It’s no secret that high-tech funding in Israel, as in other countries, has slumped in the past year. But preliminary data from a report compiled by IVC Research Center and LeumiTech on capital raising in the third quarter of 2023 indicates welcome signs of stabilization.
According to the report, Israeli high-tech companies raised $1.676 billion in Q3/2023 in 85 deals.
This amount reflects a 38% decrease over the year and compared to the amount raised in Q3/2022, as well as a 41% decrease in the number of transactions compared to the corresponding quarter last year.
However, the volume of capital raising in the third quarter decreased only 14% compared to the second quarter of the year, and was nearly the same as in the first quarter.
“A positive trend is also evident in seed fundraising rounds, which indicate the sentiment of investors to take risks in startup companies, and the ability of new companies to grow,” according to the report’s authors.
“The amount of capital raised in these rounds rose for the first time in the third quarter, after five consecutive quarters of decline.”
The volume of foreign investors has also stabilized. While this number decreased slightly compared to Q2, foreign investor volume in Q3 was higher than in the first quarter this year.
“We continue to see in the third quarter’s data the first signs of stabilization in the amount and scope of capital raising, which bring us to the levels of 2018-19,” said LeumiTech CEO Maya Eisen-Zafrir.
“Although there is still a decrease in initial investments [early rounds], it is more moderate compared to what we saw in previous quarters. In addition, we recognize a stabilization in the rate of follow-on investments, an indication that the companies are beginning to adjust their value to the new interest rate environment.”
Excluding the one mega deal of Q3/2023, a $238 million investment in Cato Networks, an analysis of the first three quarters of the year shows a trend from a downward slope to stabilization.
The third quarter is significantly higher than the figures of the first quarter, and according to IVC’s assessment, the final figures of Q3 will reflect a volume of investments close to that of Q2.
The full Israeli Tech Review for Q3/2023 will be published by IVC and Leumi Tech in mid-October.
Produced in association with ISRAEL21c