May 2019 - Monthly Insights Israeli Venture Capital
Updated: Dec 16, 2020
News and Updates
ISRAELI VENTURE CAPITAL STARTS 2019 WITH A STRONG FIRST QUARTER
On the back of a strong first quarter, 2019 is gearing up to becoming a new record year for Israeli venture capital. During Q1/2019 (which is seasonally less active),over $1.55Bn was raised by 128 Israeli startups, an increase of 15% in the number of deals and 28% in total amount raised compared to Q1/2018. The quarterly median and average amount of the transactions were amongthe highest since 2014, mostly due to the increase in the number of deals in the $5m to $20m range, which represented more than 40% of the deals in Q1/2019. This trend is very much in-line with the overall trend which we have highlighted in our previous newsletters – acontinued increase in the number and the amounts allocated towards late stage rounds. Another trend previously highlighted, the emergence of Israeli ‘mega rounds’, further confirmed itself, withtwo mega deals of over US$100 milliontaking place in Q1: Innoviz Technologies, an automotive tech company, developing high-performance LiDAR sensors, secured a C round of $132 millionled by the Chinese funds China Merchants SINO-BLR Capital Management and Shenzhen Capital Group. Drivenets, the network cloud solution company,raised $110 millionin its first financing round led by Bessemer Venture Partners and Pitango Growth. Such very large rounds were almost inexistent pre-2018 and confirm the coming of age of Israeli VC, transitioning from the start-up nation to the scale-up nation.
From a sectoral perspective,IT and software companies, which in aggregate make up the largest sector in the Israeli technology industry,raised US$660 million in 57 deals in Q1/2019, an increase of 26% in the number of deals and 31% in the total amount raised compared to Q1/2018. Other technology verticals such ascybersecurity remained at robust levelsof activity during Q1/2019 withUS$230 million across 21 dealsraised by cybersecurity companies, a 22% increase in the total amount raised compared to Q1/2018.
Israeli High-Tech Capital Raising During Q1
Source: IVC Online
On the exits side, as mentionned in ourprevious newsletter, we witnessedthe landmark acquisition of Mellanox by Nvidia for $6.9 Bn. Other large acquisitions include US software company SolarWinds acquiring of Samanage(a Viola Ventures portfolio company), which provides a platform for managing information systems on the cloud using a SaaS model, for US$350 million, andMcDonald's acquisition of Dynamic Yield(an Emerge VC portfolio company), which provides retailers with an AI powered "decision logic" technology, for US$300 million. If current trends persist in the coming quarters,2019 is likely to emerge as most active year for startups fundraising and for exits.
Notable Investment Rounds
Redislabs, a Viola Ventures portfolio company, secured its series E funding of $60 millionfrom Dell Technologies Capital and current investors. Redis Labs is the open-source home and commercial provider of the Redis database.
Amenity Analytics, a State of Mind Ventures portfolio company, secured its series B round of $18 millionled by Intel Capital. Amenity Analytics provides next-generation Text-Mining AI Platform.
Veego, a State of Mind Ventures portfolio company,secured its seed round of $5 millionfrom Robert Bosch Venture Capital and North First Ventures. Veego Software has developed a software product designed to integrate into either edge devices or IoT network components.
Zebra Technologies Corp. (Nasdaq: ZBRA), a US data capture company, acquired Profitect, a Genesis Partners portfolio company, which offers profit amplification software that enables retailers to quickly realize increased revenue and reduced costs, for $100 million
Proofpoint (Nasdaq: PFPT), a US cybersecurity company, acquired Meta Networks, a Vertex Ventures portfolio company,develops secure enterprise networks for the cloud, for $120 million.
Recommended Venture Capital Reads
To many, Uber's IPO was underwhelming. But the banker who orchestrated it is still flying high—and is in hot pursuit of his next blue-chip client. [Bloomberg]
Inside Google's civil war. [Fortune]
A new investment from SoftBank this week raised some eyebrows. Because writing huge checks is business as usual for the Vision Fund— but handing them over to another investor is not. [Institutional Investor]
Thanks in part to some of Silicon Valley's biggest names, a new stock exchange designed to foster trading in tech startups is on the way. [The Wall Street Journal]