Israeli startups raise just $3.9 billion in first six months of 2023, lowest total in five years
Israeli startups raise just $3.9 billion in first six months of 2023, lowest total in five years
In addition to the decrease in the number of investments, there was also a 53% decrease in the number of funding rounds compared to the same period last year, marking the lowest level in nine years, according to Start-Up Nation Central
Only $3.9 billion was invested in Israeli startups in the first half of 2023, a 29% decrease compared to the previous six months, according to data published by Start-Up Nation Central. There was also a 10% decrease in investment between quarters, from Q1 to Q2 2023. This is the lowest amount invested since 2018 and stands in contrast to the signs of improved investment in startups in the United States during the same period.
In addition to the decrease in the number of investments, there was also a 53% decrease in the number of funding rounds compared to the same period last year, marking the lowest level in nine years. The majority of investment in Israeli high-tech continues to be from foreign investors who led 70% more rounds than local investors and initiated 17% more new investments.
Regarding sector distribution, the activity in Israel seems to follow global trends. In fintech, private investments in Israel plummeted by over 50%, from $6 billion in 2020 to $2.6 billion in 2022, and in the first half of 2023, only $545 million were invested in the sector. The cyber sector also experienced a 57% drop to $1 billion, but it appears to be stabilizing following a steady decline since late 2021.
The sharpest decline was in enterprise IT and data, where total private investments plummeted by 66%, from $1.34 billion in H2 2022 to only $450 million in H1 2023. However, there is cause for optimism due to an increase in the last quarter of early-stage deals particularly in generative AI companies.
In contrast to most other sectors, climate tech experienced an increase in private and public funding - $900 million compared to $700 million in the second half of 2022. Though there is a gap compared to the peak experienced in the first half of 2022 with investments reaching $2.5 billion, the report estimates that this sector will remain relatively stable given the current market conditions due to demand for technological solutions for decarbonization and the high involvement of corporations in the sector.
