israeli tech ecosystem
TRANSCRIPT
Overview: Entrepreneurs, Companies, Investors and Major Trends 2015-2020
February 2021
ISRAELI TECH ECOSYSTEM
W W W . I V C – O N L I N E . C O M1
Established in 1997, IVC is the best source for information, research and insights into the thriving Israeli technology.
COVERAGE:• 9,538 Active startups• 2,524 Investors• 36,144 Key Executives• 390 Multinational Corporates• 411 Accelerators & Startups Communities
About IVC
We provide the most comprehensive, accurate, updated data, research and insights on Israel’s tech ecosystem, startups, Private Equity and Venture Capital.
IVC addresses organizations of any sort which have interest in the innovative and fast-growing Israeli high-tech ecosystem. Among our clients: strategic & financial investors, foreign and local VC funds, Family offices, Angels, CVC, PE funds, Fund of Funds, Incubators & Accelerators, service providers, NGO’s, government entities, multinational corporations, academy, technology transfer companies, start-ups, research institutions, entrepreneurs and more.
Vision & Mission: The Israeli high-tech ecosystem becomes bigger and mature, IVC ’s mission is to continue collecting and analyzing relevant data in order to provide our clients with the most accurate and in-depth information which assists them to formulate their scouting efforts, strategy and position in the Israeli market.
ISRAELI ECONOMY AND GENERAL INFORMATION
ISRAEL at a Glance
4
Population 05/20 Area GDP Growth (Q3/2020) GDP (Q3/2020) GDP/PER Capita (Q3/2020)Ratio of National Debt/GDP (2019)
9,136M 22,145 Sq/Km -4.4% 350.6B (NIS) $41,100 60.0%
Investment in R&D (2018) Inflation Rate Unemployment Rate Employees OECD Credit Rating
4.95% of GDP -0.6% 4.5% 3.9m Full Membership since 2010 Pitch A+
4
Global Industry Leaders on Israeli High-Tech
5
“"Israel is a technological superpower."
Founder and CEO, Tesla, SpaceX
Elon Musk
Jack Ma
"people here are born to believe - 'Never give
up. This mentality is what has made Israel a
miracle in only 70 years."
Founder, Alibaba
“If you’re going to the Middle East to look for oil, you can skip Israel. If you’re looking for brains, look no further. Israel has shown that it has a disproportionate amount of brains and energy.”
“Israel is a major player in the high-tech world…There is a greater concentration of talented high-tech manpower here in comparison to other countries –almost to the extent of Silicon Valley.”
Warren Buffet
Bill Gates
Tim Cook
“We have an enormous admiration for Israel, not just as an important ally for the U.S. but as a place to do business. Apple looks on Israel as a strategic market full of unique capabilities ”CEO, Apple
CEO, NVIDIA
"One of the things I've learned about Israelicompanies is that everyone wants them. I don'tknow of any large company in the world today thatdoesn't want to be in Israel. Ask the bankers - all ofthe companies wanted Mellanox. Look at me - Iwon,"Jensen Huang
Global recognition as a leading innovative technology center
2nd only to Silicon Valley in innovation
Growth engine of the economy
Human Capital emerged as Israel’s principal resource
5
VC Investments Global Comparison, 2015-Q3/2020
Source: Statista
6
28
32 31
26
29 29
38 37
20
16 1715
1715
24
31
810
8 7 7 79 10
1.5 2 2.2 2.2 2.6 2 3
10
Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20
North America Asia Europe Israel
414.2
282.1 264.8
129.2
63.6 5820
VC Investments per Capita ($), Q3/2019
Source: PwC MoneyTree 2020
1st in the world by R&D Spending, Q3/2020 Israel | South Korea | Switzerland | Sweden | Japan | Source: World Bank
6
Global dollar funding: North America, Asia, and Europe,($B), 2019-2020
Total Exits $121,987M (1371 deals)Total M&A’s $116,850M (1271 deals)
Total IPOs $6,025M (100 deals)
$36,076M investments in Israeli tech companies
$17,688M were raised by 190 Israeli VC funds, mostly from
foreign investors
More than 9,488 Start-ups
2503 Investors406 Accelerators and Incubators
389 Active MNC
7
Israel High-Tech Industry at a Glance
27 listed in US STOCK EXCHANGES
