糖心视频 VC-Backed Startups In Israel Plummeted In Q4 Amid Turmoil

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糖心视频 VC-Backed Startups In Israel Plummeted In Q4 Amid Turmoil

January 11, 2024

Chris Metinko

Venture funding to Israel-based startups in Q4 2023 hit its lowest point since early 2017, as just more than a half-billion dollars was invested in private companies with tensions and violence rising in the region.

Startups in Israel raised about $516 million in a paltry 42 deals, . That is the lowest dollar total since Israeli startups raised only $463 million in Q1 2017. The total is down about 69% from the previous quarter, which saw $1.6 billion roll to Israel-based startups, and 54% from Q4 2022.

For the year, 2023 funding in Israel declined nearly 52% from the previous year, totaling only $4.3 billion in 369 deals 鈥� down from $8.9 billion in 677 deals in 2022. Last year鈥檚 dollar total was the country鈥檚 lowest since 2018.

The fourth quarter obviously coincided with the Hamas attacks on Israel and the Israeli response.聽

鈥淭he economic performance of 2023 remains inseparable from October 7th, which shook us to our core,鈥� said , co-founder and managing partner at Israel-based incubator and investment firm . 鈥淏ut it is precisely this core that has enabled us to weather multiple colossal challenges in the past, and we are confident that we will emerge stronger from the current crisis.鈥�

Small rounds

A quick glance at the biggest rounds in Q4 give a good indication as to why the dollar amount for the quarter was so low. The largest rounds of the quarter went to:

AI startup , which locked up an additional $53 million for its Series C announced in August;
Cybersecurity startup , which raised a $51 million seed round; and
AI startup , which landed a $40 million Series D.

Those three rounds combined are less than Q3鈥檚 largest round raised by an Israeli startup 鈥� AI21 Labs鈥� original $155 million Series C from investors that include and .

In fact, a half-dozen startups in the region raised $100 million or more in rounds in Q3 of last year whereas no startup came close to that number in Q4.

Investing during uncertainty

Of course, those numbers are not shocking considering the October attacks by Hamas changed nearly everything in the country.

Despite the fighting, investors in the region say they continue to see positive signs in both the country鈥檚 robust startup ecosystem, and investors’ attitudes toward the area.

鈥淥ne of the most remarkable phenomena we witnessed (after the attacks) was the rallying of foreign investors, customers and partners who continued to support, fund and even acquire Israeli cybersecurity startups since October, despite the turmoil,鈥� said , senior partner and head of the Israel office for cyber venture firm . 鈥淭hese global industry leaders have a long history of working with the Israeli ecosystem and have expressed their confidence in its longevity and sustainability.鈥�

, founder and partner at Israel-based , said even as the country goes to war, startups have adopted agile approaches to ensure business continuity, with minimal to no disruption to their operations.

鈥淚n my view, Israeli companies are emerging from 2023 stronger, building sustainable businesses adept at navigating unforeseen challenges,鈥� he said. 鈥淔oreign investors recognize these positive developments, and I鈥檓 confident they will continue acknowledging Israel as the innovative hub that it is.鈥�

Raanan said he anticipates M&A activity to grow alongside increased fundraising as global markets gradually recover.

鈥淲hile significant IPOs might be premature in 2024, I鈥檓 optimistic about Israeli companies gearing up for this significant milestone in the lead-up to 2025,鈥� he added.

Investors are hopeful the worst may be behind them.

鈥�2023 may be the conclusion of a downward trend in tech investments,鈥� Zafrir said. 鈥淲e seem to have stabilized at pre-2020 levels and are optimistic that it might mark the beginning of a healthy ascent.鈥�

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