Israel is fighting wars on two fronts, tens of thousands citizens are displaced, and businesses are hurting because employees have been killed, injured or serving in the military reserves.

And yet the IVC Research Center & LeumiTech “Israeli Tech Review Q2/2024” reveals that in the first half of 2024, the total amounts and number of deals grew for the first time since H2/2021.

In H1/2024, Israeli and “Israel-related” (not incorporated in Israel but with senior Israeli management and founders) tech companies raised $4.78 billion in 226 deals.

The report notes that the growth wasn’t just a result of Wiz’s $965 million round in May. Even without this megadeal, the total capital raised in H1/2024 was 19 percent higher than in H2/2023, with 3% growth in year-over-year figures.

On the quarterly level, Q2/2024 was the first since Q1/2022 when both amounts and number of deals were above their quarter-over-quarter and year-over-year comparisons.

“So far, 2024 is set to be a positive year compared to 2023, following the two years of the downtrend,” the report declares.

Early rounds (seed and A) started to rise in Q4/2023, and the increase continued this year. In H1/2024, early-round capital raising totaled $1.18 billion in 163 deals, compared to $818 million in 114 deals in H2/2023.

In Q2/2024, six megadeals (over $100 million each) accounted for nearly 60% of the total in the quarter. Excluding the outlier Wiz deal mentioned above, amounts and the number of deals in the second quarter were similar to the first quarter.

The report states that Israel-based cybersecurity startups did well in H1/2024, mainly due to megadeals: Wiz ($965m), Cyera ($300m), Island ($175m), Insightec ($150m), Semperis ($125m) and Weka ($100m).

Other tech verticals, especially automotive, IoT and food tech, “did not show similar success and most of them are still suffering from the downtrend since H1/2022,” according to IVC and LeumiTech.

And although logic would dictate a slowdown in new startups, the researchers found 81 companies have so far been established in H1/2024, “but our estimation suggests 500–600 companies will be established this year,” down only slightly from the estimated 600–650 companies established in 2023.

Regarding exits (mergers and acquisitions, buyouts and IPOs) of Israeli high-tech companies, the number was dropping since H2/2021 and shows some improvement in H1/2024 but remains far below the “normal” numbers in 2017–2020. “However, this change in course supports the recovery perception we are seeing in other parts of the local industry.”

Among the standout M&As during the first half of the year: WalkMe was acquired by SAP for $1.5 billion, Resident by Ashley for $1b, and BioCatch by Permira for $750m. In all, there were 17 M&As valued at over $100m each from January to June 2024.

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