With $2.24 Billion in Funding in a Single Quarter, Israeli Tech Companies Set a Six-Year Record

In the third quarter of 2019, companies based in or otherwise linked to Israel raised $2.24 billion across 142 deals, more than in any quarter since 2013, according to a Monday report by IVC and ZAG

Israel-based or linked companies raised $2.24 billion across 142 deals in the third quarter of 2019, more than in any quarter since 2013, according to a Tuesday report by Tel Aviv-based research firm IVC Research Center and the Israel office of international law firm Zysman, Aharoni, Gayer & Co. (ZAG-S&W). The report shows a slight increase from the second quarter of 2019, which recorded $2.206 billion across 128 deals, and a bigger increase from the third quarter of 2018, which saw $1.63 billion across 119 deals. This is in line with the global trend.

 

Thirteen deals of over $50 million each accounted for 57% of the quarterly sum. There were six deals of over $100 million, according to IVC-ZAG, though some of the capital was in secondary or debt financing. Cybersecurity company Cybereason Inc. raised $200 million from SoftBank Corp. Fintech startup Fundbox Inc. raised a $176 million series C round. Content creation app developer Lightricks Ltd. raised a $135 million series C round ($80 million of it in secondary). Israel-linked car financing company Lendbuzz Funding LLC raised $20 million in equity and $130 million in debt financing. Israel-linked insurance startup Hippo Insurance Services raised a $100 million series D round. Israel-linked Trax Image Recognition raised a $100 million round. Venture capital-backed deals accounted for 72% of the quarter’s total capital raised, $1.6 billion across 81 deals, compared to 81%, or 72 deals, in the third quarter of 2018.

 

 

Tel Aviv. Photo: Amit Sha'al

 

 

Overall, VC-backed deals raised $4.68 billion in total during the first three quarters of 2019, almost the same amount raised throughout all of 2018. Revenue growth companies led the charge, raising $2.58 billion in total during the first three quarters of 2019 across 48 deals, a 65% increase in capital and a 23% increase in deals compared to the entirety of 2018.

 

Israeli VC funds were involved in 56 deals during the quarter and contributed $280 million of the total $1.02 billion these deals attracted. Over the first three quarters of 2019, Israeli VCs made 267 investments, an 18% increase year-over-year.

 

“The proportion of total capital invested in early-stage companies relative to the total capital invested has been declining over the past year, with the lowest rate recorded this quarter,” stated Shmulik Zysman, managing partner of ZAG-S&W. “In contrast to the first three quarters of 2018, the total capital raising of early-stage companies in the first three quarters of 2019 has been relatively stable. Therefore, we have hope that this is not an unequivocal trend but only a warning sign." There was a 30% increase in the number of early stage deals compared to the third quarter of 2018, however, according to the report.

 

Software companies raised the most in the third quarter of 2019, $1.4 billion across 52 deals, 10 of them larger than $50 million. Life sciences companies raised $350 million across 38 deals, up from $239 million across 29 deals in the third quarter of 2018.