In their latest report, IVC-KPMG Survey revealed that Israeli startups have collectively raised $1.1 billion this quarter, just short of the $1.12 billion that they raised last quarter. In the first three quarters of 2015, 506 Israeli startups have collectively raised $3.2 billion, compared to $2.3 billion at this time last year.
Koby Simana, CEO of IVC Research Center commented that, “The third quarter of the year tends traditionally to be on the slow side for capital raising, so we expected to see a slight drop from the previous quarter’s records, yet capital raising is still going exceptionally strong, which is why this drop is marginal at best. We expect the fourth quarter trend to go up again, and believe 2015 may end with as much as $4.4 billion in total capital raising by high-tech companies.”
Yet more indicative than the aggregate amount raised was the number of large fundraising deals by startups of $20 million or more. 20 companies were able to raise such amounts in the third quarter, amounting to $703 million. These sizable transactions accounted for 64 percent of the total capital raised in the third quarter and reflected a 67 percent increase in large deals from the last quarter.
Of the companies that had stellar fundraising rounds, many were fintech companies, including FundBox; which raised $50 in September; Payoneer, which raised $50 million; and Behalf, which raised $119 million in July.
Real estate search engine Compass also raised $50 million in September, while data analytics company Optimal+ also raised $42 million from private equity firm KKR.
According Simana, “We are far from Silicon Valley’s $0.5 billion financing rounds, even while we do find the occasional $100 million round here as well, but in general large deals in Israel are affordably-priced, reflecting real, rather than speculative, valuations.”
Not surprisingly most of the capital came from venture capital funds. This quarter VCs contributed $908 million to Israeli companies – the highest aggregate contribution ever – averaging $9.1 million per deal.
However, Israeli VC funds only accounted for 12 percent of total investments, a sign of continued international interest in Israeli startups and innovation. Notable international firms that were active this quarter include San Francisco-based Blumberg Capital, Hong Kong based Horizons Ventures, and Jeff Bezos’ personal fund, Bezos Expeditions.
Given the recent large fundraising rounds of Israeli companies, Simana’s predictions on the fourth quarter results could prove to be accurate.