In 2014, Israeli startups enjoyed exits (i.e., acquisitions and IPOs) worth about $15 billion, an all-time record, up from $7.6 billion in 2013 and $5.5 billion in 2012. Eighteen Israeli companies went public (13 in the U.S. and five in the U.K.) in 2014, raising a total of $9.8 billion, compared to $1.2 billion in 2013. Fifty-two startups were sold in 2014 for a total of $5 billion, down from $6.5 billion in 2013, a decline that is explained by the increase in the number of IPOs in 2014 and the acquisition of Waze for $966 million in 2013. Israeli startups were acquired at a faster pace than ever, within an average of 3.95 years, compared to a period of 5.5 years before acquisition in 2013 and 8.59 years in 2009.
The 18 startups that went public in 2014, compared to only three in 2013, changed the conversation from criticism of the eagerness of Israeli startups to “sell out” quickly to talk of the startup sector’s newfound “maturity.“ MobilEye (camera-based technology that alerts drivers of potential collisions and accidents), was the largest IPO of 2014 and the largest-ever IPO of an Israeli company, listing on the NYSE and raising slightly over $1 billion at a valuation of $7.5 billion. The second largest IPO in 2014 was made by SafeCharge (payment solutions) on London’s Alternative Investment Market (AIM), raising $125 million at a valuation of $400 million.
Other IPOs included CyberArk (cybersecurity) raising $85.8 million; Borderfree (eCommerce) raising $80 million; Matomy Media (advertising and promotion) raising $63.6 million; Varonis Systems (enterprise information management) raising $106 million; and ReWalk (assisted walking device for paraplegics--the first and only exoskeleton approved by the U.S. Food and Drug Administration) raising $36 million.
The IPOs and an average of 6.2 times return on investment in 2014, attracted more investment in Israeli startups. In 2014, 688 companies raised $3.4 billion in new funding, an all-time record. The amount was up 46 percent from $2.3 billion raised by 659 companies in 2013. The number of large deals has increased in 2014, with 39 companies completing financing rounds exceeding $20 million.
Rubi Suliman, partner at PwC Israel, said, "In 2014, the stars were aligned exactly right for Israeli high-tech. The IPO window was open in the U.S. and England, the maturity of many Israeli companies and investors, the major availability of money for high-tech from buyers and investors, and of course the strength of Israeli high-tech that knew how to reinvent itself and adapt to the times."
Will the stars continue to be aligned in 2015?
According to a Deloitte Brightman Almagor Zohar survey, 36% of executives in the Israeli venture capital community believe that the economic situation in Israel will become worse in the coming two quarters, compared with only 14% who believe it will improve. In the same survey in the first quarter of 2014, 57% of the participants expected improvement in the economic situation.
Still, over $700 million (more or less) have been invested in Israeli startups over a period of just one week this month. Amazon announced its first investment in Israel, acquiring Annapurna Labs (semiconductors) for $370 and opening an R&D center in Israel. Dropbox acquired CloudOn (editing Office documents on the iPad) for $150 million (or less?),
A sign of things to come in 2015?
Sources: PwC Israel, IVC, NoCamels, Globes, Israel21c
