IVC, an Israeli organization that calls itself “Israel’s tech ecosystem’s premier data source,” released its “Israel Tech Review Q2/2024.” The results are to be expected. After a sharp decline in Israel’s high-tech sector – including new foreign investments – caused by the October 7 Hamas terrorist massacre followed by the Iron Swords War in Gaza against Hamas Israel Startup Nation saw a rebound in the first half of 2024.
The IVC Israeli Tech Review offers a comprehensive overview of Israel’s high-tech landscape, covering fundraising, mergers, acquisitions, and capital market trends.
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Despite a challenging environment marked by six months of war, escalating geopolitical tensions, and domestic political instability, investor appetite for Israeli risk assets has proven resilient. Total venture capital funding reached $1.74 billion in Q2, a slight decline of 1% compared to the previous quarter but a substantial 70% drop from the record-breaking $5.75 billion in Q1 2022. Seven mega-deals worth over $100 million each accounted for 49% of the quarter’s total investments.
Israeli tech continued its upward trajectory in Q2 2024, extending a positive trend observed over the past six months. The first half of 2024 marked a turning point, with both total investment and deal count surpassing H2 2021 levels. While the $965 million investment in Wiz during Q2 significantly boosted overall figures, underlying growth remains robust, with capital raised excluding Wiz increasing 19% compared to H2 2023 and 3% year-over-year. Moreover, Q2 2024 achieved sequential and annual growth in both investment and deal count for the first time since Q1 2022.
So far, about 81 companies that were established in H1/2024, but IVC says its estimation suggests 500–600 companies will be established this year. IVC also estimates that 600–650
companies were established in 2023 in what it called a “continuing downtrend noted since
2015.”
“The flow of capital in 2021–2022 created the potential for a change in the trend’s direction
during 2022– 2023,” said IVC, “but the change did not materialize.”
IVC said that the number of deals in H1/2024 is on pace to be much higher than in 2023. IVC’s estimation for the real number of deals (including deals which are excluded from the report, (view IVC methodology for more details), shows a clear directional change in the number of deals for 2024.
This came after a very poor showing in Q4 2023, after the start of the war against Hamas terrorists in Gaza. IVC said that in Q4/2023 the firm saw the lowest level of foreign investor participation so far in this cycle. Foreign investment sentiment can be estimated by using both the number of investors and the number of investments (each deal includes several investments). Both factors show that the participation level of foreign investors has recovered in the last six months.
Israeli investor participation, on the other hand, is still stabilizing following Q4/2023, but has not yet returned to 2018–2019 levels.
