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Israeli tech companies shatter 2020 fundraising record in under six months, raising $10.5 billion

Israeli tech companies shatter 2020 fundraising record in under six months, raising $10.5 billion

According to data compiled by Start-Up Nation Central, 2021 has already also set a record for the number of investments in Israeli startups of over $100 million, with 30 having been completed so far compared to 21 mega-rounds throughout all of 2020

Meir Orbach | 14:17  09.06.2021
The Israeli hi-tech sector can't stop breaking records. According to data compiled by Start-Up Nation Central, Israel’s innovation technology sector broke a new capital funding record this week, reaching a total of $10.5 billion raised since the start of the year. In doing so, it matched the total raised throughout the whole of 2020, which was itself a record year, in less than half the time.

The past week alone included massive funding rounds by the likes of Gong ($250 million) and Verbit ($157 million).

According to the data, the significant rise in investments focused on the more advanced stages, with most of the capital (64%) invested in rounds C or later. 2021 has already set a record for the number of mega-rounds (investments of over $100 million) raised, with 30 having been completed so far compared to 21 mega-rounds throughout all of 2020. These rounds represent 53% of all capital raised, and for the first time, they account for more than half of the total funds invested.
Uri Gabai, the incoming CEO of Start-Up Nation Central Uri Gabai, the incoming CEO of Start-Up Nation Central's new Research and Policy Institute. Photo: Courtesy Uri Gabai, the incoming CEO of Start-Up Nation Central

The marked increase in investments in Israeli tech companies (most of which originate from foreign investors) is even more pronounced when compared with investment performance worldwide. While Israel recorded an increase of 137% for the first five months of 2021 compared to the first five months of 2020 (according to Start-Up Nation Finder), the increase globally was only 89%. Europe recorded an increase of 123% over the same period, while the U.S. saw an increase of 91% and Asia saw an increase of 69%, according to PitchBook data.

“The record funding in 2021 indicates that the growth in 2020 was not a short-term Covid-related boost but reflects top investors’ increasing trust in the Israeli innovation ecosystem," said Uri Gabai, the incoming CEO of Start-Up Nation Central's new Research and Policy Institute. "The significant increase in median deal size reflects a maturing ecosystem that is able to maintain its competitive edge as a global hub of technological innovation and offering problem-solving solutions."

The median funding round amount more than doubled year-over-year from $6.8 million in 2020 to $14 million by June 8 in 2021. In terms of growth rounds (round B or higher), the median round size rose from $26 million in 2020 to $46 million in 2021. Early-stage companies experienced a similar boost in median funding from $4 million to $8 million.

The bulk of funding went to cybersecurity, fintech, and enterprise solutions companies, with the top three sectors pulling an accumulated $6.2 billion or 60% of all investments. These sectors are all software, strongly B2B oriented, and saw huge increases in demand for their solutions over the last year as work practices changed.
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