Tech ecosystem is resilient
On October 7, when Hamas brutally entered Israel and the Gaza war began, there was a pause in all Israeli hi-tech deals, leading to worries about the competitiveness of local hi-tech companies compared to firms in more politically stable nations globally.
However, Startup Nation Central’s new analysis, released Sunday and based on data published on its Startup Nation Finder platform, indicates that Israel’s hi-tech sector has remained “strong and stable.”
“Despite significant challenges, such as a decrease in human capital by about 15% due to military enlistment and shortterm funding gaps affecting small start-ups, the Israeli technological ecosystem demonstrates resilience, continuing to attract investments, investors, and venture capital activity,” Startup Nation Central said.
According to the data, since October 7, there have been 220 private investment rounds worth around $3.1 billion, with an average investment of around $19 million.
The data showed that health technologies led in the number of investment rounds, followed by software solutions and security technologies.
The leading sector in fundraising amounts was security technologies, with nearly $1.1b. raised.
Mergers and acquisitions since October 7 were worth $3.7b., including two large acquisition deals of nearly a billion dollars each. Public data show that companies were sold for over $1.5b. in March alone.
“We’ve seen the tech sector rebound from zero, with much larger fundraising volumes compared to the same period a year ago,” said Itay Rand, a general partner at 10D, in a separate release. “In terms of investments, there was almost no activity in the market during October-November, but in the current quarter, we’re seeing a return of global funds interested in Israel.”
He said, “Israeli tech is in great momentum; many employees have returned from reserve duty in recent weeks, feeling their presence in startups where, thanks to human capital, they’re progressing faster.”
Regarding investments in Israel in general, Startup Nation Central showed that the downward trend matches that of the United States. However, new money is also coming into the country.
The Startup Nation Central report showed that more than 20 new funds have been established since October 7, raising a total of $1.7b. Of these, 11 funds were established to address the urgent funding needs of startups facing financial challenges due to the war’s impacts.
Israeli tech has been operating under the slogan “Israeli tech delivers no matter what,” focused on the US market. Companies have told The Jerusalem Post in various interviews that the concept is working.
Pavel Gurevich, who recently sold his cybersecurity company for $600m. to Akamai and now manages its operations in Israel, said the continued performance of the Israeli tech elite “is primarily a tribute to entrepreneurs and Israeli techies who succeed in creating breakthrough technology, building companies, and selling them under such conditions.”