Indicating Recovery, Israel-based Startups Secure $1.6 Billion Investments

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According to IVC-LeumiTech data, fundraising increased in the first three months of 2024, following a drought during the first months of the conflict.
According to a report compiled by research center IVC and LeumiTech, a Bank Leumi arm that specializes in tech companies, Israeli tech startups raised a total of $1.6 billion from investors in the first three months of the year, indicating that the fundraising drought caused by the outbreak of the Israel-Hamas war is beginning to show signs of recovery.
Capital raised by Israeli IT companies increased by 10% in the first quarter of 2024 compared to the previous quarter, when $1.45 billion was secured, while the conflict caused a dramatic drop in investment.

However, fundraising in the first three months of the year was still 10% lower than the amount of cash raised during the same period last year, according to preliminary figures given in the IVC-LeumiTech report.

“Despite domestic instability brought on by the ongoing fighting and complex macroeconomic conditions, we see that the trend of stabilization in the industry continues into 2024,” stated LeumiTech CEO Maya Eisen-Zafrir. “Israeli high-tech is standing firm and showing encouraging signs of recovery.”

As the conflict began, the Israeli army summoned hundreds of thousands of reserve soldiers, some of whom are still wearing their uniforms after nearly six months. The lack of workers in the IT sector, the Israeli economy’s growth engine, has harmed startups’ day-to-day operations as well as their ability to attract overseas investors and raise money.
The war hit the Israeli tech industry at the end of a crisis year in which it was already dealing with a global drop in venture capital funding, as well as local political uncertainty over the government’s proposed judicial overhaul, which threatened to erode investor confidence (and has since been postponed).

According to the report, the number of deals registered in the January-March period jumped by 35% from the previous quarter to 105, following successive quarterly declines since the beginning of 2022. Deal flow in the reported quarter was down around 9% from the first quarter of 2023, when 115 deals were registered.
“After three consecutive quarters in which there were decreases in the volume and number of fundraising deals by Israeli tech companies, the figures for the first quarter in 2024 are surprisingly positive,” said IVC CEO Ben Klein.

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