Investors Focus on Cybersecurity, As Investments in Israeli Startups Dwindle

The first half of 2018 saw 260 funding rounds for Israeli startups, totaling $2.42 billion in investments, according to a new semi-annual report published Thursday by Start-Up Nation Central (SNC), a Tel Aviv-based non-profit organization managing a database of Israeli tech companies.

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The amount of money raised is lower compared with the second half of 2017, in which investments totaled $2.77 billion. When reviewed in a broader context, 2018 saw a rise of 33% from the first half of 2015, in which $1.81 billion was raised. The median size of funding rounds in Israel has increased from $2 million in the first half of 2015 to $5 million in the same period of 2018, according to the report.

Tel Aviv. Photo: Shutterstock

The top three funding deals of 2018 belong to blockchain company Orbs Ltd., which raised $118 million from undisclosed investors in May, software company Clarizen Inc. which received $110 million from private equity firm K1 Investment Management LLC in a management buyout, and financial service company eToro Group Ltd., which raised a $100 million Series E round led by China Minsheng Financial Holding Corporation Limited.

Only 43 Israeli-linked companies made an exit in the first half of 2018, the lowest number of exits since 2015, bringing in a total of $1.71 billion, according to SNC’s report. In comparison, the second half of 2017 saw 55 exits totaling $4.71 billion. Only three Israeli tech companies went public in the first half of 2018, raising $104 million.

Cybersecurity startups raised the most funds in the first half of the year, totaling $536 million in 60 funding rounds, 47% more money raised than during the second half of 2017.

Fintech companies raised $396 million in 40 rounds during the first six months of 2018, 25% more than the amount raised in the previous half year.

Agritech companies raised $35 million in 15 rounds, 64% less than the previous half year.