Israeli fintech firms raised record $2.3 billion in first half of 2021

Venture capital investments in the sector surged 260% over last year; growth linked to demand for online payments, corporate innovation during pandemic

Luke Tress is a video journalist and tech reporter for the Times of Israel

Illustrative image of cash. (Nati Shohat/Flash90)
Illustrative image of cash. (Nati Shohat/Flash90)

Investments in Israel’s financial technology sector surged to a record high in the first half of 2021.

Israeli fintech firms raised a record $2.3 billion in venture capital investments in the first half of the year, according to a report by Start-Up Nation Central, a nonprofit that tracks Israel’s tech industry.

The sum represented a leap of 260 percent over fintech investments in the first half of last year, and was 28% higher than the $1.8 billion invested in the sector in all of 2020.

Venture capital investments in fintech amounted to 19% of the $12.2 billion invested in Israeli technology companies in the first half of 2021.

Israel’s fintech sector saw 68 funding rounds in the first half of 2021, already closing in on the 74 total rounds last year.

There was also an increase from the number of seed rounds and C+ rounds in 2020, suggesting the sector is home to both mature companies and fresh startups.

Seven firms completed funding mega-rounds of over $100 million, outpacing the five companies that did so in 2020.

Rapyd, which facilitates multi-currency payments, raised $300 million in Series D funding; fraud prevention firm Forter raised $300 million in Series F funding; and payment platform Melio raised $110 million in a Series D round.

Firms providing payment solutions accounted for the plurality of investments in the first half of the year, with 35%, followed by anti-fraud and insurtech companies. The three subsectors account for 70% of fintech funding over the past two years.

The sector saw seven acquisitions, one initial public offering and one SPAC merger, compared to eight acquisitions and one IPO last year.

The sector’s success is linked to the pandemic, which spurred demand for online payment solutions, corporate innovation and Federal Reserve policies that paved the way for market activity in the United States, the report said.

“COVID-19 drivers aside, Israeli fintech companies have grown rapidly and globally, building commercial partnerships and contributing significant technology to payments and enterprises,” said Start-Up Nation Central analyst Nicole Krieger.

The 28% jump in funding in Israel’s sector over the past year surpassed an increase of 20% in investments for US fintech firms and the decline of 30% for Asian companies. European fintech companies saw a boom of 63%, though, according to the report.

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