By Steven Scheer
JERUSALEM (Reuters) – Fundraising by Israeli technology firms slumped 65% in the second quarter compared to the same period last year, data showed on Wednesday, as political turmoil in the country exacerbated a global slowdown in the sector.
Firms raised a total of $1.78 billion in the second quarter, roughly the same as the first quarter, but down 65% from over $5 billion in the same period last year, preliminary data from the IVC Research Center and LeumiTech showed.
Israeli tech companies raised nearly $16 billion in 2022. But that was mainly in the first half, before the global economic slowdown, higher interest rates and weak stock markets hit.
Between April and June, there were only 100 deals and only one was above $200 million, the report said.
High-tech had been the fastest growing sector in Israel for a decade, accounting for 14% of jobs and almost a fifth of economic output. Innovations from the country in cybersecurity, artificial intelligence and other fields have been adopted around the world.
But a slowdown in the sector has worsened in 2023, exacerbated by political turmoil, the state-backed Israel Innovation Authority reported on Monday, warning that the country may be detaching from broader trends towards a global recovery.
The Israeli government’s plan to overhaul the country’s judiciary has also harmed fundraising, with many investors wary and vocal about not investing in the country when checks and balances are at risk.
Timor Arbel-Sadras, the chief executive of LeumiTech – the tech arm of Bank Leumi – said the data showed a stabilisation in the decline seen in the first quarter but that it was unclear what the rest of 2023 would bring.
“It will also be interesting to see how companies will adapt the funding rounds to the current economic climate, which will enable new transactions and acquisitions in the tech industry,” she said.
(Reporting by Steven Scheer; Editing by Conor Humphries)
