The Israel Venture Capital (IVC) Research Center and LeumiTech said fundraising in the quarter up until December 26 dipped 15% from the third quarter but 75 deals were done. The war began on October 7.
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Early stage “seed” funding stood at $220 million in 31 rounds.
The report said that foreign participation rose in the fourth quarter after a decline earlier in 2023, saying “the presence of foreign investors is a significant indication of the availability of funds for investments.”
Last week, a group of 70 US tech executives came to Israel in a show of support.
LeumiTech CEO Mia Eisen-Tzafrir said the fourth quarter data, were “an indication of the high durability of the Israeli high-tech industry and an important reminder of the role this sector in the Israeli economy has especially these days”.
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High-tech accounts for 12% of employment, more than half of Israel’s exports, 25% of income taxes and nearly a fifth of its overall economic output. At least 15% of the tech workforce has been called up for military reserve duty.
Overall, Israeli startups raised about $7 billion in 2023 versus close to $16 billion in 2022 – mainly in the first half of the year before the global economy began to slow.
In addition to a drop in funding due to the economy, foreign investors were spooked by Israel’s plan to overhaul its judicial system, a proposal that has since been shelved.
Eisen-Tzafrir said that 2023 reflected a return to the levels of investment and volumes of activity from 2018 and 2019 – before the peak years of relative anomalies in 2020 to 2022. Tech fundraising in Israeli startups reached $26 billion in 2021 in 779 rounds.
IVC CEO Ben Klein said 2023 was challenging for the Israeli economy and high-tech.
“The results of the entire year, especially the fourth quarter, support an optimistic approach towards the local industry,” he said. “Despite the complexity, foreign investors’ participation level is a clear sign of the attractiveness of Israeli high-tech companies, even in difficult times.”
