Israeli tech firms raised $2.5 billion in the second quarter of the year in 170 deals, up 13.1 percent in money terms from the same period a year earlier, but almost 9% lower than the amount raised in the first quarter of the year, as the coronavirus pandemic hit the nation.
In the first quarter of the year, Israeli tech firms raised $2.74 billion in 142 deals, data presented by IVC Research Center and attorneys Zysman, Aharoni, Gayer & Co (Zag-S&W) shows. In the second quarter of 2019, Israeli tech firms raised $2.21 billion.
The data indicates a “slowdown” in the ability of tech firms to raise capital, said Shmulik Zysman, founding partner of ZAG-S&W, “as everything drew to a complete halt in March” — and could be an indication of a continued downward trend for the rest of the year.
Even so, he said, the figures are not as bad as feared, because even if lower, the amount of money raised in the second quarter of the year is still one of the “highest ever” posted in a quarter, he said.
During the first six months of 2020, Israeli tech firms raised a total of $5.25 billion in 312 deals, the data showed.
Most of the investments in the quarter were follow-on deals, in which existing investors injected more funds into the startups in their portfolios to get them through the crisis.
Foreign investors accounted for 52% of the investments made in the quarter, with the share of Israeli investors increasing their activities in the period. Foreign investment in Israeli tech firms has declined since the fourth quarter of 2019, to $1.58 billion in the second quarter this year from $1.8 billion in the fourth quarter of 2019.
The activity of Israeli investors in the second quarter of 2020 totaled $689 million, down from $809 million in the second quarter of 2019, but up from $373 million in the first quarter of the 2020 and, the data shows.
“Compared to foreign funds, Israeli venture capitalists appear to have identified opportunities and invested” in them in the quarter, said Zysman in a statement.