The Israeli tech ecosystem has made its mark globally since its early days somewhere in the 1990s. With $8.3 billion raised in 2019 and $9.9 billion in exits in 2019 alone, Israel punches above its weight.
The stats about Israel’s tech ecosystem have become part of its Startup Nation Mantra – Israel boasts the highest number of startups per capita (6587 companies according to SNC), the highest VC dollars per capita, the % of GDP spent on R&D is only second to Korea, it has over 350 multi national R&D centres etc. What’s less discussed, is that Israel also, has one of the highest number of unicorns, aka privately owned startups worth more than $1 billion, globally.
I’m not a huge fan of ‘unicorn statistics’ as they tend to represent unreailsed value, ultimately assigned by investors and not by the market. That said, the density of startups reaching unicorn status can also be considered a sign of maturity for the ecosystem and in Israel, the pace of new unicorns is growing steadily.
In any case, while those outsized outcomes were far an apart a decade ago, Israel has gone from 20 unicorns in 2019, to more than double in 2020. As of now, Israel has 42 Unicorns, or (technically 40, now that Lemonade and JFrog went public).
The Israel Unicorn Landscape
And here is the full list (data courtesy of PitchBook)
From humble beginnings
It wasn’t easy for me to pinpoint the first Israeli Unicorn. There were many Israeli startup transactions north of $1 billion in the early 2000s. Lucent acquired Chromatis for $4.8b in 2000, M-Systems, inventor the disk-on-key, was acquired for $1.6 Billion by Sandisk in 2006, etc. Technically, the term unicorn was coined by Aileen Lee in 2013, so many consider the first ‘new’ unicorn to be Waze in 2013, as the company achieved a $1.3 billion valuation when it was acquired by Google.
Since then, Israel has produced unicorns in many software categories, from health to cyber and enterprise to consumer. In the past, Israeli startups had a reputation for selling too early, and now, partly thanks to the availability of late stage capital, more Israeli companies are able to stay private longer and either become mega acquisitions (like we’ve recently seen with the acquisition of Moovit by Intel for $900 million) or wait for the right timing to IPO, like Jfrog’s recent excellent public debut.
Here is a selection of Israeli startups that achieved unicorn status in the first half of 2020 alone
Clouds in the horizon?
At the time of writing this post, Israel is experiencing its second wave of Covid-19 with over 9,000 cases a day, and millions of people in a second lockdown, making deep impact on the country’s economy. To make matters worse, even a rock solid Israeli economy doesn’t guarantee success to Israeli startups.
Over half of the Israeli unicorns are US based. In New York alone there are nine Israeli unicorns. Since a large portion of the growth capital and revenue required for Israeli startups to reach unicorn status depends on the US, Israel’s ability to continue to generate unicorns in this fast pace is dependant on the recovery of the US economy. With travel restrictions and frozen visa quotes, Covid-19 is putting this at risk.
Israeli startups have raised $7.6 billion in 2020 so far, and are on course to passing last year’s record amount. So far, crisis was averted. In the pipeline, there’s no shortage of future unicorns, fondly referred to as ‘charging ponies’ by our friend Yaron Samid at TechAviv.
To be in venture capital one has to be an optimist, as ultimately we invest in the future and hope our companies can solve humanity’s largest problem. I believe the best for Israeli tech is yet to come. For more on the Israeli ecosystem, download PitchBook’s Israel Private Capital Breakdown
I'm a former general partner at google ventures, head of Google for Entrepreneurs in Europe and founding head of Campus London, Google's first physical hub for startups.
I'm also the founder of Techbikers, a non-profit bringing together the startup ecosystem on cycling challenges in support of Room to Read. Since inception in 2012 we've built 11 schools and 50 libraries in the developing world.
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