Startup to Scale up: Israeli Entrepreneurs More Than Double Investments, IPOs in 2021

Jan 11, 2022

Sitting in Tel Aviv, we often throw around the buzz phrase, ‘Startup Nation’. As 2021 comes to a close and we take stock of the year’s achievements, the startup nation is starting to show a new face, that of the ‘Scale-up Nation'. Having become synonymous with groundbreaking hi-tech ventures, billion-dollar unicorns, and record-breaking investment rounds, Israel’s tech scene is maturing and the industry clearly shows no signs of slowing down.

Year-end numbers show that the Israeli tech sector has seen incredible growth. Over the course of 2021, Israeli companies closed 773 investments deals and raised $25.6 billion completely overtaking 2020’s previous record of 604 deals and $10.3 billion in funding, according to data released by the IVC-Meitar Israel Tech Review. This jump in funding represents a nearly 146% increase in investments with deals over $100 million contributing to 55% of the total sum for 2021. This figure is nearly double the average global investment growth and tops that witnessed in the US and UK, two major international hi-tech markets. 

One clear takeaway from this year’s funding is that the investment rounds are largely characteristic of developing trends in the tech industry around the world. Cybersecurity and fintech companies led the funding rounds at $6.5 billion and $6.6 billion in investments, respectively, followed by IoT (internet of things) startups raising $2.9 billion and food tech startups raising $866 million.

A few notable major funding rounds include the cybersecurity firm Claroty raising $400 million in a round led by Softbank, food tech startup Future Meat raising $347 million for cultured chicken, and fintech startup Melio raising $250 million. Likewise, early investment rounds (Seed and A) saw no signs of slowing down with a reported 408 deals and a median investment amount of $4 million. 

Further reports indicate a 520% increase in the number of companies that have successfully applied for an IPO, both in Israel and the US, when compared to 2020. As of now, 97 companies have made the move to becoming publicly-traded companies. A PwC Israel report indicated that Israeli exits, merger and acquisition deals, and IPOs reached a value at $82.4 billion in 2021. According to the IVC-Meitar report, out of 75 IPOs, 23 were on the NASDAQ, and the rest were on the Tel Aviv Stock Exchange.

But what makes Israel so unique? And why does Techstars base itself out of Tel Aviv as opposed to another part of Israel?

First, Israel is a hub of innovation and technological advancement. It is built into the Israeli DNA, having had to come up with ingenious solutions to adapt to and improve their circumstances in the desert of the Middle East. For that reason, Israelis naturally took to hi-tech, producing revolutionary software solutions, consumer products, and processes. With hi-tech having taken root, Israel’s location at the crossroads between the West, Africa, Asia, and peaceful, neighboring countries in the region, makes it uniquely poised to connect great tech ventures to many different markets. 

Tel Aviv is the core of this technological activity, as a cosmopolitan city of international renown bringing wide-eyed tech entrepreneurs, multinational corporations, and investors alike to vie for a piece of the pie. It is no wonder then that the Tel Aviv Stock exchange currently hosts 540 companies on its rosters, with the TA-35 index showing a near 26% growth since last year. 

Investors and startups alike will continue to flock to Tel Aviv with the intention of finding the next tech to disrupt the all-powerful market. It is a technological hub for the entire world and there is truly no better place to develop and refine your startup than in the Silicon Valley of the Middle East.

For these reasons, we invite you to join us at our Demo Day so you to can gain insights into the blooming Israeli startup industry.

About the Author
Hilla Ovil-Brenner

Hilla Ovil-Brenner is managing director of the Techstars Tel Aviv Accelerator. A serial entrepreneur in the high-tech industry for the past 20 years, she is a true believer in innovation and team spirit. Hilla specializes in turning dreams into reality through passion, experience, and skill. She was named one of the top 100 influential people in the hi-tech ecosystem by geektime. Hill is the Founder of Yaazamiyot, the biggest female founders group in Israel.