During the first quarter of 2023, Israeli high-tech companies raised $1.72 billion in 105 deals — a 70 percent decrease from Q1/2022 and 79% from the peak in Q4/2021.
And that number is inflated by three mega deals of over $100 million each, accounting for 38% of the overall amounts: $300 million for Wiz, $250 million for eToro and $110 million for Via.
Furthermore, only 23 exits (21 M&As and two IPOs) were completed in Q1/2023, totaling $1.087 billion.
These sobering facts were revealed in the IVC–LeumiTech Israeli Tech Review Q1/2023.
“The year began with a significant slowdown in investments, both in terms of the volume of transactions and the number of transactions,” said Timor Arbel-Sadras, CEO of LeumiTech.
“Clearly, investors as well as funds are still hesitant to make investments or make mergers and acquisitions. The root cause is probably the high level of uncertainty around companies’ valuations in the current macroeconomic terms. We anticipate that in the second half of the year we will see higher levels of such activity, and hope that this will lead to a renewed growth in the long term.”
The report also found that early rounds (pre-seed, seed and A series) decreased 62% compared to Q1/2022, while seed deal amounts dropped 50%.
Marianna Shapira, Research Manager at IVC, explained that the decline in Israeli high-tech capital market activity in the beginning of 2023 followed the trend in the second half of 2022, which reflects fluctuations on global financial markets.
“The capital volume from foreign sources, that provides the major financial support for Israeli startups, has weakened. Companies experienced a notable drop in capital investments from their existing investors, and the number of early startups that raised capital has decreased considerably,” she said.
“On top of that, the mega-rounds trend is in a major decrease, compared to previous years. All these trends lead us to a modest projection regarding capital volume for 2023, in case the financial conditions and trends will not change in the course of this year.”