The state of Israeli tech in 2022 and what to expect in 2023
The post was originally published on VC Cafe and this is a short excerpt. For the full post please visit https://www.vccafe.com/2023/01/02/israeli-tech-ecosystem-2022-year-end-reports-and-what-to-expect-in-2023/
Happy New Year!
2022 is behind us now and the end of year reports are trickling in. 2022 was a year of two tales in Israeli tech — the first half, when it seemed that it was ‘business as usual’ and the second half, when it was clear it’s everything but usual. That’s of course part of a global trend. On a global level, venture financing of private companies dropped 33% year over year, from a record $733B in 2021 to $490B in 2022.]
2022 IN ISRAELI TECH AND VENTURE
As Vintage Venture Partners put it in a recent presentation shared in Tel Aviv, 2022 started off well but fell of a cliff in the second half (the slides were shared on Twitter by Amitai Ziv from Tech 12)
While 7,838 tech jobs were lost across 120 companies in 2022, according to an analysis by Tech12, the demand for engineers remained high with 13,100 open engineering roles.
Israeli venture funding dropped 40% compared to 2021, from $28.7 billion to $17.1 billion according to the 2022 Israel high tech ecosystem report by Viola Ventures.
It’s worth noting that the numbers are still preliminary. A report by Greenfield Partners puts the total fundraising of Israeli startups at $15.16 billion (by 394 companies).
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In 2022, a total of 72 M&A deals were closed, compared to 171 in 2021, a 58% drop. Total deal value this year was $16.9 billion, about a fifth of the same figure last year, with $82.5 billion, according to the Israeli high tech exit report 2022 by PWC.
The ten biggest exits of the year included a mix of IPOs and acquisitions
There are 85 Israeli unicorns, but only about 50% them justify a billion Dollar valuation, according to Viola’s report. As growth investments (and valuations) go down, unicorns might struggle to survive, according to Globes.
Israeli public tech companies saw market cap decline of 65% in 2022
In terms of sectors, in 2022 cycber, fintech and devops remained the most active investment sectors in Israel
Sector funding distribution according to Greenfield Partners
In addition to investments, the Israeli tech sector found itself getting more politically involved as the new government led by Prime Minister Netanyahu (who holds the PM for the sixth time) was sworn in.
Executives and VCs in the Israeli tech sector wrote public letters, tech leaders came out publicly against discrimination of any kind and voiced their concerns publicly, such as Bessemer’s Adam Fisher ‘Business in the Opposition’ post.
2023: HOPE FOR THE BEST BUT PREPARE FOR THE WORST
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