A Global Perspective Of Israeli Tech In 2015Jan. 19, 2016
From the Chinese stock market crash that shook global equity markets to the obsession with hunting for unicorns, 2015 was a year filled with volatility and non-traditional capital flowing into the private markets. Israel felt the effects of these global trends, with an unprecedented $5 billion in investments, $8 billion M&A activity and a significant drop in IPOs (to $4 billion). Yet beneath the surface of these high-level statistics lies a wealth of interesting data.
Whether it’s sectors like cyber and fintech heating up or syndications and co-investments leading to increased round sizes and valuations, the story of Israel’s 2015 startup activityshares much in common with the global technology ecosystem.
Cyber. Sony’s security breach last December accelerated the worldwide realization that, as the TV series Homeland puts it, “The soldiers are hackers, the battlefield is online.” Israel’s edge in security, fueled by the IDF’s elite 8200 unit and headlined by Microsoft’s $320 million acquisition of three-year-old Adallom had investors contribute $520 million to Israeli cyber in 2015.
The realization that Israeli cyber companies can successfully IPO (CyberArk in 2014) or quickly exit for large sums has caused the appetite for Israel cyber to skyrocket this year.
Fintech. The $4.7 trillion in financial services revenue at risk for technological disruption was a prime target in 2015. Startups around the globe raised $11 billion in venture capital in the first three quarters, up from $6 billion through the same period in 2014. Israeli fintech exits grew to $1.3 billion in 2015, up from $700 million in 2014.
Meanwhile, marketplace lender Prosper established an R&D center with its acquisition of Billguard, Barclays’ launched an accelerator to tap into Israel’s talent pool and cash flow optimizer Fundbox raised $90 million.
Adtech. Global adtech experienced a significant correction in H2, despite IronSource’s $150 million merger and Taboola’s $117 million Series E in H1. Highlighted by Fidelity’s mark downof Taboola from $1 billion to $500 million, Appnexus’ fraud cleanup and Turn and Pubmatic’srecent layoffs, investors are requiring ad networks to reinvent themselves and find meaningful points of differentiation and sustainable business models. This shifting mentality amongst VCs caused a significant drop-off in Israel’s adtech fundraising efforts, from $260 million in H1 to $52 million in H2.
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