IVC and ZAG/Sullivan Summary of Israeli High-Tech Companies Capital Raising – Q1/2020

ZAG/Sullivan Press Release
April 6, 2020

Overview

2020 is, so far, proving to be a major challenge for Israel’s high-tech industry. The
COVID-19 crisis has caused businesses to cease regular activity and search for ways
to survive this uncertain period. The first to suffer from the global recession in the
Israeli high-tech industry were young seed companies, with only four capital-raising
deals made since February.

The first two months of this year showed mostly regular activity, with quarterly
figures at the same levels as previous, strong months. In March 2020, the prevalent
trend from 2019 has strengthened – investor interest in later rounds and mature
companies– became even more prominent.

Growth-stage companies succeeded in raising robust amounts. Four of the eleven
companies that attracted more than $50 million this quarter raised notable
amounts in March, the largest being Via’s $400 million deal.

Israeli High-Tech Capital Raising (By Quarter) | Q1/2015-Q1/2020

In Q1/2020, Israeli high-tech has attracted the record quarterly amount of $2.74B in 139 deals, 76% up from Q1/2019 capital volume. Excluding the mega-deal by Via ($400m), the total amount summed up to $2.34B in 138 deals. Israeli VC funds investments were down to 7% of total capital raised.

Israeli High-Tech Capital Raising in VC-Backed Deals (By Quarter) | Q1/2015-Q1/2020

Israeli VC-backed deals topped all years, reaching $2.43B – 89% of total capital raised in Q1/2020. However, COVID-19 crisis affected Israeli deal-making in March - only 17 VC-backed deals were closed – 50% down from previous dynamic months of 2020.



Number of Deals by Round Type | January-March, 2018-2020

Seed capital raising was cut down to the mere 2 deals in months of February and March of 2020, following the global COVID-19 crisis.


Israeli High-Tech Capital Raising by Round | Q1/2015-Q1/2020

In Q1/2020, later rounds (C rounds and later) capital raising peaked reaching the record of $1.92B. The 37% share of the total capital volume was raised in March, mostly due to the mega-deals of Via ($400m) and Insightec ($150m).

Israeli High-Tech Capital Raising by Round | Q1/2015-Q1/2020

In total, the number of early rounds (Seed + A Rounds) downsized to 63 in Q1/2020 – 17% under the quarterly averages of 2019.


Quarterly Capital Raising by Stages | 2015 – 2020

Seed companies suffered the major setback due to COVID-19 crisis – raising $16m in 21 deals, down 28% in number and 70% in capital volume from the quarterly averages of 2019.
Growth companies kept high pace, mostly due to 9 companies with over $50m each, raising $1.37B in total.


Quarterly Capital Raising by Deal Size | 2019–2020

Q1/2020 registered 43 deals in the $5m to $20m range, a decrease of 12%, compared with the previous quarter and last year’s corresponding quarter, with 49 deals each. Deals under $5m increased in January, however the following months showed a slowdown, due to COVID-19 crisis.



Methodology

This report reviews capital raised by Israeli high-tech companies from Israeli and foreign venture capital funds as well as other investors, such as investment companies, corporate investors, incubators and angels.

Reported data present in the investments activity IVC collects from reliable media sources, and direct reports gathered by IVC’s information specialists’ team.

The report is based on data from 436 investors of which 130 were Israeli VC funds and 306 were other entities.

The report data was last updated on March 31, 2020.

The term Early Stage companies refers to high-tech companies in the process of development and not yet offering products to the market.

The report covered total investments in the Israeli venture capital sector, including both VC-backed rounds where at least one investor participating in the round was a VC fund, as well as deals not backed by venture capital funds.

The report includes amounts received by each company directly, including direct transactions performed between company shareholders.

Most companies belong to more than one technology vertical, therefore the data regarding verticals should be viewed separately per vertical.

For additional information:

Marianna Shapira, Research Director, IVC +972-73-212-2339  marianna@ivc-online.com

About the authors of this report:
IVC is the leading online provider of data and analysis on Israel’s high-tech & venture capital industries. Its information is used by key decision-makers, strategic and financial investors, government agencies, and academic and research institutions in Israel.

ZAG/Sullivan (Zysman, Aharoni, Gayer & Co.) is an international law firm with offices spanning Israel, the United States, China, and the United Kingdom. The firm’s multidisciplinary attorneys specialize in all aspects of commercial law for both publicly held and private companies. Mostly known for its expertise in the high-tech and life sciences arena, the firm is the focal point for its clients who are seeking capital and international transactions. ZAG/Sullivan provides results-driven legal and business advice to its clients, addressing all aspects of the clients’ business activities, including penetration into new markets in strategic locations. In recent years, the firm has acted on a majority of the equity and debt financing transactions by Israeli technology companies on the Nasdaq. It has been the firm’s experience that the best results, that give our clients the competitive advantage they need, are attained by coupling professional experience, global presence, and connections with the investor communities in Israel and abroad.

Jump to Page