From OrCam to Verbit: Big Tech 50 reports the devaluation of leading Israeli startups
From OrCam to Verbit: Big Tech 50 reports the devaluation of leading Israeli startups
Big Tech 50 limited partnership's H1 2024 report highlights widespread devaluation of Israeli startups due to the judicial overhaul and the war in Gaza. Verbit's valuation dropped from over $2 billion to $512 million, Trax's from $2.2 billion to $790 million, and OrCam's from $333 million to just $31 million
High-tech company valuations are among the industry’s most closely guarded secrets and lie at the heart of every fundraising and investment made by venture capital funds in private startups. However, a glimpse into the reports of the publicly traded Big Tech 50 limited partnership for the first half of 2024 reveals the volatility that many Israeli high-tech companies have experienced since 2021, from the years of the great tech bubble to the judicial overhaul and the impact of the war in Gaza on their valuations. The partnership's reports show that while a number of companies have maintained or even increased their value, many others have experienced a significant collapse.
The Big Tech 50 partnership was formed with the goal of creating a portfolio holding shares in 50 leading Israeli tech companies and selling the holdings in the event of an IPO or exit. The partnership holds fractional shares in a large number of prominent companies and notes that changes in the fair value of portfolio companies don’t necessarily indicate a proportional decrease in the company's value, but rather the partnership's assessment of the fair value.
The report indicates that Verbit, which has experienced a significant roller coaster, has seen its valuation plummet from $2 billion in 2021 to a current market cap of $512 million. Big Tech 50 notes that the company faced challenges in 2023 amid a challenging business environment marked by the advancement of artificial intelligence platforms and its impact on the transcription market, particularly in the entertainment sector, where absolute accuracy is less critical and pricing is more flexible. This directly resulted in lower transcription prices, affecting the company's revenue in 2023 and is expected to continue to in 2024.
At the beginning of the year, founder and CEO Tom Livne left Verbit, and Yair Amsterdam was appointed as his successor. The company has invested heavily in developing its transcription models and possesses numerous assets in the field. Big Tech 50 is aware that the accuracy of Verbit's products is higher than that of more generic competitors. Therefore, the company has potential in sectors such as law, medicine, and academia, but it will take time for growth in these areas to offset the decline in revenue. Consequently, the partnership was forced to reduce the value of its holding in the company.
Via, the public transportation management company, has seen its valuation soar from $2 billion at the time of investment to $2.8 billion today. OpenWeb, an edtech player, has also held its ground, maintaining a valuation of around $1.75 billion, slightly below its previous $1.8 billion. At-Bay, a cyber insurance provider, has likewise retained its market value of approximately $2.1 billion.
Fundbox, a fintech firm, is currently valued at $246 million according to the Big Tech 50 reports, a significant decline from its previous billion-dollar valuation. The company has been struggling due to the substantial increase in interest rates, which has severely impacted its small business lending operations.
OrCam, co-founded by Mobileye's Amnon Shashua and Ziv Aviram, has suffered a significant drop in valuation. Its valuation has plummeted from $333 million to just $31 million based on the latest Big Tech 50 reports. OrCam had previously raised capital and even considered an IPO when its valuation surpassed a billion dollars. In July 2024, OrCam announced it would stop developing its vision product and concentrate on its hearing product. The company plans to sell its remaining vision product inventory while focusing on development and sales of its hearing product, which it believes offers higher potential. As a result, Big Tech 50 has significantly reduced its valuation of OrCam, while hoping that the renewed focus on hearing products will prove successful.
Another interesting company is Trax, which developed computer vision and data processing solutions for the retail world. It was valued at $790 million in the reports, a significant drop from 2021 when the company reported raising funds at a $2.25 billion valuation.
Sisense, a veteran company in the local tech industry, also boasted a valuation of over a billion dollars in the past. Since then, it has undergone many changes and several rounds of layoffs. Once valued at $628 million in 2023, Sisense’s valuation decline has continued and is now valued at only $486 million.
Buildots, which developed a system for optimizing the construction industry, also recorded a significant decline in valuation from nearly half a billion dollars in 2023 to $211 million today.
