Tel Aviv at sunset, Israel
Israel Startup Nation 2023 suffered through a serious crisis in 2023 as the country saw a huge drop in exits of its firms. This was true for both acquisitions of companies and exits through an IPO which saw an overall drop of 56% compared to 2022.
This is according to the data released by the accounting firm PwC as part of its “exit report” for Israel 2023.
PwC also found that the total value of all such transactions amounted to only $7.5 billion, in comparison to an all-time high of $82 billion set by Israeli companies in 2021. There were only 45 acquisitions and IPOs in 2023 – a decade low for Israel (there were 72 in 2022) – and 19 of these came out of the cyber security related fields the cyber fields. The 19 accounted for $3.8 billion of the $7.5 billion total.
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The amount raised related to all high-tech firms came to $5 billion.
However, 2021 saw the end of the worldwide Covid shutdowns and so it saw a sharp increase in such business deals around the world. So, 2023 would never equal 2021.
Also, 2023 was marked by a continuing worldwide financial crisis caused by the ongoing Russian war in Ukraine. The worst effects may have passed once the war entered its second year but were still felt well into 2023.
Of course, there is also the war in Gaza that began on October 7 and which has seen almost a total end – with some small exceptions – to new major investment in Israeli firms.
“Even as a staunch optimist, I’m worried because we have a crisis within a crisis within a crisis,” said Yaron Weizenbluth, Partner and Head of Assurance and High-Tech cluster in PwC Israel.
“In the world, there is already an expectation of clarity, of lowering interest rates, and there are already quite a few preparations for IPOs,” he added. “In Israel, we have begun to see a recovery in activity, but the main thing we are seeing is small transactions. We recognize a desire for foreign funds to come to Israel, but unlike in the past, there are not enough new companies to invest in simply because not enough companies were opened in the last year. We need the atmosphere in Israel to change and there will be a mood and a desire to establish new companies because the world believes in us.”
