capital investments. Last year they accounted for $1.1 billion, which is 13% of all money raised.