Israeli tech startups raised $1.37 billion in the third quarter, a sign of stabilization in startup investments

Israeli high-tech companies raised a total of $1.7 billion in the third quarter of this year, according to the preliminary data shared on Tuesday by the IVC Research Center and LeumiTech. This substantial investment is a clear indicator that investment in the startup landscape is showing signs of stability.

The news comes just two months after the state-backed Israel Innovation Authority reported that the country’s technology sector was experiencing a slowdown primarily due to political turmoil within the country.

According to Reuters, the data for the third quarter reveals a 38% decrease compared to the same period in 2022. However, it’s worth noting that this represents a more moderate 14% decline from the second quarter, as reported by the IVC Research Center and LeumiTech.

The full quarterly report is expected to be released in October, providing a more comprehensive view of the situation, Reuters reported, citing LeumiTech CEO Maya Eisen Zafrir.

So far this year, Israeli tech companies have successfully raised a total of $5.3 billion, with $1.9 billion secured during the second quarter. It’s important to remember that in the entirety of 2022, tech firms in Israel raised an impressive sum of nearly $16 billion. However, the landscape shifted as the global economy experienced a slowdown, coupled with rising interest rates and weak stock markets.

Furthermore, the Israeli government’s proposed overhaul of the country’s judiciary has added an element of uncertainty to fundraising efforts. Investors have expressed concerns about the democratic health of the nation.

Maya Eisen Zafrir, CEO of LeumiTech, commented on the data from the third quarter, noting the early signs of stabilization in fundraising figures. This data suggests a return to levels reminiscent of 2018-19. Additionally, there’s evidence of a stabilization in follow-on investments, indicating that companies are adapting their valuations in response to the new interest rate environment.

“We continue to see in the third quarter data the first signs of stabilization in the amount and scope of fundraising, data that bring us back to the levels of 2018-19,” said LeumiTech CEO Maya Eisen Zafrir.

“In addition, we recognize a stabilization in the rate of follow-on investments, an indication that the companies are beginning to adjust their value to the new interest rate environment.”