Israel had always battled its neighbours and developed a strong military but the influx of people needing jobs helped catalyse a startup ecosystem and funding of venture capitalists to enable it.
The integration of corporate research and development and venturing units has catalyzed this trend even further over the past decade, as identified in the latest GCV Israel conference in February.
Israeli tech companies, which raised a record $8.3bn in 2019, raised $3.7bn in the first four months of this year, including $1bn last month alone, according to Globes newspaper. IVC-ZAG data showed last year’s total easily surpassed the record $6.4bn raised by Israeli tech companies in 2018 and $5.24bn in 2017.
This is even in a coronavirus-inspired downturn that has seen China’s total sag 31% to $16.8bn in the first three months of the year and the whole of Europe raising about $9bn in the first quarter, according to Pitchbook.
If investing in deals is hard and Israel’s April deals included $145m for behavioural biometrics company BioCatch and $100m to flash storage platform Vast Data, then striking exit levels is probably even harder.
Intel paid $840m, net of the equity gain of its corporate venturing unit Intel Capital following the corporate venturing unit leading a $50m series D round in 2018.
Intel, as with other big tech companies, have long had a substantial R&D presence in Israel but ramped up its CVC activities and increasingly its acquisitions policy after buying Habana Labs for about $2bn in December.
These acquisitions returns the capital to investors and creates a new wave of angel investors to re-seed the market. If this is a downturn the next upcycle for the country could be even more impressive if the bombs stay away.
