Preliminary data released on Thursday by the Israel Venture Capital (IVC) Research Centre and LeumiTech revealed that Israeli high-tech firms successfully raised $1.5 billion in the fourth quarter of 2023, demonstrating resilience in the face of the ongoing conflict in the region.
Despite a 15% dip in fundraising compared to the third quarter, a total of 75 deals were executed by Israeli startups up until December 26. Notably, the conflict, which commenced on October 7, did not deter foreign investors, as indicated by increased foreign participation in the fourth quarter.
Early-stage “seed” funding amounted to $220 million, distributed across 31 funding rounds. The report highlighted the significance of foreign investors’ presence, citing it as an indication of the availability of funds for investments. In a recent show of support, 70 US tech executives visited Israel last week.
LeumiTech CEO Mia Eisen-Tzafrir emphasized that the data from the fourth quarter underscored the robustness of the Israeli high-tech industry, highlighting its pivotal role in the country’s economy, especially during challenging times.
High-tech contributes significantly to Israel’s economic landscape, accounting for 12% of employment, over half of exports, 25% of income taxes, and nearly a fifth of the overall economic output. However, at least 15% of the tech workforce has been called up for military reserve duty.
The year 2023 posed challenges for the Israeli economy and high-tech sector, with a drop in funding attributed to both global economic slowdown and concerns surrounding Israel’s proposed judicial system overhaul, a plan that has since been shelved.
Eisen-Tzafrir noted that 2023 marked a return to investment levels and activity volumes observed in 2018 and 2019, following the peak years of relative anomalies from 2020 to 2022. While Israeli startups raised approximately $7 billion in 2023, compared to nearly $16 billion in 2022, the results of the fourth quarter were described as supporting an optimistic outlook for the local industry.
IVC CEO Ben Klein stated, “Despite the complexity, foreign investors’ participation level is a clear sign of the attractiveness of Israeli high-tech companies, even in difficult times.” The tech fundraising landscape in Israeli startups had reached $26 billion in 2021 across 779 rounds.
