October 2020 - Monthly Insights Israeli Venture Capital
News & Updates
CONTINUING GROWTH DESPITE GLOBAL PANDEMIC
Despite the COVID-19 pandemic, high-tech companies continue to drive the growth of the Israeli economy. Contrary to the global trend, the sanitary crisis and macro-economic environment have not impacted high-tech capital raising in Israel, as Israeli tech companies have raised over $7.5 billion during the first three quarters of the year, a figure which is well on course to beat the record $8.7 billion raised during 2019. The resiliency of the Israeli tech market is driven by its strong entrepreneurial spirit, deep-tech focus on software and data, and the multidisciplinary approach of Israeli tech experts, all of which put the sector in a good position to adapt quickly to the new global environment.
Israel high tech capital raising Q1-Q3 ($ billion)
Source: IVC Online
Global high tech capital raising Q1-Q3 ($ billion) Source: Pitchbook
Boasting the highest number of startups per capita and having more companies listed on the NASDAQ than any country in the world save the US and China, Israel has certainly cemented its reputation as the Startup Nation. Current fundraising trends and growing foreign investor attention toward Israel prove that the local startup ecosystem is poised for exponential growth. Indeed, over the past three years, financing rounds of over $100 million are no longer a rare occurrence and financing rounds of over $20 million have become routine. As Israeli startups develop an effective sales and marketing culture, they are now seeking to scale-up and build unicorns rather than making quick exits. This trend which has been observed in the market over the last few years, has not been hindered by the pandemic, as the volume of high-tech unicorns produced in the Israeli ecosystem continued to rise since the beginning of the year. Israel has seen 14 megadeals (over $100 million) and produced eleven unicorns during 2020, representing 14% of global unicorns formed in 2020. Notable recent unicorns include RedisLabs (a Viola Ventures portfolio company), SentinelOne (an Upwest Labs portfolio company), AppsFlyer (a Magma Ventures portfolio company) along with a few former unicorns which are now public such as Fiverr (FVRR), Lemonade (LMND) and JFrog (FROG). In addition to the growing amounts of capital from local and foreign funds and other corporate investors flowing into growth stage companies, Israeli companies are increasingly proving their ability to generate sales into global markets despite the geographical challenges they face. Similar to what we’ve seen in the B2C environment, the importance of digital sales channels for B2B companies has grown significantly in the past few years and has radically increased since the COVID-19 crisis began. According to McKinsey, almost 90% of sales have moved to a video-conferencing, phone, web sales model, and while some skepticism remains, McKinsey states that more than half of the respondents believe this is equally or more effective than sales models used before COVID-19. This removes the geographical barrier and benefits Israeli companies to generate new leads and sales to potential customers in global markets more easily than ever before, resulting to scale revenues and increasingly building companies reaching the status of “Unicorn”.
Notable Investment Rounds
Aidoc, an Emerge VC portfolio company, secured a $20 million B round, led by Square Peg Capital with the participation of Sweetwood Ventures, Magma Ventures, and TLV Partners. Thanks to its AI algorithms, Aidoc flags acute pathologies as they enter the workflow, supporting and enhancing the impact of radiologist diagnostic power.
Snyk, a Canaan Partners portfolio company, secured a $200 million D round led by Addition Capital with the participation of Accel and Salesforce Ventures, among others. Snyk is a security platform designed to help software-driven businesses enhance developer security.
Dataloop, an Amiti Ventures portfolio company, secured a $11 million A round led by Amiti Ventures with the participation of F2 Capital and SeedIL Ventures, among others. Dataloop is an AI data management platform that provides data life cycle solutions to businesses.
JFrog (NASDAQ: FROG), a Gemini portfolio company which provides software developers with a binary repositary management solution, raised $509 million in its initial public offering on the Nasdaq stock exchange at $44 per share, which valued the company at $4 billion.
Cisco Systems Inc. (NASDAQ: CSCO), a global leader in IT and cybersecurity solutions, acquired PortShift for $100 million, a Team8 portfolio company which develops application security solutions while enabling DevOps to operate freely.
Dubai's Amanat Holdings has completed its first venture capital deal as it looks to deploy $272 million over the next few years. [Bloomberg] Toyota racing development uses data to outpace competition using AWS analytics. [Forbes] From artificial intelligence to novel biotech, these Tech Spotlight Finalists do not give us the blind hope of technology solving our problems, but how we can and must solve technology's problems. [Wired] LVMH reports strong growth at Dior and Louis Vuitton, partly offsetting steep declines in other segments of the luxury conglomerate's empire. [Wall Street Journal]