Startup Nation Central’s H1 2024 report found that while Israeli M&A reached $4.1 billion, the highest number since 2018 and up 70% from H2 2023, the number of actual deals was low, reflecting large acquisitions of cybersecurity companies. In nine deals, Israeli cybersecurity companies were acquired for $1.5 billion, accounting for 35% of all M&A.
Private Israeli tech companies raised $5.1 billion in 322 deals in the first half of 2024, up 31% from the first half of 2023, with the cybersecurity industry accounting for 52% of the total. Estimates suggest the figure could reach $6.7 billion including unreported deals.
The second quarter of 2024 was particularly strong with $3.3 billion raised compared to $1.8 billion in the first quarter. Fifty-six percent of the money raised in the first half of the year was in mega-rounds of $100 million or more.
Cybersecurity has become the dominant tech sector in Israel, with Wiz, which is now in talks to be acquired by Google for $23 billion, raising $1 billion in May in the largest funding round ever raised in Israel.
A big gap between the United States and Israel
The report compared global trends, including the importance of cybersecurity in local ecosystems, and found a significant gap between the United States and Israel. “In 2018, the cybersecurity sector accounted for 20% of investment activity in both ecosystems,” the report said. “Over the years, the rate in the United States has declined to around 13%, while in Israel it has grown to 25%. In the first half of 2024, cybersecurity funding in Israel jumped to over 50%.” These findings, according to the report, underscore the critical importance of cybersecurity to Israeli technology and the attractiveness of the field to investors. “Trends toward consolidation of cybersecurity services worldwide have led to a wave of acquisitions by leading companies in the field — a trend that is more pronounced in Israel due to the dominance of cybersecurity,” the report added.
“Over-reliance on cybersecurity in the long term could come at the expense of other important ecosystem trends and opportunities,” the report concludes.
“The massive fundraising, mega-rounds and cybersecurity activity have successfully overcome regional risks in Israel,” said Avi Hasson, CEO of Startup Nation Central.
This article was published in Globes, Israeli Business News – en.globes.co.il – on July 17, 2024.
© Copyright Globes Publisher Itonut (1983) Ltd., 2024.
