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Israeli tech sector

Investment in Israeli Tech Firms Slumps 56%, Hit by Political Upheaval and Hamas War

Fundraising by Israeli tech startups and companies plunged 56 percent this year, compared with the same period in 2022, as the sector grappled with political uncertainty around the judicial overhaul and the outbreak of the war with the Hamas terror group.

Local startups raised a total of $6.9 billion in 2023, similar to the levels recorded in 2018 and 2019, according to annual preliminary data put together by research center IVC and Leumitech, a Leumi banking arm that specializes in banking for tech companies.

The number of deals slumped 44% year-on-year, with 392 funding transactions recorded throughout 2023, marking the lowest figure since at least 2015, the data showed. Full annual data on the Israeli tech sector is expected to be released in January.

In the last quarter of the year, fundraising by Israeli startups fell 15% to $1.45 billion compared with the previous quarter before the start of the fighting. The number of deals slowed, with 75 transactions recorded during the last three months of the year, a decline of 17% versus the previous quarter.

At the same time, the Gaza war did not appear to deter foreign investors from continuing to back local tech companies. Foreign investors’ share in funding Israeli tech companies in the fourth quarter increased at a relative rate, following the trend from the beginning of the year. Against this, the participation of local investors in funding deals declined during the same period. The local tech sector relies heavily on foreign capital, largely American. (TOI / VFI News)

“‘For I know the plans I have for you,’ declares the Lord, ‘plans to prosper you and not to harm you, plans to give you hope and a future.’” - Jeremiah 29:11