Forw
ard
Informal
Creative
Ambitious
Non-Conventional
Com
munic
ative
Improvisation
Innovative
Experimental
Independent thinking
“Chutzpah”
Vis
ion
Inte
grity
Personal Example
Courage
Out-of-the-box
Persistent
Hard Working
Team
Family
Action DrivenEducatio
n Competitive
Frie
ndship
Fast Movers
Inquisitive
Restless
8
• Challenging - question everything
• Strong drive, must-win attitude
• Knock on every door
• Solution-driven approach to real problems
pros
• Cost-effective use of limited resources
• Going global from inception
• Learn from mistakes – tolerate failures
• Short history – past is not a constraint
• Rewarding – financial, prestige, popular
Israel Entrepreneurship DNA Attitude, Characteristics, CultureDrivers of Innovation and Success
Entrepreneurial Culture
Strong Cooperation
Educated Human Resources
Quality Academic Institutions
Smart Money, Mainly Foreign
Strong Presence of Multinationals
Proven Exit Avenues
Commercialization
Government Support
Modern Infrastructure
Academic institutions, Government, Industry, Defense, Silicon Valley
Skilled engineers, military service, elite
units, immigration )1991 Russia(
Research, scientists, 12 Nobel prize winners,
IP-patents, Weitzman Institute, Technion
Food chain: VC funds, CVCs, PE, angels,
incubators, accelerators
All sectors, regions; strategic – products needs, clients, DD,
capital, exits
M&A is the main avenue, improved
performance
Defense-developed innovative technologies, basic science, academic
research
Innovation Authority special programs: grants,
incubators, human resources; tax incentives
Legal, banking, financial, accounting,
IP protection
9
High quality startups, serial entrepreneurs, technology
clusters, one hub
Israeli Tech Ecosystem Critical Mass of Success Elements
9
HaifaHaifa is an industrial zone and a tech
hub. It hosts leading companies such as Microsoft, Intel and Google and
academic institutes
Tel Aviv Tel Aviv is one of the greatest tech
hubs in the world; it has the highest number of startups per capita in the globe and the highest investment of
GDP in R&D
HerzliyaIn Herzliya high-tech park there are 60+ startups and large companies, including Apple’s R&D center, and
Microsoft
Upper GalileeFoodtech, AgroTech, ii2020 –
emphasize on periphery
Beer ShevaCyber Center - a joint venture of the Israeli
National Cyber Bureau, Beer Sheva Municipality, Ben Gurion University and leading global companies in the cybersecurity industry
JerusalemThe city already has 440+ active
technology companies
1010
TheIsraeliHigh-Tech Main Hubs
More IPOsIsraeli tech companies reached a maturity level that enabled them to turn to capital markets as a viable
exit alternative. In 2020, Israeli companies made 121 funding deals raising $6.55B on the capital markets, compared to $1.95B in 2019. Deals included IPOs,
follow-on offerings, PIPEs, and registered direct deals (RDs), covering equity and debt (straight and
convertible) through primary and secondary offerings.
Continued GrowthIsraeli tech ecosystem continued to grow in 2020, despite the COVID-19 pandemic.
Investments totaled $10 billion in 607 deals, exceeding 2019 results by 31% in capital and 20% in the number of deals.
Investments in Growth CompaniesDeals over $100m equaled one-third of the total
investment’s amount. There were 20 deals of above $100 million and 96 deals of above $30 million in 2020
(compared to 18 and 65 in 2019, respectively). These investments provided growth companies with
substantial financing for their long-term expansion strategies.
Early Rounds Israeli Venture Capital FundsThe share of Israeli VCs in the overall VC
investments keeps shrinking. In 2020, Israeli VCs captured just 15% of total VC investments
than 18% in 2015-2019.
A decline in M&A activityThe Covid-19 pandemic slowed M&A
activity. During 2020 there were no M&As larger than $5B. While the total of M&As
smaller than $1B shrunk to a total of $3.11 billion (compared to 9.718 billion in 2019), M&As amounts in the range of $1-5 billion
grew compared to 2019.
