Brian Blum
October 30, 2019

Israeli high-tech companies raised $2.24 billion in 142 deals in the third quarter of 2019, according to data released this week by the IVC Research Center and the ZAG S&W Zysman, Aharoni, Gayer & Co law firm. That’s the highest amount – and the highest number of deals – in any quarter since 2013.

The amount raised in Q3 2019 was up 37% over the same quarter in 2018, when high-tech funding was “only” $1.63 billion.

The aggressive pace of the last three months was driven by 13 specific deals valued at over $50 million. These captured some 57% of the total capital raised in the quarter. Six of these deals were over $100 million and came to $841 million all together.

The six companies in the $100 million club included cybersecurity company CyberReason ($200 million), business analytics firm FundBox ($176 million), mobile application maker Lightricks ($135 million), business analytics leaders LendBuzz ($130 million), Hippo ($100 million) and enterprise applications software company Trax ($100 million).

VC-backed deals in particular raised $1.6 billion in 81 deals in the quarter, but if you look at the amount of money raised from the venture capital community over the first three quarters of 2019, it jumps to $4.68 billion. Given that the total for all of 2018 was $4.76 billion, 2019 looks set to be a record year.

Breaking down who got what: software continues to lead, with almost $1.4 billion raised in 52 deals (10 of which were among the 13 total that raised over $50 million). Life sciences did well in the quarter, too, raising $350 million in 38 deals (up from $239 million and 29 deals in Q3 2018). Cleantech companies came in last, but still not shabby, growing both by number of deals (10) and the amount raised ($85 million).

What’s coming for 2020? More artificial intelligence and cybersecurity investments, says Marianna Shapira, research director at IVC Research Center. IVC reports that, over the last five years, “there has been a continuous increase in capital raising and exits in these technology verticals.”

There is a warning sign in the data: less money is going to early stage companies, according to Shmulik Zysman of report co-author ZAG, with much of the investments going to more established high-tech firms.

In Q3 2019, for example, just $264 million went to early stage companies while $1.9 billion was taken by later stage endeavors. That continues a trend – albeit not as pronounced – from last year in the same quarter, when $559 million went to early-stage companies and $1.2 billion went to more mature companies.

Shapira admits that “there has been no increase in the capital raising in the early stages.” Nevertheless, she adds that IVC “expects that the rate of funding for these companies might increase in the last quarter of this year, in accord with the trend observed in previous years.”

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