Israeli startups continue to break records. They have raised $10 billion since the beginning of the year. This is a continuation of a trend that began in the year 2020 with a $10 billion investment volume for the entire year.
Israeli startups have now surpassed the previous record and still are half a year ahead of us, as investors continue to pour money into technological businesses as they continue their capital-raising effort. This is a major increase in the amount of money going into the Israeli startups, which previously raised $7.5 billion in 2019 and $6.5 billion in 2018.
The first half of the year saw 28 “unicorn” startups raise money, which are companies valued minimum $1 billion. 30 of the fundraising rounds totaled $100 million or more; combined, these mega-rounds accounted for more than $5 billion of the total cash raised. The three high-tech industries that have received most investment are cybersecurity, Fintech (financial technology), and enterprise software.
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Nimrod Cohen, founder, and partner of the TAU VENTURES fund said that “In the last year, we have seen an explosion in everything related to fundraising, both in terms of amounts and value. Some say it is a bubble but I think the Coronavirus has accelerated a process that has happened last year. I mean we, our children, and our parents are in contact with technology.
“This internalization,” explains Cohen, “combined with low-interest rates and a scarcity of investment alternatives, is perhaps part of the explanation for the increased cash flow. As with any trend, there are those who ride the trend and enjoy it without justification, but I believe it will also straighten out in the end. “
According to Lee Mozer, founder and partner of the AnD Ventures fund: “The past year has sped up a lot of processes in the world of investments in high tech and Israeli companies in particular. This flood of money causes some startups to grow too fast and skip important steps in building a stable company. Entrepreneurs find themselves with double the amount they wanted to raise, with an investor who is not necessarily strategically suitable for them,
Hundreds of millions of dollars in funding have become commonplace. January opened with the announcement of OwnBackup, a developer of cloud backup and recovery solutions, which announced a $167.5 million round of funding at a $1.4 billion valuations.
High-Tech companies also claimed large investment closing within 72 hours; for example, the cybersecurity startup Orca Security raised $210 million in a round valued at $1.2 billion just two years after its founding.
Another factor that contributed to the record-breaking is dense capital raisings; if the previous two to three years were spent raising money, a pattern of closing several raisings in less than a year had developed. Thus, the cyber company Salt Security raised three rounds in less than a year amounting to $120 million, the last of which was raised last month $70 million.
According to Roey Eliyahu, the company’s CEO, he did not plan to raise the two additional rounds and the top investors, the reason he agreed to raise additional capital is that the investors were strategic partners.
According to Dekel Percy, founder, and partner of the TPY fund, “Israeli high-tech is undergoing a rapid metamorphosis, as evidenced by startups and entrepreneurs capable of growing into big enterprises, rather than just tens or hundreds of millions of dollars companies. Some reasons for the acceleration are of course the coronavirus effect and the continuation of a low global interest rate environment, which makes the technology sector a desirable investment. ”
