• Mon. Jun 24th, 2024

Investment in Israeli Tech Companies Falls by 38%, LeumiTech Reports

Sep 27, 2023

LeumiTech Report

Leumi’s banking arm, LeumiTech, published its report on Tuesday, showing that Israel-based tech companies and startups had raised $1.6 billion from venture capitalists in this year’s third quarter. The latest figure represents a 38% decline, given that the tech firms raised $2.58 billion in the same period last year.

Moreover, investment funds injected into Israeli tech firms from June to September were 15% less than the $1.90 billion invested in the second quarter and remained within the same levels as the first quarter. A full quarterly report on the tech sector in Israel is set to be released early next month.

Since the start of the year, Israel-based tech companies have secured over $5.2 billion in funding. For comparison, investors injected $14.5 billion into various tech firms in 2022 and more than $25 billion the previous year.

What is Causing Investments in Tech Firms to Decline?

This year, investments in tech companies have slowed, probably due to the increasing interest rates. In addition, the political uncertainty caused by the controversial judicial overhaul revealed in February by the Israeli government has forced foreign venture capitalists to stay on the sidelines until a resolution is achieved.

Per LeumiTech’s report, only 85 investment deals were stuck in the third quarter, representing a 40% drop from the same period last year. Additionally, LeumiTech revealed that this year saw the lowest number of investment deals since 2018.

Meanwhile, tech firms are finding it tough to secure deals valued at $200 million or more. Since June, only Cato Network has managed to strike a deal worth above the said value. The developer of cloud-based networks for big companies, which allow remote employees to connect to apps regardless of their location, raised over $230 million in funding, pushing its valuation to $3.1 billion.

Investment in Israeli Tech Startups Rise 33%

The report noted a positive trend for tech startups. These firms raised $140 million in seeding funding during the third quarter, a 33% growth compared with the $105 million raised in the previous quarter.

In terms of foreign investors involved in funding rounds, the number has been declining since the start of the year. During the first quarter, 478 non-Israeli investors poured money into tech firms. The figure dropped to 356 and 318 in the second and third quarters, respectively.