Israeli tech firms raise record $5.4 billion in first quarter of year

Israeli tech firms have raised a massive $5.4 billion in 172 fundraising deals in the first quarter of the year, the highest ever for a quarter, and double the amount they raised in the same quarter a year ago, new data by IVC Research Center and Meitar Law Offices shows.

In the first quarter of 2020 tech firms raised $2.65 billion.

The quarterly amount was 89 percent higher than the funds raised in the fourth quarter of 2020, $2.84 billion, and was mostly due to 20 deals that raised in excess of $100 million each, for a total of $2.96 billion, in the first quarter of this year.

Foreign investors made 594 investments in the first quarter of this year, compared to an average of below 400 investments per quarter in the 2019-2020 period, the data showed.

Venture capital firms accounted for 78% of all the investment deals in the quarter, marking the highest rate in a decade. However, non-VCs investors, like private investors, preferred to shy away in the quarter, suggesting that valuations are too high, IVC and Meitar said in a presentation.

Investors still preferred to invest in later stage companies, rather than early-stage firms: indeed, early-stage firms raised just $294 million in 56 deals in the first quarter of this year, compared to 116 growth stage deals, in which some $5.1 billion was raised.

There were 33 merger and acquisition deals in the first quarter of the year, totaling $2.1 billion, showing that “normality” has returned to the market, after the slowdown in M&A activity in 2020, due to the pandemic. In the first quarter of 2020, M&A deals still yielded a high $2.96 billion in 32 deals, but by the third quarter of 2020, M&A deals yielded just $1.9 billion in 17 deals, and $1.13 billion in 31 deals in the fourth quarter of 2020.

There were 21 initial public offerings in the first quarter of the year, most of them, 19, on the Tel Aviv Stock Exchange.

“2021 started on a much more positive note for the Israeli high-tech industry, resulting in the record quarterly capital intake, as well as a rebound in exit proceeds, demonstrating a bustling quarter in local initial public offerings activity,” said Marianna Shapira, research manager at IVC.