In the first half of 2021, Israeli high-tech companies have raised $11.9 billion, a record amount of cash, above the $10.3 billion raised in all of 2020.
According to IVC-Meitar review released today, 230 transactions totaling $6.52 billion were executed in the second quarter of 2021. As a result, the first half of 2021 saw 66 percent of all deals completed in 2020.
In the first half of the year, 38 transactions totaling more than $100 million were closed, accounting for over half of all fundraising during that period. Additionally, the record amount of cash raised in the first half of 2021 – $11.9 billion – above the $10.3 billion raised in all of 2020.
Fundraising records were set in all rounds. Investments in early rounds (Seed and A rounds) continued to grow in the second quarter, hitting 126 transactions and $1.04 billion in volume.
Investments in more advanced rounds (B rounds and above) also increased in the second quarter of 2021, reaching $5.48 billion, up 18% from $4.66 billion in the first quarter. Additionally, the number of quarterly transactions has increased significantly over the last two years, with the median data indicating an increase in capital per transaction in medium and later rounds during the first half of 2021.
In the first half of 2021, 79 transactions totaling $50 million or more were completed, up from 47 in 2020 and 39 in 2019.
Investor preferences remained consistent in the first half of 2021. The majority of cash flowing to Fintech and cybersecurity technology companies: 57 transactions in Fintech, up from 26 in the same period last year. Cybersecurity companies raised $2.9 billion in the first six months of 2021, accounting for over 25% of all capital raised during this period and exceeding the entire capital raised in 2020.
Israeli high-tech activity rose dramatically in the first half of 2021 in the US, Israel, and other public capital markets, as evidenced by the biggest number of initial public offers (IPOs), SPAC deals, and follow-on offerings. 7 transactions were completed through a merger with SPAC firms totaling $2.41 billion.
The Tel Aviv Stock Exchange (TASE) attracted the most initial public offerings (IPOs) during this period (35 deals), accounting for nearly 12% of the total amount raised in the 48 initial public offerings that occurred during the first half of 2021.
This figure shows TASE has established itself as a viable venue for technology businesses with a particular valuation to go public.
“Since 2013-2014, we have not seen such a big number of Israeli high-tech companies go public in such a short period,” said Mike Rimon, a partner at Meitar. “48 Israeli firms performed public offers – either through a “normal” offering or by a merger with a SPAC – of which 35 were completed in Tel Aviv, 12 in the United States, and one in London.”
These firms, according to Rimon, particularly those that went public in the United States, completed their initial public offerings at extremely high valuations, and most of them increased their valuations following the IPO. This tendency is likely to continue in the near future, albeit at a slower pace than in the first half of 2021. Mergers involving SPACs will be evaluated considering the US and Israeli regulators’ concerns about such transactions, as well as performing such businesses following their de-SPACing, which was much worse than that of “conventional” IPOs in the first quarter of 2021.
Israeli high-tech M&A acquisitions totaled approximately $4 billion in the first half of 2021, a rate comparable to that of 2020 when we also saw a downturn. MyHeritage was acquired by Francisco Partners for $600 million; Prospera was acquired by Valmont; and VDOO was acquired by JFrog for $300 million each.
Mariana Shapira, a Senior Analyst at IVC, states: “It appears that Israeli industry remains a strategic target for foreign venture capital investors, with technology companies benefiting from generous investments at every stage, with serious investors participating in earlier stages, which results in increased fundraising volumes and an increased chance of success.
The expansion of Israeli investors’ activities, as well as high company values, indicate that cash is available, and a good trend in the flow of funds to the high-tech industry is projected to continue in 2021.”