Capital raising analysis,

trends and insights

Q1/2020

Israel

Tech

Funding

Report

1

2

2020 is, so far, proving to be a major challenge for Israel’s high-tech industry. The COVID-19 crisis has caused businesses to cease regular activity and search for ways to survive this uncertain period. The first to suffer from the global recession in the Israeli high-tech industry were young seed companies, with only four capital-raising deals made since February.

The first two months of this year showed mostly regular activity, with quarterly figures at the same levels as previous, strong months. In March 2020, the prevalent trend from 2019 has strengthened – investor interest in later rounds and mature companies– became even more prominent.

Growth-stage companies succeeded in raising robust amounts. Four of the eleven companies that attracted more than $50 million this quarter raised notable amounts in March, the largest being Via’s $400 million deal.

Overview

1,003 925

803

1,043 1,168

1,499

1,148

719

999 1,070

1,493

1,295 1,212

1,602 1,630

1,909

1,557

2,206 2,239 2,362

2,740

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Q12017

Q22017

Q32017

Q42017

Q12018

Q22018

Q32018

Q42018

Q12019

Q22019

Q32019

Q42019

Q12020

Capital Raised $m

9.0 8.7 9.0 8.0 9.7

11.0 9.8 8.9 8.8 9.7

14.0

10.0 10.4 12.4

13.7 11.4 12.0

17.2 15.8

17.1 19.7

Average Amount $m

111 106

89

130121

136

117

81

114 110 107

130116

129119

168

130 128142 138 139

# of Deals

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Israeli High-Tech Capital Raising (By Quarter) | Q1/2015-Q1/2020$400m

$250m

$100m

$27m

In Q1/2020, Israeli high-tech has attracted the record quarterly amount of $2.74B in 139 deals, 76% up from Q1/2019 capital volume. Excluding the mega-deal by Via ($400m), the total amount summed up to $2.34B in 138 deals. Israeli VC funds investments were down to 7% of total capital raised.

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16% 23% 17% 23% 16% 25% 20%16%

25% 28% 19% 22% 13% 26% 11% 20% 20% 16% 18% 16% 8%

897

395

685 807 797

1,002 846

450

760 771

1,240

807

997 875

1,314

1,574

1,362

1,714 1,601

1,762

2,425

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Q12017

Q22017

Q32017

Q42017

Q12018

Q22018

Q32018

Q42018

Q12019

Q22019

Q32019

Q42019

Q12020

Israeli VCs Share % ($m) VC-Backed Capital Raised $m

66 59 60

8171

90

68

4661

75 71 67 72 72 72

99

78 75 81 82 84

# of Deals

4

Israeli High-Tech Capital Raising in VC-Backed Deals (By Quarter) | Q1/2015-Q1/2020

23 23

2628

26

24

3532

17

January February March

Number of VC-Backed Deals by Month, 2018-2020

2018

2019

2020

Israeli VC-backed deals topped all years, reaching $2.43B – 89% of total capital raised in Q1/2020. However, COVID-19 crisis affected Israeli deal-making in March - only 17 VC-backed deals were closed – 50% down from previous dynamic months of 2020.

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Number of Deals by Round Type | January-March, 2018-2020

1410

20

13 1417

6 69

6

13

20

712

210 10

13

129

15

9

12

1711

62

14

21 9

68

5

8

9

10

2018 2019 2020 2018 2019 2020 2018 2019 2020 2018 2019 2020

Seed A Round B Round C Round & Later

January February March

Seed capital raising was cut down to the mere 2 deals in months of February and March of 2020, following the global COVID-19 crisis.

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36 37 28 34 24 67 34 22 56 44 23 62 48 32 27 62 42 43 33 51 18

109 227 174 218 253 303 363 151 125 207 249 213 349 235 372 428 432 376 336 382 294

319 319 287 205 207 222 247 154 224 336 432 269 252 521 209 621 399 392 321 511 511

176 124 218 219 248 234 182 135 330 120 112 347 181 400 434 267 479 375 700 588 379

363 218 96 368 437 674 322 256 265 364 677 404 381 414 588 532 206 1,020 849 826 1,537

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Q12017

Q22017

Q32017

Q42017

Q12018

Q22018

Q32018

Q42018

Q12019

Q22019

Q32019

Q42019

Q12020

Seed Round $m A Round $m B Round $m C Round $m Later Rounds $m

6

Israeli High-Tech Capital Raising by Round | Q1/2015-Q1/2020

L

C

B

A

S

In Q1/2020, later rounds (C rounds and later) capital raising peaked reaching the record of $1.92B.

The 37% share of the total capital volume was raised in March, mostly due to the mega-deals of Via ($400m) and

Insightec ($150m).

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Israeli High-Tech Capital Raising by Round | Q1/2015-Q1/2020

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Q12017

Q22017

Q32017

Q42017

Q12018

Q22018

Q32018

Q42018

Q12019

Q22019

Q32019

Q42019

Q12020

Number of Later Rounds 19 16 7 22 18 23 14 13 20 21 19 16 16 17 25 21 17 24 20 22 30

Number of C Rounds 11 9 10 16 14 8 14 7 13 5 7 9 7 8 14 8 17 11 16 14 17

Number of B Rounds 24 21 17 21 15 16 16 11 15 26 21 22 24 36 17 30 23 25 20 25 29

Number of A Rounds 23 25 24 36 40 46 48 31 28 32 36 44 37 37 44 62 45 40 59 43 39

Number of Seed Rounds 34 35 31 35 34 43 25 19 38 26 24 39 32 31 19 47 28 28 27 34 24

Number of Seed Rounds Number of A Rounds Number of B Rounds Number of C Rounds Number of Later Rounds

In total, the number of early rounds (Seed + A Rounds) downsized to 63 in Q1/2020 – 17% under the quarterly averages of 2019.