1111
TheIsraeliTech Ecosystem 2020 Trends
During the first half of 2020, IVC saw a sharp downtrend in early financing rounds.
The sentiment changed in H2/2020 when investors returned and infused average amounts to
early-stage companies.
1362
1248
1124
920
806
337
2015
2016
2017
2018
2019
*2020
12
The Israeli high-tech industry continues toproduce about 1,000 new innovativecompanies every year
9500+ ACTIVE COMPANIES
12
Israel High-Tech Newly Established Companies by Year, 2015-2020
# of Established* IVC Estimation, final figures for 2020 will be more accurate around Q3/2021
313
13
Leading Israeli Unicorns, 2020
13
(*Valuation in last round was higher than $2B)
(*Valuation in last round was higher than $1B)
Added Value of Multinationals Presence in Israel, from all Region & Sectors
193
124
107
84
75
60
59
57
57
52
42
32
30
24
23
20
19
19
17
15
Artificial Intelligence
Machine Learning
IoT
Big Data
Cyber Security
Industry 4.0
SaaS
Automotive
FinTech
Digital Health
Machine Vision
RetailTech
Insurtech
SportsTech
Smart City
Augmented Reality
PropTech
Adtech
Blockchain
Marketing Tech
15
Israeli High-Tech - CVCs Activity (Corporate Venture Capital), 2015-2020
15
2,624
1,802 2,030
780
2,4492,879
2724
20
27
2023
2015 2016 2017 2018 2019 2020
Corporate-Backed Exits
1,173 1,724 1,714
2,445 2,067
2,917
135 147 147
191
129154
2015 2016 2017 2018 2019 2020
Corporate-Backed Investments
Active Israeli CVC-Backed Tech Companies by Tech Verticals, 2015-2020
Tech Verticals
$M
# of deals
# of Active CVC-Backed Companies
$M
# of deals
1300
3358
4141
631
0 500 1000 1500 2000 2500 3000 3500 4000 4500
Seed
R&D
InitialRevenues
RevenueGrowth
14%
35%44%
7%
Discovering new knowledge about products, processes, and services,and then applying that knowledge to create new and improved products,processes, and services that fill market needs.
A company whose yearly revenue does notexceed $10 million dollars.
A startup company, which is in its early daysof product development and fund raising.
A company whose yearly revenues exceed $10 milliondollars and has a double-digit yearly growth rate.
Active High-Tech Companies by Stage
16
17
Israeli Tech - Totals $m 2015-2020
3,4354,290 4,531
5,843
7,799
10,178
7,712
9,957
8,025
12,159
14,268
7,968
10,255
874 1,230 1,480 1,951
6,961
2015 2016 2017 2018 2019 2020
Investments $m
M&As $m
Public Offerings $mSou
rce:
IVC
-Mei
tar T
he
Isra
eli T
ech
Rev
iew
20
20
407 429 432
512 506
607
128 127 131 119 144
9979 51 70 66 68 128
2015 2016 2017 2018 2019 2020 Sou
rce:
IVC
-Mei
tar T
he
Isra
eli T
ech
Rev
iew
20
20
# of Transactions
# of M&As
# Public Offerings
Israeli Tech – Total Number of Transactions 2015-2020
M&As: consistent with the exit's methodology, M&As include buyouts and exclude exits of $5B and above.
