In 2014 Israeli high-tech startups stepped up their search for funds from venture capitalists and other private investors. They were very successful, raising a record $3.4 billion.
In total, 688 Israeli companies in the high-tech sector raised over $3.4 billion in capital in 2014, an increase of 46% on the 2013 figure, reveals a report on fund-raising by Israeli technology sector firms compiled by global Audit, Tax and Advisory services provider KPMG in conjunction with the IVC Research Center, the leading online provider of data and analyses on high-tech, venture capital and private equity industries in Israel. In the fourth quarter alone $1.1 billion was raised, a record over the last six years examined. IVC Research Center CEO Koby Simana, who co-authored the report, points out that “the hike in capital raised by Israeli high-tech companies directly reflects the continuing increase in the number of large deals.” Large deals – i.e. those attracting over $20 million equivalent – previously accounted for no more than 3% of total deals, but “in 2014 that share doubled,” says Simana. Landa Nanography, IronSource and Kaminario are three examples of startups which are today finding favour with venture capital funds and managing to raise very substantial sums.
Israeli venture capital funds provided 17% ($574 million) of the total investment injected into tech sector companies in 2014. During the last quarter, 36 Internet companies succeeded in raising funds worth $320 million (29% of total investment in the tech sector), sums of money that have never before been raised in this field in one quarter. In November, for example, Gigya, a specialist in helping companies to create relationships with their customers on the social networks, raised $35 million.
Following hard on the heels of high-tech firms were companies in the life sciences – i.e. the medical and biotechnology sectors – and software publishers, both sectors managing to raise around $250 million from eager investors. One example is ConsumerPhysics, which raised over $4 million to develop SCiO, the first-ever molecular sensor that fits in the palm of your hand.
Moreover, following impressive funding rounds last year, KPMG Israel consultant Ofer Sela sees the trend continuing, underlining: “We believe that the maturity level of Israel-based companies in 2015 will attract private equity investors.” The confidence now shown by US stock markets in this ‘startup nation’, the strongly rising trend in the number of deals between $5 million and $20 million over the past few years, coupled with the currently favourable economic conditions, all tend to support Ofer Sela’s prediction. Meanwhile, in a first financial foray into the Israeli ecosystem, Chinese Internet giant. Alibaba recently bought a stake in Visualead, a pioneering Israeli startup in QR code technology that has established a presence in the Chinese retailing technology market.