Breaking

Humanitarian Crises: Ongoing conflicts and natural disasters displacing millions of people worldwide. Calls for international cooperation and increased humanitarian aid to address these crises.
Space Exploration: Successful landing of China’s Zhurong rover on Mars, marking the country’s second successful interplanetary landing. Continued international cooperation in space exploration, with upcoming missions to the Moon and beyond.
Social and Political Movements: Continued protests and activism around the world on issues like racial justice, climate change, and women’s rights. Political and social tensions in various countries, including Peru, Iran, and Israel.
Public Health Developments: Ongoing response to the COVID-19 pandemic, with new variants and debates over booster shots. Progress in research for treatments and vaccines against other diseases, such as malaria and HIV/AIDS.
The real estate market in Dubai is looking to recover with the search for Israeli investors.
Technological Advancements: Breakthroughs in artificial intelligence, renewable energy, and space exploration. Continued development of ChatGPT and other AI language models, advancements in solar and wind power technology, and successful launch of NASA’s Artemis mission to the Moon.
Economic Uncertainty: Rising inflation and interest rates impacting global economies, leading to concerns about a potential recession. Central banks raising interest rates to combat inflation, with consequences for businesses and consumers.
Global Climate Change: Record-breaking heatwaves and wildfires in Australia, severe storms and flooding in California, highlighting the urgency of climate action. Ongoing international climate negotiations and domestic policies aimed at reducing greenhouse gas emissions.
US Supreme Court Ruling on Affirmative Action: Supreme Court hears arguments in two cases challenging affirmative action in college admissions and contracting. Potential for a landmark decision impacting racial equality in education and business.
US Midterm Elections: Democrats narrowly maintain control of the Senate, Republicans win majority in the House of Representatives. Potential for divided government impacting legislation and political discourse.
Russia-Ukraine War: Escalation in eastern Ukraine, with Russia capturing Avdiivka, its biggest gain in nine months. Ongoing international sanctions on Russia and humanitarian efforts for Ukraine.
Israeli Tech Markets Report in 2020

The Israeli Tech Review, the first comprehensive report of the Israeli High-Tech industry, providing data and insights on investments, M&A and public capital markets activities of the Israeli HighTech industry in 2020.

This year provides a perfect example of why a comprehensive report is crucial to understanding the dynamics in the industry. The days where a quick glimpse at the totals of a financial feature gave the ability to assess the industry strength are long gone. With $10 billion in investments in private companies, over $6.5 billion of funding from public capital markets and $7.8 billion in M&A transactions, understanding the Israeli tech industry requires an analysis from more than one viewpoint.

In the past year, while we have seen a significant reduction in M&A activity in light of COVID-19, Israeli tech companies reached a level of maturity that enabled them to turn to capital markets as a viable exit alternative, leveraging on a rapid increase in investments.

Over recent years, we have seen an upsurge in investments in the range of $30 million and above. While companies that raise such amounts represent, to a great extent, the pipeline of future exits at high valuations, we have flagged the challenge presented to the Israeli high-tech industry – being the gap between the number of companies that are expected to achieve a high exit value v. a consistent and relatively low number of exits of between $500M and $1B.

Indeed, contrary to the M&A activity, investment activity in Israel during 2020 sent an optimistic message with record highs of the number of investments and amounts raised. Strong and high-valuated companies have shown resiliency to the COVID-19 pandemic. Investment activity included an impressive number of growth investments (96 investments of above $30 million and 20 investments of above $100 million in 2020, compared to 65 and 18 in 2019, respectively).

Israeli Tech

These investments provided growth companies with solid financing for their long-term expansion strategies. As a result, the decline in M&A activity does not impair their ability to provide liquidity, which can be achieved through creation of value over time as standalone companies. The strong investment activity, together with the increased availability of capital for deployment, both through domestic and foreign funds, mark this year as an investors’ year.

Early Round Investments (Seed + A Rounds) took a temporary blow during Q1-Q2 of 2020, due to the uncertainty in the financial markets. However, Q3 and Q4 activity compensated for that and we saw a rise in the number of investments, in number and in value.

Because a large part of early investment deals become publicly known 12–24 months after they are closed, the real early investments pattern will be revealed in the upcoming year (for more information see our section about Early Investment in 2020).

We have seen this year that growth equity is seen as a standalone strategy focusing on scale, through organic and inorganic growth. The current Israeli market creates opportunities for deployment of growth capital, and we see Israeli – as well as US – funds, more active in this vertical.

In parallel, low interest rates have attracted investors to the capital markets despite the COVID-19 effects, resulting in an all-time high of both NASDAQ’s and the NYSE’s valuations. This development did not skip Israeli tech companies. In 2020, Israeli companies made 121 funding deals with a total of $6.55B on the capital markets, compared to $1.95B in 2019. Deals included IPOs, follow-on offerings, PIPEs and registered direct deals (RDs), covering equity and debt (straight and convertible) through primary and secondary offerings.

IPOs

Contrary to previous years, IPOs became an attractive exit alternative for growth companies, signaling another step in the maturity of the Israeli high-tech industry and presenting an impressive crop of unicorns. The pipeline for 2021 is strong, across multiple tech verticals, which in turn we expect will result in the long run in an increased M&A activity by such companies, leveraging on their ability to use publicly traded shares as currency.

Another global trend that has affected and continues to affect Israeli tech companies is the return of the SPACs. 2020 brought to the US a record of SPAC IPOs, both in terms of the number of deals and the amounts raised. SPACs provide a relatively painless track for Israeli mature technology companies to enter the public markets with significant available funding, while skipping the tedious and often cumbersome process of an IPO. Interest in the SPAC opportunity is increasing in Israel, promising that 2021 will be another active year for Israeli tech companies on the capital markets.

Recent News & Activity of Review of the Israeli Tech Markets Report in 2020

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