Report: Israeli Tech Funding Dips Amid War but Investors Remain Committed

Israel’s conflict with Hamas hasn’t scared off investors.

Israeli tech companies raised $1.5 billion during the fourth quarter, Reuters reported Thursday (Dec. 28), citing data from the Israel Venture Capital Research Center and LeumiTech.

While that number is down 15% from the third quarter, 75 deals were done in the last three months of the year and in the wake of the war, which began Oct. 7, according to the report.

There were 31 rounds of seed funding that raised a total of $220 million, the report said. Fourth-quarter participation from foreign investors rose after dropping earlier in the year.

LeumiTech CEO Mia Eisen-Tzafrir said, per the report, the fourth quarter data showed “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.”

In all, startups in Israel have raised around $7 billion for the year, down from nearly $16 billion in 2022. Most of that funding came in the earlier half of the year before the world economy slowed.

The report follows news from last week that 70 American tech executives went to Israel to show their support.

“Coming here is a chance to stand in solidarity with Israel and also support the tech ecosystem, which is the world’s second-largest after Silicon Valley,” yVentures Chief Technology Officer George Djuric told Reuters last week. “As a technology fund, it makes sense for us to be here.”

This has been a difficult year for startups overall. 2023 has seen roughly 3,200 venture-backed firms in the United States go out of business. That number could be even higher, as many companies likely closed their doors without much public attention.

The trend extends to Europe, where a report last month by British venture capital firm Atomico projected that money raised by the region’s tech startups will reach around $45 billion for the year, falling from $82 billion in 2022.

“The decline is not surprising given the dual effect of many later-stage companies delaying fundraising, as well as materially slower deployment pacing by investors, which have both served to drive the large decline in the prevalence of outsized, late-stage investment rounds — the biggest factor in the lower amounts of capital invested,” the report said.

As Sezzle CEO Charlie Youakim told PYMNTS Karen Webster in November, “A lot of air is coming out of the balloon” for startups these days.