On Monday, Israel’s leading startup NGO Start-Up Nation Central (SNC) announced that Israeli startups received more funding in January 2021 than in any other single month on record. The banner, $1.44 billion fundraise included six mega-rounds of more than $100 million each, or roughly three-quarters (73 percent) of the funding total. January’s mega-rounds were also close to one-third (30 percent) of the total number of mega-rounds in all of 2020 (21).
According to SNC, all of Israel’s VC mega-round capital in January came from U.S. investors.
“The record level of fundraising in recent months is driven by two effects. One is the increasing maturity of the Israeli tech ecosystem, [where] rapidly growing startups are able to raise much larger rounds. The other is the effect of Covid-19 on Israeli companies, which pivot rapidly to address the challenges of the pandemic, but that will also stay relevant long after it is gone,” said SNC’s Director of Research Meir Valman.
Fintech was the lead sector in January, accounting for two mega-rounds and $413 million of all capital raised. Since September 2020, Israeli fintech companies have attracted $1.4 billion in venture capital investments, compared to just $340 million raised in the first eight months of 2020.
All told, 2020 itself was a record year for Israeli capital raises. December figures for the startup community showed $9.5 billion in funds raised, more than 20 percent above the 2019 figure of $7.7 billion. The 20 percent lift in VC investing in 2020 compared to an increase of 5 percent for all U.S. startups, and 1 percent for Europe. According to SNC, investment in South Asian tech companies actually fell by 15 percent in 2020, and South America dropped by 21 percent. Additionally, funds raised for Israeli startups in 2020 skewed to more advanced capital rounds of $25 million and above. Early stage rounds for Israeli startups nonetheless declined in 2020.
Last week, Swedish private equity and real assets investor EQT announced a $100 million growth investment in Tel Aviv-headquartered cybersecurity firm CYE. The investment (which was not included in January’s investment figures) marked EQT Private Equity’s first-ever investment in Israel, and will help CYE scale and accelerate its go-to-market and product investments.