According to a report from IVC, in 2022, Israel Startup Nation high-tech companies raised $14.95 billion in 663 different deals. In Q4 2022, $2.02 billion was raised in 121 different deals. The outcome of the investment activity in 2022 supports the perception of a slowdown, with a drop of more than 40% from the amounts raised in 2021.
So, to be clear, only 1/7 of the amount raised by Startup Nation in 2022 came in the year’s final quarter. This was clearly due to the worldwide financial crisis that stemmed from the Russian invasion of Ukraine. The year, however, began on a high note as the port Covid rebound at the end of 2021 continued.
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The last quarter of 2022 saw a rash of layoffs by Israel Startup Nation firms, delayed IPOS and even outright closures of some companies. And new investments also plummeted, with some companies actually seeing drops in their valuations after new raises. IVC found that the aggregate number of pre-seed and seed rounds continued to decline from their peak in Q4/2021 and that seed amounts continued to drop as well, although they were still much higher than the ranges we saw before 2021.
Key findings for Startup Nation Q1–Q4/2022:
The Israeli tech industry realized a downslide in 2022, with the second highest amount ever raised: $14.95 billion raised in 663 rounds, 42% and 15%, respectively, below 2021 figures.
Q4/2022 continued to plunge, as seen through Q1/2022–Q3/2022, with $2 billion raised in 121 capital raising rounds.
Capital inflow from mega deals (over $100 million each) slipped to the 2018–2019 pace, with 36 mega rounds over the year, contributing 39% of the year’s amount, compared to a 54% share of the total amount in 2021.
Early round financial activity remained robust for most of the year, but Q3 and Q4 provided evidence that early stage companies are starting to lose their appeal.
120 exits were completed in 2022, with 101 M&As totaling $12.7B.
IVC estimates that 706 new companies were established in the course of 2022.
The capital raised in 2022 accounted for 58% of the total raised in 2021, while the number of deals reached 85% of the total number of deals made in 2021.
In Q4/2022, two additional Israel Startup Nation high-tech companies reached the valuation threshold of $1b, making the total number of new unicorns 23, surpassing all previous years, but still half of the record 42 new unicorns in 2021.
But IVC said Capital raising among existing unicorns was not impressive in 2022 and fell sharply closer to the year’s end.
In short, while Q4 2021 saw huge growth for Startup Nation as it rebounded from the Covid crisis, Q4 2022 saw a steep decline in investments.
IVC Research Center is an Israeli high-tech and venture capital online database, providing information and analysis since 1997
