TLDR:
- Israeli VC fundraising saw a 73% decline in 2023, hitting a 10-year low
- Despite the plunge, Israeli funds still have $10 billion in reserves
Israeli VC fundraising suffered a significant decline in 2023, reaching a low not seen since 2015, according to a report by IVC, Gornitzky law firm, and KPMG. The overall amount secured by 21 Israeli venture capital funds was $1.52 billion, with three funds raising over $200 million each. Noteworthy is the rebound seen in 2024, with several funds raising almost $1 billion collectively including Team8, Red Dot Capital, Ibex Investors, and iAngels.
The report highlighted a decrease in Israeli VC fund capital allocation and limited availability of capital for local startups due to increased investment rounds and foreign funds’ involvement. The reduced appetite for high-tech investments among local institutional investors was also observed, as investments in startups dropped by 70% in 2023.
Despite the challenges, Israeli funds still hold a substantial $10 billion, with $2.38 billion earmarked for new investments and $7.7 billion reserved for existing portfolio companies. The Israel Innovation Authority launched Yozma 2.0 to encourage institutional investments in local funds.
Overall, 2023 marked a challenging year for the high-tech and venture capital sectors, but the Israeli tech ecosystem demonstrated resilience. While fundraising and investment rounds are crucial, the industry’s strength lies in various factors. The focus now is on offering incentives to entrepreneurs to prevent an exodus of innovation and sustain the robust foundation of the industry.
