Has Israel Tech Funding Hit Bottom? LeumiTech Report Tracks Israel Tech Investment Activity

Israel has been one of the hottest tech start-up and venture markets for years. Well-known for its hyper entrepreneurial activity, Israel has still been hammered by the global economic downturn and heightened inflation. LeumiTech publishes a periodic update of funding and tech activity in Israel and the company has just released its Q2 report.

According to LeumiTech, Q2 of 2023 delivered a decline of 62% when comparing year-over-year numbers for Q2 2022.

For the first 6 months of 2023, the number of deals dropped by 22% and the amount raised by 24% in comparison to the first half of 2022.

The report looks for a silver lining in the gloom stating that on a quarterly level, there are signs of recovery in Q2 of 2023 – with $1.93 billion raised for 114 deals – an increase of almost 11% in capital from Q1 of 2023.

When looking specifically at Fintech funding, $675 million was raised during the first 6 months of 2023 compared to $1.58 billion during H1 2022. Fintech funding peaked in the last half of the year in 2021 when 61 firms raised almost $3.8 billion.

LeumiTech states taht pre-seed deals are steady but seed rounds have tanked for five quarters in a row. Not a good sign. The report says that the “lack of VCs in seed rounds serves as a stark reminder that a real recovery isn’t here yet.”

The decline is pretty much across the board for funding, deals, exits and new startups hitting the scene. Through the first half of 2023, early financing rounds experienced the lowest median raise in 5 years. The number of deals reached 160 – a drop of 43% from the 281 deals performed in H1/2022.

Like most of the world, Israel is looking forward to an economic recovery.


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