The Innovation Nation.
Israel remains one of the hottest entrepreneurial hubs in the world. The country has punched above its weight class for years now and is well known for being the launch pad of many successful tech startups. But 2023 has hit the country hard, and the terrorist attack by Hamas in October has not helped. Today, IVC-LeumiTech has shared preliminary numbers for the full year 2023 tech investing activity. According to the report, tech funding cratered by 56% when compared to 2022 and the number of deals dropped by 44%.
In total, there were 392 funding rounds in 2023 that raised $6.9 billion. During Q4, Israeli tech companies raised $1.45 billion in 75 deals, a decrease of 15% and 16%, respectively, when compared to the same period year prior.
CEO of Leumitech, Mia Eisen-Tzafrir, commented on the numbers that were current as of December 26th:
“Following global trends in the tech market, the year 2023 reflects a return to the levels of investment and volumes of activity we saw in 2018 and 2019 – before the peak years of relative anomalies in 2020-2022. The difficult events and the fighting of the challenging global macro environment in the last few months have raised the challenge for Israeli high-tech in its global environment. The fourth quarter data show a relatively moderate decrease of 15% and a clear increase in the investment figures in the Seed stages, which are an indication of the high durability of the Israeli high-tech industry and an important reminder of the role this sector in the Israeli economy has especially these days.”
Ben Klein, CEO of IVC, said 2023 was a challenging year in general but in spite of these challenges foreign investor participation which is showing resiliency is a sign of the attractiveness of the market.
In 2022, 697 companies raised $ 15.7 billion. In 2021, 779 companies raised $26 billion – a high point for the market.
It is hard to forecast 2024 due to ongoing global and regional challenges but with interest rates heading lower, perhaps next year will deliver a bounce from a moribund 2023.
The full report will be completed next month.