PIPE deals analysis is part of the Public Offerings section
Public Offerings include Teva $7.24B public offering in 2015
18
Investments in Mid - Later Rounds $m, 2015-2020 Annual Number of Deals in Mid - Later Rounds, 2015-2020
Sou
rce:
IVC-
Mei
tar
The
Isra
eli T
ech
Rev
iew
20
20
79
60
82
10189
129
46 4234 33
55 62
35 4148
55
43
76
2015 2016 2017 2018 2019 2020
Sou
rce:
IVC
-Mei
tar
The
Isra
eli T
ech
Rev
iew
20
20
Israeli High-Tech Investments | 2015-2020
1,101 888 1,208 1,706 1,581 2,309 737 783 909 1,113 2,120
1,795 702 1,406 1,381
1,383
2,281
4,283
2015 2016 2017 2018 2019 2020
B Rounds $m C Rounds $m Later Rounds $m # of B Rounds # of C Rounds # of Later Rounds
3,4354,290 4,531
5,843
7,799
10,178
407 429 432 512 506607
2015 2016 2017 2018 2019 2020
Total $m # of Deals
Sou
rce:
IVC
-Mei
tar
The
Isra
eli T
ech
Rev
iew
20
20
358 683 783 1,0401,704
2,680
464610 554
804
1,822
1,483
53
69 108
286
326
391
335
718 742
920
930
1,512
2015 2016 2017 2018 2019 2020
Number of Transactions by Verticals, 2015-2020
Sou
rce:
IVC
-Mei
tar
The
Isra
eli T
ech
Rev
iew
20
20
19
Sou
rce:
IVC
-Mei
tar T
he
Isra
eli T
ech
Rev
iew
202
0
Cyber Security
Fintech
FoodTech
IoT
The investment trends in Tech Verticals continue to support the growth of the Israeli main technological clusters: Cyber Security, Fintech and IoT, which got the biggest checks in 2020.
Nevertheless, the number of deals in FoodTech companies continues to grow. The overall small amounts invested in this cluster, imply that the companies in that field are still young.
50
6874
85
69
79
42
5152
75 77
91
5154
51
62 5767
11 12
24 26 29
41
2015 2016 2017 2018 2019 2020
Cyber Security
Fintech
FoodTech
IoT
20
Israeli High-Tech Exits by Deal Type, 2015-2020
Israeli High-Tech M&As, 2015-2020
20Buyouts $m IPOs $m M&As $m # of Buyouts # of IPOs # of M&As
Sou
rce:
IVC
-Mei
tar
The
Isra
eli T
ech
Rev
iew
20
20
1,185 1,110 1,394
3,361 2,014
4,035
609 26 440 250 424 1,610
6,527
8,847
6,631
8,798
12,254
3,933
5 4
9 87
4
86
138 9
19
123 123 122
111
137
95
0
20
40
60
80
100
120
140
160
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2015 2016 2017 2018 2019 2020
7,712 9,957
8,025
12,159 14,268
7,968
128 127 131 119144
99
2015 2016 2017 2018 2019 2020* Excluding M&As of $5B and above.
* Including M&As & Buyouts
M&As $m
# of M&As
Sou
rce:
IVC
-Mei
tar
The
Isra
eli T
ech
Rev
iew
20
20
201820182018
2019201920202020
21
Acquired by GoogleFor $1.19B
Acquired by D+HFor $1.25B
Acquired by CovidienFor $970m
Acquired by Rakuten Inc.For $900m
Acquired by Apax Partners& JMI EquityFor $1B
Acquired by CiscoFor $5B
Acquired by MedtronicFor $1.6B
Acquired by KLA-TencorFor $3.4B
Acquired by Giant InteractiveFor $4.4B
Acquired by Thoma BravoFor $2.1B
Acquired by Mitsubishi TanabePharmaFor $1.1B
Acquired by IntelFor $15.3B
Acquired by NvidiaFor $7.4B
Acquired by Nuvei For $889m
Acquired by SalesforceFor $1.35B
Acquired by Hellman & FriedmanFor $1.15B
2020 Acquired by Intel For $1B
Acquired by Insight Partners ($1B) and CapitalG (Google) ($100m) For $1.1B
US Companies are majority of the acquirers IBM, Intel, Google, Microsoft, Amazon, Palo Alto Networks, Facebook and many more
2019
2015 2014
Israeli High-Tech Top M&As in 2012-2020
2017 2017 2016
2013 2013 2012 2012
