The IVC-LeumiTech Israeli Tech Review Q3/2024 full report will be published in October, but the preliminary numbers released today provide a reason for optimism, which is pretty remarkable, given the war.
Israeli startups raised $2.43 billion in the third quarter of 2024, across 99 rounds, representing a 32% increase compared to the same period in 2023 (pre war). Excluding the large transactions (6 transactions of over $100 million), the investments in the third quarter amounted to $1.33, a 5% increase compared to the previous quarter.
Despite the growth, Q3 2024 saw a 20% decrease in funding and a 17% drop in deal volume compared to Q2 2024, highlighting volatility.
In contrast to the dominance of the cyber sector in the previous quarter (62% of the total capital raised), in the third quarter the scope
The transactions amounted to about 14% of the total of all rounds. SSI Inc. $1 billion round accounted for 41% of total Q3 investments.
Foreign investor participation remained strong, while local investor activity declined due to geopolitical and economic uncertainties. Despite the war, in the last nine months Sequoia , Greylock and Accel all opened offices in Israel, and Founders Fund appointed a partner to cover Israeli deals.
Israel continues to be a relatively liquid market
Another strong indicator for the strength of the Israeli startup ecosystem has been exits/ liquidity, especially given the shortage of exits in the venture capital industry.
For example, In the last 30 days Salesforce acquired three Israeli startups for a combined $2.6 billion (Own Company, Tenyx and Zoomin), Israeli gaming startup Superplay was acquired by Playtika for $700M in cash (and up to $1.9 billion in earn out targets) and Wiz, Israel’s fast growing cybersecurity startup is talks on raising funding at $20 billion valuation, after turning down a Google acquisition offer for $23 billion. Not bad, considering the that all of this happened while Israel is fighting a war on seven different fronts.
The report published by Startup Nation Central earlier this month showcases this in more detail:
Israel continues to draw investors seeking bold, determined solutions to global challenges. With attractive valuations and immense growth potential, the Israeli tech ecosystem remains resilient—no matter the circumstances.
– Startup Nation Central: One Year of Israeli Innovation in War
Looking ahead in Israeli startup investing
It would be naive to ignore the current risks and challenges facing the Israeli startup ecosystem. With the ongoing conflict, many founders and employees are serving in reserve duty, and the frequent flight cancellations have made it harder for international investors to connect. Macroeconomic factors, such as the credit downgrade by Moody’s, the risk of brain drain, and the potential judicial reforms, further complicate the landscape.
Last month, at the annual Mind the Tech event hosted by Calcalist in London, I had the privilege of joining a panel discussion with Davor Hebel (Eight Roads), Saul Klein (LocalGlobe), Maya Eisen Zafrir (CEO of LeumiTech), and Gideon Argov (New Era Capital). The panel unanimously agreed: Israeli entrepreneurs are among the most resilient. Outside of the US and China, the UK and Israel continue to be the largest unicorn hubs globally, and there will be a premium on Israeli innovation and founders—not just in defence and cybersecurity.
2024 has been a challenging year filled with loss and anxiety, and although the crisis is far from over, early signs of recovery are emerging. The current environment presents opportunities for resilient Israeli startups. While geopolitical challenges persist, strong companies are still being built, and Israel remains a global center of innovation. There is a consensus that Israeli tech will emerge stronger, with a renewed focus on sustainable growth and global expansion. For example, we at Remagine Ventures did five deals over the summer, all in pre-seed Israeli founders. They understand they’re entering a tougher market, but they are determined, and generative AI means that they can do more with less.
Despite a decline in the number of new startups, the quality of those being founded has increased. Even though Israel’s credit rating has dropped, foreign investor interest remains robust. History shows that the best companies often emerge after a crisis. Though there are still significant challenges ahead, it is vital to continue building—with a stronger sense of purpose than ever before. As we approach the Jewish New Year, I wish everyone celebrating a Shana Tova and Chatima Tova.
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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