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634 745 515

742 788 1,088

847 509

780 745 1,122 1,054 901

1,318 1,339 1,350 1,259

1,916 1,975 1,930 2,245

44 47 32 59 47 52 60 35 50 61 54 65 55 72 70 80 74 70 78 75 84

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Quarterly Capital Raising by Stages | 2015 – 2020

33 38 23 32 33

60

33 22

59 44

18

64 48

38 40 56 53

43 49 62

16 32 34

2832 34 41

23 1837

25 1938 32 30 19

45 30 27 28 32 21

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Q12017

Q22017

Q32017

Q42017

Q12018

Q22018

Q32018

Q42018

Q12019

Q22019

Q32019

Q42019

Q12020

Capital Raised $m Number of Deals

See

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row

th

Seed companies suffered the major setback due to COVID-19 crisis – raising $16m in 21 deals, down 28% in number and 70% in capital volume from the quarterly averages of 2019. Growth companies kept high pace, mostly due to 9 companies with over $50m each, raising $1.37B in total.

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Quarterly Capital Raising by Deal Size | 2019–2020

18 18

21

24

19

16

27

21 21

36

14

11

39

12 12

3

9

46

57 7

2

5

8 8

4

810

5

Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sept-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20

<$5M >$30M

Q1/2020 registered 43 deals in the $5m to $20m range, a decrease of 12%, compared with the previous quarter and last year’s corresponding quarter, with 49 deals each. Deals under $5m increased in January, however the following months showed a slowdown, due to COVID-19 crisis.

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Deals Over $50m | Q1-2020

$210m

$150m

$150m

$100m

$61m

$60m

$55m

$50m

$400m

$58m

Leading investors in Deals over $50m

Leading Capital Raising Deals

$200m

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Methodology

This report reviews capital raised by Israeli high-tech companies from Israeli and foreign venture capital fundsas well as other investors, such as investment companies, corporate investors, incubators and angels.

Reported data present the investments activity IVC collects from reliable media sources, and direct reportsgathered by IVC’s information specialists’ team.

The report is based on data from 436 investors of which 130 were Israeli VC funds and 306 were other entities.The report data was last updated on March 31, 2020.

The term Early Stage companies refers to high-tech companies in the process of development and not yetoffering products to the market.

The report covered total investments in the Israeli venture capital sector, including both VC-backed roundswhere at least one investor participating in the round was a VC fund, as well as deals not backed by venturecapital funds.

The report includes amounts received by each company directly, including direct transactions performedbetween company shareholders.

Most companies belong to more than one technology vertical, therefore the data regarding verticals should beviewed separately per vertical.

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IVC Research Center is the leading online provider of data andanalyses on Israel’s high-tech, venture capital and private equityindustries. Its information is used by all key decision-makers,strategic and financial investors, government agencies and academicand research institutions in Israel.

IVC-Online Database (www.ivc-online.com) showcases over 9,000Israeli technology startups, and includes information on privatecompanies, investors, venture capital and private equity funds, angelgroups, incubators, accelerators, corporate VCs, investment firms,professional service providers, investments, financings, exits,acquisitions, founders, key executives and R&D centers.

Publications include Newsletters; Daily Alerts; IVC Magazine; Surveys;Research papers and Reports; and Interactive dashboards.

IVC Industry Analytics – analysis, research and insights into thestatus, main trends and opportunities related to exits, investments,investors, sectors and stages.

ZAG-S&W (Zysman, Aharoni, Gayer & Co.) is a leading internationallaw firm specializing in all areas of commercial and business law andis one of Israel’s leading commercial law firms.The firm has earned its international standing due to its globalpresence in the US, China and England. The firm’s attorneysspecialize in all disciplines of commercial law for both publicly heldand private companies, with expertise in hi-tech, life science,international transactions, and capital markets.

ZAG-S&W provides result-driven legal and business advice to itsclients, addressing all aspects of the clients’ business activities,including penetration into new markets in strategic locations. Inrecent years, the firm has acted on most of the equity and debtfinancing transactions by Israeli technology companies on theNASDAQ.It has been the firm’s experience that the best results, those thatgive our clients the competitive advantage they need, are attainedby coupling professional experience, global presence, andconnections with the investor communities in Israel and abroad.

Website Website

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The information contained in this report is derived fromIVC-Online - the IVC Research Center Ltd. ("IVC") Databaseand the IVC-ZAG Israeli High-Tech Survey.

This report is copyrighted, no part of the material in thisreport (including, but not limited to text, content, andimages) may be reproduced, republished or utilized in anyform or by any means without the explicit and prior writtenconsent of IVC.

C O P Y R I G H T S

2020

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Marianna ShapiraResearch Director, IVC Research Center

marianna@ivc-online.comwww.ivc-online.com+972-(0)73-212-2339

C O N T A C T U S