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Israeli firms raise record amount of capital in 2020 despite pandemic downturn

Companies set to receive over $10 billion this year for first time; 24% increase over 2019 outpaces global averages

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

Illustrative: People take a view through augmented reality glasses as start-up firms showcase products at an Innovation Lab event at the Tower of David Museum in Jerusalem, October 17, 2017. (Hadas Parush/Flash90)
Illustrative: People take a view through augmented reality glasses as start-up firms showcase products at an Innovation Lab event at the Tower of David Museum in Jerusalem, October 17, 2017. (Hadas Parush/Flash90)

Israeli companies raised a record amount of capital in 2020, significantly outpacing other countries, despite the economic downturn caused by the pandemic.

Israeli firms raised $9.5 billion in capital as of the beginning of the month, 24 percent more than the 2019 total of $7.7 billion, according to a report from the Israeli nonprofit Start-Up Nation Central.

Homegrown companies are set to raise over $10 billion in capital this year for the first time, the report said. Total investments in Israeli firms have more than tripled since 2014, when companies raised $2.6 billion.

Most of the capital came from foreign investors. The leading categories were cybersecurity, with $2.5 billion raised, and financial technology, with $1.7 billion.

The record-setting year for Israeli companies is a marked contrast to capital investments worldwide. The US saw funding increase by 5% and Europe by 1%, while in Asia overall, investments decreased by 15%, and in South America funding plummeted 21%. Globally, investments fell by 4%.

The report said that Israeli companies’ relative success was likely due to global demand for Israeli technology, Israeli industry’s rapid adaptation to change, its cumulative technological know-how, and its global reputation as a high-tech powerhouse.

Most of the funding focused on more advanced stages of capital rounds, amounting to $25 million and above.

Eugene Kandel, CEO of Start-Up Nation Central, said the figures indicated a high level of global trust in the Israeli tech industry, but warned that the number of new startups founded each year has been decreasing for three years and that 2020 saw a decrease in funding for early stage rounds.

Start-Up Nation Central is a non-profit organization that grew out of the bestselling 2009 book by Saul Singer and Dan Senor, and focuses on strengthening Israel’s innovation industry. Its tracking platform, Finder, which collated the funding data, draws on information from over 6,600 companies.

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