Optimism grows for Israeli tech IPOs amid global market recovery
Optimism grows for Israeli tech IPOs amid global market recovery
Venture capitalists see 2025 as a turning point, but geopolitical risks remain in focus.
After two years of stagnation, the Israeli high-tech IPO market could make a comeback in 2025, with at least five Israeli companies expected to go public, according to a new survey by Poalim Tech, the high-tech banking arm of Bank Hapoalim, and research firm Meidata. The survey, which gathered insights from senior executives of leading venture capital funds that invest in Israeli companies, reflects cautious optimism for a rebound in public offerings on U.S. stock exchanges, particularly Nasdaq and NYSE.
One notable name already in advanced preparations is Shlomo Kramer's Cato Networks, which is expected to list on a U.S. exchange following the first quarter of 2025. Although the survey did not specify other companies, experts predict a stronger pipeline of high-growth tech firms readying themselves for IPOs in the coming years.
The anticipated revival comes after a sharp slowdown in global and Israeli IPO markets. The past two years were characterized by rising U.S. interest rates, a global economic downturn, and steep declines in technology stock valuations, all of which dampened investor appetite for public offerings. This slump contrasts sharply with 2021, a record year when over 20 Israeli companies went public, collectively raising more than $4 billion.
Venture capital investors responding to the survey highlighted stricter benchmarks for IPO candidates in the current market environment. Companies pursuing public offerings in 2025 are expected to meet higher revenue thresholds, ranging between $200 million and $250 million, with early issuers potentially requiring revenues closer to $500 million.
In addition to revenue, investors are placing a stronger emphasis on profitability and sustained growth. Companies will need to demonstrate annual growth rates of at least 30%, a more demanding target than in previous years.
The survey identified key sectors with high IPO potential, including cybersecurity, B2B software and SaaS, cloud infrastructure, artificial intelligence, fintech, healthcare, data, and travel. The timing of a market reopening will likely depend on three main factors: anticipated interest rate cuts in the U.S., the shift in U.S. political leadership, and geopolitical developments in Israel.
Interestingly, most investors believe that Israel's domestic security challenges will not significantly impact IPO activity in the U.S., as many Israeli companies operating globally have diversified operations outside of Israel. However, lingering uncertainty around proposed legal reforms in Israel could add to the perceived risk of investing in Israeli firms.
Michal Kissos Hertzog, CEO of Poalim Tech, expressed optimism about the future of Israeli IPOs. "I am very optimistic about the coming years, which look promising for Israeli high-tech companies aspiring to list in the U.S. According to the survey, between 2025 and 2026, we will see a significant number of IPOs by global software companies, and I believe that at least 2-5 of them will be Israeli."
Hertzog also noted a key trend emerging from the survey: companies are taking longer to prepare for public offerings. "Firms want to establish a solid base of operations and profitability before entering the capital market. This aligns with investors' approach, as they return to focusing on higher sales thresholds and profit multiples similar to pre-2017 levels."
