Also this year, Israel’s technology industry delivered record numbers of mergers and acquisitions. According to a new report from Vintage Investment Partners, M&A deals hit a new peak this year at $10.5 billion, 22% higher than the previous peak of $8.6 billion in 2021.
A particularly interesting figure in this report is the proportion of international buyers, 78% of all deals, said Vintage Managing Partner Assaf Hourish. Among this year’s notable deals: SAP’s acquisition of WalkMe for $1.5 billion, and Permira’s acquisition of BioCatch for $750 million. In addition, after two years of slowdown, technology giants such as Microsoft and Applied Materials have renewed acquisition activity in Israel.
On the other hand, the venture capital sector in Israel is witnessing major changes. The number of new funds fell by 35% (from 40 in 2023 to 26 in 2024), but the average amount of capital raised per fund rose sharply from $125 million to $202 million. “We are witnessing a consolidation process in this sector,” explains Hurish. “Institutional investors prefer large funds with a proven history.”
Another change in the high-tech sector, according to the report, is that the number of new companies founded by experienced entrepreneurs increased by 25%.
All of these factors affected investment patterns this year. While the total capital raised by companies decreased by 12% (from $9.2 billion in 2023 to $8.1 billion in 2024), and the number of deals decreased from 682 to 434, the average amount per deal increased by 37%.
It is not surprising that AI continues to emerge as the main growth driver in the market. According to the figures in the report, the share of AI investments in total deals rose from 26% in 2023 to 41% in 2024. “The need for expensive computer infrastructure,” says Horich.
How is data collected?
The report is based on several sources, including the research firm PitchBook and the Israeli database IVC. Vintage’s analysis covers more than 4,000 mutual funds and approximately 33,000 companies. Its numbers are updated until September 2024, while forecasts for the last quarter of the year are based on special models that take into account time gaps in reporting deals. To allow comparison between different markets, all trades are converted to US dollars at the average exchange rate for the year.
“The market is going through a maturation process,” says Horich. “The transition from growth at all costs to sustainable growth, coupled with the peak in M&A deals, indicates the strength and maturity of the Israeli technology industry.”
circumstance. “The quality of Israeli technology remains leading-edge, and we see exceptional investment opportunities in other areas,” said Guy Lachman, a partner in the high-technology practice group at law firm Pearl Cohen, who attended the report’s unveiling. He added: “For many European and Asian investors, investing in Israel at this time is considered very complex and difficult, and unfortunately many of them have lost interest in us, but investment deals continue and new deals are starting.” “Mostly at relatively modest valuations, amid extreme caution and measured behavior on the part of investors.”
Published by Globes, Israel Business News – en.globes.co.il – on December 5, 2024.
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