Israeli high-tech shows signs of recovery with $1.6 billion raised in 105 rounds in Q1 of 2024

Could funding in the Israeli high-tech sector be on the recovery trail? Initial findings published by data company IVC, together with LeumiTech, the high-tech banking arm of Bank Leumi, indicate an increase in the scope of fundraisings and the number of rounds in high-tech companies in the first quarter of 2024.

Funding rounds in the first quarter amounted to $1.6 billion in 105 fundraising rounds. While the volume of fundraising was 10% higher compared to the fourth quarter of 2023, it remained 10% lower than the capital volumes raised in the first quarter of 2023. However, the number of rounds reflects a 34% increase compared to the previous quarter, marking a change in trend for the first time since 2022. The full report on capital raising activities in Israel will be published in April.

A considerable improvement was registered in the early-stage rounds, with Seed and Series A rounds recording the first significant increase during the quarter, reaching 80 rounds – an increase of 48% compared to the previous quarter. There was also a recovery in large fundraisings, with six Israeli companies completing capital raisings of more than $100 million. Unsurprisingly, the cyber sector stands out with the raising of $620 million, representing about 40% of the total capital raised in the quarter.

The biggest raises in cyber were Silverport, which raised $116 million, Claroty, which raised $100 million in equity and credit, and Axonius, which raised $200 million at a valuation of $2.6 billion, similar to its last round in 2022. Outside of cyber, Minute Media raised $100 million.

Contrary to expectations, the war did not deter foreign investors, and their involvement in transactions increased compared to the previous quarter. Simultaneously, Israeli funds also became more active, marking the first increase in the number of investments they made since the beginning of 2022.

“In the face of the local instability brought about by the ongoing conflict and the complex macroeconomic conditions, we see that the trend of stabilization in the industry continues into 2024,” said Maya Eisen Zafrir, CEO of LeumiTech. “Israeli high-tech is standing firm and showing encouraging signs of recovery. We are happy to see the growth in the number of transactions among the young companies, which represents a significant expression of confidence by investors in Israeli entrepreneurs.” Eisen Zafrir further added, “Looking ahead, assuming that no extreme geopolitical or macroeconomic scenarios materialize, we hope to see continued recovery in the next quarter.”

“After three consecutive quarters of decreases in the scope and amount of capital raising by Israeli technology companies, the figures for the first quarter of 2024 are surprisingly positive,” said Ben Klein, CEO of IVC. “Despite the economic and political vulnerability, the analysis of the data points to stabilization and improvement, even if modest, in most of the financial parameters of Israeli high-tech. In addition, the significant increase in the number of transactions in early capital raising rounds (Seed, Series A rounds) indicates a positive sentiment among investors, and one can hope that they indicate a change in trend.”