Fresh off an “extraordinary” funding year of a record over $25 billion in 2021 concurrent with a battering on Wall Street in recent months, Israeli companies raised close to $5.6 billion in the first three months (Q1) of 2022, according to a new report by the IVC Research Center and LeumiTech, Leumi Group’s banking arm for high-tech companies.
The $5.58 billion was raised over 212 deals in Q1 2022, and is on par with fundraising in Q1 2021, which amounted to $5.4 billion, but less than Q4 2021 which saw Israeli companies nab $8.1 billion in funding overall.
The 212 fundraising rounds overall in Q1 2022 included 14 “mega deals” of over $100 million each, making up 44% of the total amount raised.
Not surprisingly, given the performance of Israeli tech shares on Wall Street in recent months, IPOs (initial public offerings) shrank significantly this past quarter to just seven. These were part of 39 tech exits (defined as merger and acquisition deals or IPOs of shares) totaling $8.96 billion and largely comprising Intel’s intended acquisition of Israel’s Tower Semiconductor by Intel for $5.4 billion. Intel is also set to buy Israeli computing tech startup Granulate for about $650 million, in a deal announced last month.
Another notable acquisition that of Israeli threat detection firm Siemplify (officially, Cyarx Technologies) by Google for $500 million.
“After a phenomenal year for the Israeli high-tech [industry] it seems as though 2022 started [with] more restraint. Furthermore, it seems that investors have slowed [their] pace and are waiting for a correction in valuation in the private sector,” explained Timor Arbel-Sadras, CEO of LeumiTech.
The industry, she added, is seeing “a decrease in the number of IPOs and we expect to see again the dominance of M&As in exit deals. M&A deals will include both mature startups as an alternative to IPO [avenues] and also [the] acquisition of early-stage startups” by more established companies.
Notable investment transactions in Q1 2022 included funding rounds for digital assets platform Fireblocks, with a $550 million investment in January, construction tech company Veev, with an investment of $400 million also in January, and cybersecurity company Axionus with a round of $200 million in March.
As in previous quarters, companies in the cybersecurity sector generated the most funding (about $1.8 billion) in Q1 2022, followed by fintech startups with $985 million, IoT (internet of things) companies with $464 million) and foodtech outfits with $341 million in investments, including $135 million for plant-based meat startup Redefine Meat.
Funding by foreign investors was down in Q1 2022 compared to previous quarters ($3.9 billion vs $6.3 billion in Q4 2021, for example) but comprised a majority of investments, with Israeli investors financing $1.4 billion of the total this past quarter, according to the report.