Over 100 Israeli Technology Companies are Publicly Traded on NASDAQ
22
Market cap as of month end - July 2020
Market cap
$42.25BMarket cap
$17.57BMarket cap
$14.97BMarket cap
$8.29BMarket cap
$7.58B
Market cap
$6.03BMarket cap
$5.22BMarket cap
$4.91BMarket cap
$4.56BMarket cap
$4B
Market cap
$3.89BMarket cap
$3.28BMarket cap
$3.04BMarket cap
$2.9BMarket cap
$2.56B
Notable Israeli Technology Companies Traded on Global Public Markets
Leading Technology Clusters, Matching Global Technology Trends and Demands
AICyber
Fintech
2323
Israeli High-Tech Leading Clusters
458.9 816.22 936 1024 2054 3043
86 94 92
134
10895
2015 2016 2017 2018 2019 2020
575 730.4 730.4 1050 1960 2150
100117 117
128
97
79
2015 2016 2017 2018 2019 2020
1039 1071 2018 2840 4590 4430
239 251
333
378388
299
2015 2016 2017 2018 2019 2020
Foodtech
117.42 11.7 190.19 415.8 393.2 431.56
3340
51
67
5649
2015 2016 2017 2018 2019 2020
117.42
# of dealsCyber $M Fintech $M AI $M Foodtech $M
61
57
51
41
33
21
2015
2016
2017
2018
2019
2020*
443 Active Cyber Companies
Israeli Cyber Companies
110 Acquired/Merged
458.9 816.22 936 1024 2054 3043
86 94 92
134
10895
2015 2016 2017 2018 2019 2020
Investments in Cyber Security Companies ($m, #), 2015-2020
1040 573.8 1036 2018 2057 4004
20
14 1414
22
16
2015 2016 2017 2018 2019 2020
Newly Established Cyber Companies
Exits by Cyber Companies ($m, #), 2015-2020
*2020 details are not final
$M
# of deals
$M
# of deals
24
25
Israeli Fintech Companies
698 Active Fintech Companies
76 Acquired/Merged
Investments in Israeli Fintech Companies ($m, #), 2015-2020
575 730.4 730.4 1050 1960 2150
100117 117
128
97
79
2015 2016 2017 2018 2019 2020
$M
# of deals
Exits by Fintech Companies ($m, #), 2015-2020
2280 56.25 12 170 1080 905.87
14
86
10
17
13
2015 2016 2017 2018 2019 2020
56.25 12170
$M
# of deals
81
70
92
82
45
11
2015
2016
2017
2018
2019
2020*
Newly Established Fintech Companies
*2020 details are not final
26
Israeli AI Companies
1649 Active AI Companies
131 Acquired/Merged
Israel High-Tech - AI Companies ($m, #), 2015-2020
1039 1071 2018 2840 4590 4430
239 251
333
378388
299
2015 2016 2017 2018 2019 2020
$M
# of deals
Exits by AI Companies ($m, #), 2015-2020
$M
# of deals350.45 236.5 15,700 2600
1014
2217
35
30
2015 2016 2017 2018 2019 2020
350.45 236.51180 1129 159
225
229
252
191
96
2015
2016
2017
2018
2019
2020*
Newly Established AI Companies
*2020 details are not final
27
Israeli Foodtech Companies
Israel High-Tech - Foodtech Companies ($m, #), 2015-2020
$M
# of deals117.42 11.7 190.19 415.8 393.2 431.56
3340
51
67
5649
2015 2016 2017 2018 2019 2020
117.42
Exits by Foodtech Companies ($m, #), 2015-2020
165.5 13.3 4.3 165.5 76 20.3
4 4
2
8
34
2015 2016 2017 2018 2019 2020
13.34.3
$M
# of deals
399 Active Foodtech Companies
30 Acquired/Merged
Newly Established Foodtech Companies
47
46
42
45
38
10
2015
2016
2017
2018
2019
2020*
*2020 details are not final
91 229 128.4 218 145 164.2
503 335 406
700
131371
532
1285
642
1272
1625913
434
907
688
1535
652
1114
2015 2016 2017 2018 2019 2020
29
Israeli Venture Capital Funds Activity
$25,072 Raised by 265 Israeli VCs
Fund Raising by Israeli VCs by Vintage Year and Size ($m), 2015-2020
Medium Fund (100m-200m USD)
Large Fund (200m+ USD)
Micro Fund (<50m USD)
Small Fund (50m-100m USD)
