2021 Israel Funding Ecosystem

Over the past year, Israel’s appetite for entrepreneurial success continues to shine through in remarkable ways. Levels of capital investments and exit activity continue to break records during a time in which Israel’s high-tech industry shows signs of maturation.

VC-backed investments in Israeli tech have almost doubled in 2021 after an already record-breaking year in 2020. In contrast, M&A activity begins took a back seat as more companies chose to exit through capital markets. The number of Israeli founded unicorns has spiked in the last three quarters.

Last year, Cardumen Capital released the first version of our Israeli Funding Ecosystem Map that displayed the main investors in Israeli entrepreneurship. This year, we brought together content from an array of resources, including Startup Nation Central, Pitchbook, and Crunchbase to build a more comprehensive and up to date landscape. Our research indicates that in 2020 and thus far in 2021, 26 VCs, 3 Corporate VCs, 5 incubators, 5 accelerators, and 1 crowdfunding platform have been founded.

Here are the top highlights of our funding landscape analysis:

You can view the map in high-resolution here

Israeli venture capital environment insights

• The first half of 2021 saw an unprecedented boost in funds headed for Israeli high-tech. Going into 2021, the amount of VC-backed tech investments almost doubled, surging from an already record-breaking $9.13B in 2020 to $15.98B in Q1-Q3 2021.

• Considering investments by stage, early-stage investments remained relatively consistent from 2015 to 2021 while growth stage investments have increased. The amount of funding into growth stage has seen an 80% increase from $8.66B in 2020 to $16.32B in Q3 2021

• Exit activity soared concurrently with investment activity and likewise almost doubled from 2020. Of the $18.9B of total exit value in the first eight months of 2021, $9.8B was raised in capital markets, $1.6B in buyouts, and $7.6B in M&A. Only $9.8B total was raised in 2020.
• While the exit values of Israeli tech companies broke records in absolute numbers, the portion of acquisitions relative to capital market exits changed significantly. Buyout activity reduced significantly, and there was a jump in capital raised through initial public offerings. The total amount of capital raised by Israeli high-tech IPOs grew from $1.6B in 2020 to a record-breaking $9.8B in 2021.

• The term, “unicorn,” which once played at the rarity of a private startup being valued over $1B USD, appears to be out of date considering just how many Israeli companies are coming to fit the criteria. “[…] In the UK there are twenty-seven, in Germany nine, in France seven, and in the Netherlands four,” reported the Chairman of Cukierman & Co. Investment House in April, 2021. Today, there are 72 Israeli founded unicorns.
• Looking back, a study conducted by TechAviv indicates that on average one Israeli company achieved unicorn status each week. According to a study from Catalyst Investments L.P., the average amount of time it takes for companies to reach unicorn status has more than halved in the past decade, taking an average of roughly six years.
• The combined value of the Israeli unicorns currently stands at $199B, indicating an average value of $2.7B per startup.

This is all to say that by key indicators, Israel’s tech industry has emerged in 2021 to set the bar even higher than previously. The small country outperforms even entire regions of the developed world in investment and entrepreneurial activities, and the nation continues to earn its prized status among business leaders and investors alike for its capacity to push the cutting edge and to flourish.

About Cardumen Capital

Cardumen Capital is an independent, European Alternative Investment Management Company. Its technology fund focuses on deep tech, early-stage startups in Israel. Get in touch with us here.

About Gonzalo Martínez de Azagra

Gonzalo has 17 years of experience in technology and venture capital. He is Co-Founder and General Partner of Cardumen Capital working out of the Tel Aviv Office.

About Noa Shamay

Noa has a bachelor’s degree in Economics and Data Analysis from IDC Herzliya. She is an analyst at Cardumen Capital working out of the Tel Aviv Office.

About Brendan Bassett

Brendan is a Summer Analyst at Cardumen Capital. He is studying for his B.S. in International Business at Northeastern University in Boston, MA.