November 2019 - Monthly Insights Israeli Venture Capital
News and Updates
Israeli High-Tech Capital Raising Overview: Q3 2019 Supported by a record breaking third quarter, the Israeli high tech industry is on its way to reach new fundraising records this year. During Q3/2019 Israeli high tech companies raised US$2.2 billion in 144 funding rounds, which is the highest amount of capital for any quarter since 2013. In aggregate, during the first three quarters of the year, Israeli high tech companies raised US$6.1 billion, which is well on course to beat last year’s record of $6.4 billion. As discussed in previous newsletters, two important structural trends are continuing to play out: the increase of larger financing rounds (over US$20 million) and the corresponding decrease in the seed-stage financing rounds. As a result, during the third quarter of the year, we have witnessed 15 mega rounds (over US$50 million), 6 of which exceeded US$100 million, including cybersecurity company Cybereason (US$200 million), fintech company Fundbox (US$175 million) and insurtech company Hippo (US$100 million). This category also includes Lightricks, a Viola Ventures portfolio company, which raised a US$135 million C round led by Goldman Sachs and reached a US$1 billion valuation in a record-breaking year for Israeli unicorn formation (9 new unicorns). Raising 214% more capital in the first 3 quarters of 2019 than during the same period last year, mega rounds are constantly increasing and are becoming the growth driver for the Israeli high-tech industry. As companies continue to scale, the importance of securing large holdings in seed rounds continues to be a fundamental driver of returns in the Israeli venture capital space. As a result, and amid the subtle growth in early stage valuations, seed funds are writing larger checks in a smaller number of companies in order to get a larger ownership stake and generate returns that investors look for.
Israeli High tech Capital Raising (US$ billion) Source: IVC online
The increase in capital raising activity in Israel recorded in 2019 is in line with the global trend seen in the high-tech industry. One notable trend expected to continue during the fourth quarter of this year is the rapid growth of capital raising by fast-growing software companies, especially in the artificial intelligence, fintech and cybersecurity verticals. According to IVC's data, over the last five years there has been a continuous increase in capital raising and exits in these technology verticals.
Notable Investment Rounds
Explorium, an Emerge portfolio company, secured its series A round of $15 millionled by Zeev Ventures with the participation of F2 Capital and Emerge VC. Explorium develops a data science platform, fueled by automated data enrichment and feature discovery.
Syte, a Magma Venture Partners portfolio company, secured its series B funding of $21.5 millionled by Viola Ventures with the participation of Commerce Ventures and Magma Ventures among several others. Syte is a Visual AI technology provider that empowers retailers to tap into the personal inspiration of individual shoppers and deliver the right products at the right time.
Namogoo, a Hanaco VC portfolio company, secured its series C round of $40 millionled by Oak HC/FT Partners with the participation of 83North, Blumberg Capital and Hanaco VC among several others. Namogoo is a pioneer in the field of customer hijacking prevention, its technology identifies and blocks unauthorized ads injected into consumer web sessions.
Baxter (NYSE: BAX), a Fortune 500 American health care company,acquired Cheetah Medical for $230 million, a Robert Bosch Venture Capital company which provides 100% noninvasive fluid management technologies designed for use in critical care, operating room, and emergency department settings
Invitae (NYSE: NVTA), a leader in advanced medical genetics, acquired Clear Genetics for $50 million, a Meron Capital portfolio company which has developed a chatbot for making genetic tests accessible to consumers.
Recommended Venture Capital Reads
Depending on who you ask, value investors have plenty of things to blame for a decade-plus of underperformance. Including SoftBank. [Institutional Investor] The CEO of Goldman Sachs spent his Halloween night spinning tunes and sipping tequila in a Miami nightclub until 3 am. There might be a metaphor in there for the changes he hopes to bring to the bank. [Fortune]
WeWork's employees can't say that they saw the company's collapse coming. But they also can't say they were completely surprised. [The New Yorker] Silicon Valley used to love Mark Zuckerberg. Not anymore. [Vanity Fair]