Israeli hi-tech fundraising skyrocketed in the first quarter of 2021, with $5.37 billion raised in 172 deals, according to a report by IVC and the Meitar law firm.
Those numbers are more than double from the same quarter a year earlier, and 89% higher than the fourth quarter of 2020.
The rise was mostly due to 20 deals of over $100 million each during the quarter, which represented some 55% of the total, the report said. That was attributable to increased activity by foreign investors, who made 594 investments in 124 deals, compared to the average of under 400 quarterly investments in 2019-2020.
“The high amounts in Q1/2021 funding resemble the surge in tech companies’ valuations in Nasdaq indexes,” the report noted. “However, the high correlation between the Israeli private tech companies funding and Nasdaq valuations suggests that Israeli tech financing might expect some decline in the capital flow further into 2021.”
VC-backed deals continued their growth trend, accounting for 96% or $5.18 billion in 134 deals. On the other hand, non-VC-backed deals continued to shrink as a share of the overall investments and sank to 22%, probably another sign of the ever-increasing valuations.
“COVID-19 strongly impacted Israel in 2020,” said Marianna Shapira, Research Manager at IVC. “The year 2021 started on a much more positive note for the Israeli hi-tech industry, resulting in the record quarterly capital intake, as well as a rebound in exit proceeds, demonstrating a bustling quarter in local initial public offerings activity.
“However, this robust quarter has been successful mostly for the growth stage, veteran companies that have been accepted on global scale, and possess long-term connections with the foreign investors community. A different picture can be seen on the other scale of the Israeli startups’ scene. Though younger startups enjoyed some increase in capital intake, their numbers didn’t climb up, which implies that there is much harder competition among companies seeking capital”.
There were 21 Israeli IPOs during the quarter, with 19 of them on the Tel Aviv Stock Exchange. However, the “big money” came from Wall Street, with Playtika’s Nasdaq IPOworth to $2.16 billion, the report noted.
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