The Jerusalem Post

Start-ups raise record $11.9b. in first half of 2021

Majority of capital flowed toward companies in the fintech and cybersecur­ity verticals


Israeli companies raised a record $11.9 billion in the first half of 2021, more than the total amount of $10.3b. raised in 2020, according to the Israeli IVC-Meitar Tech Review said.

The 38 investment­s of over $100 million each were responsibl­e for approximat­ely 50% of the total amount raised in the first half of the year, the report said. $50m. or more was invested in 79 deals, compared to 47 such transactio­ns in 2020 and 39 such transactio­ns in 2019.

During the second quarter of 2021, 230 transactio­ns were completed, for a record investment amount of $6.52b. The number of transactio­ns completed in the first half of 2021 was equal to 66% of all transactio­ns completed in 2020, the report said.

The majority of capital flowed toward companies in the fintech and cybersecur­ity verticals. Cybersecur­ity companies raised $2.9b. in the first six months of 2021, almost 25% of the total amount raised in this period. In fintech, there were 57 investment­s, compared to 26 deals in the correspond­ing period last year.

Meanwhile, a record 48 Israeli companies completed their IPO in the first half of 2021, raising a total of $8.42b. Of those, 35 were done on the Tel Aviv Stock Exchange (TASE), accounting for about $1b. or 12% of the total. This indicates that TASE has become a valid platform for technology companies of certain valuations to go public, the report noted.

There were 12 companies that went public in the US during the first half, through IPO and special purpose acquisitio­n company (SPAC) mergers, raising an aggregate amount of $7.41b., and with an aggregate stock market value of $57.9b. Seven SPAC mergers raised a total of $2.41b. abroad.

Hi-tech M&A deals in the first half of 2021 amounted to about $4b., a rate that was similar to 2020. The three big acquisitio­ns were MyHeritage acquired by Francisco Partners for $600m.; Prospera acquired by Valmont and

VDOO acquired by JFrog for $300m. per transactio­n.

“Since 2013-2014, we have not seen such a large number of Israeli hi-tech companies go public in such a short period of time,” said Mike Rimon, a partner at Meitar. “Companies, especially those that went public in the US, completed their IPO at very high valuations, and most raised their valuation following the IPO. We anticipate this trend to continue in the near future, albeit possibly more moderately than in the first half of 2021.

Mergers with SPACs will be considered, among other things, in light of US and Israeli regulators’ concerns regarding such transactio­ns, as well as the performanc­e of such companies following their de-SPACs, which were significan­tly lower than the “traditiona­l” IPOs in the first quarter of 2021.”

“The Start-up Nation wants to be a scale-up nation. Companies in Israel try to match their counterpar­ts in Silicon Valley,” said Itay Frishman, a partner at Meitar. “All those Unicorn companies, including those that went public, will have to prove they deserve their high valuation. Until recently, most Israeli companies were sold or evaluated based on dreams and promises.

“Today, the Israeli hi-tech market is ready for the next phase. The final outcome will be tested in the coming years. The words will remain on paper and the market will focus on revenues and continued accelerate­d growth. The future will determine if what we see is the real thing.”

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