2021 was another record-breaking year for Israel’s tech scene, with $25.4 billion raised, representing 136% growth in equity investments over 2020, Start-Up Nation Central’s end-of-year summary shows.
Although investment in technology companies has grown considerably across the world, the rate of increase of funding for Israeli companies far surpasses the global average of 71%, as well as those of other tech centers, including the US with 78%, the UK with 105%, and Singapore with 95%, according to comparative data on compiled from PitchBook on December 1.
FinTech, Enterprise IT & Data Infrastructure, and Security Technologies are the three largest sectors in terms of funding, each doubling last year’s total and emerging as the ecosystem’s main drivers.
The number of mega-rounds, huge fundraising of more than $100 million, climbed from 22 in 2020 to 74 in 2021, hitting $14.77 billion, 310% more than last year, and making up more than half of the funding total.
2021 saw 33 privately held technology companies join the billion-dollar club, reaching a total of 53 Israeli unicorns.
The number of IPOs and stock launches shot up from 22 in 2020 to 57 in 2021, raising an accumulated $4 billion. Although the trend made many headlines this year, only 10 companies carried out special purpose acquisition company (SPAC) mergers, raising an accumulated $4.9 billion.
39 Israeli startups were acquired by established Israeli companies, the highest number on record, “indicating the growing maturity of the ecosystem,” SNC pointed out.
Some of the most active investors in 2021 were foreign-based Venture Capitals that are among the world’s largest tech investors, including Insight Partners which participated in 49 rounds, Bessemer Venture Partners in 23 rounds, and Tiger Global Partners with 16 rounds.
“This illustrates the level of attractiveness Israeli companies hold for foreign investors and their growing influence on the market,” SNC noted.
Start-Up Nation Central CEO, Avi Hasson, stated on Monday that “two years into the COVID-19 pandemic, the Israeli tech ecosystem is stronger than ever. In a world where digital has become the default, Israel is a world-class source of solutions to global challenges.”
This trend “resulted in an all-time record in capital raised, increased foreign interest in Israel, and a lot of buzz surrounding our ability to produce unicorns, which raises the question of whether Israel has made the transition from being the Start-Up Nation to the Scale-Up Nation,” he added.
Hasson also outlined the challenges the Israeli tech companies are dealing with.
“Some of the challenges are reaching critical levels. Companies are struggling to find sufficient employees, with the Israeli tech sector suffering a chronic shortage of tens of thousands of skilled employees,” he explained.