TLDR:
- Foreign investors in Israeli tech dropped by 23% in the six months following the war outbreak
- Decrease in investor activity poses a threat to the future growth of the Israeli high-tech sector
Recent data indicates a worrying trend in the Israeli high-tech industry, with a significant decrease in foreign investors and VC funds active in the country. The outbreak of the war has led to a 23% drop in the number of foreign investment entities and a 20% decrease in foreign VC funds investing in Israeli tech. This decline in investor activity has raised concerns about the industry’s ability to maintain its status as an innovative hub.
The shift from start-up to scale-up companies in Israel has attracted large foreign investment bodies in recent years, contributing to the growth and success of the sector. However, the current decrease in investor interest poses challenges for the development and financing of the next generation of startups. The situation is further complicated by the global trend of decreasing risk appetite among institutional investors.
Efforts by the Innovation Authority to attract institutional funds to invest in Israeli venture capital funds are ongoing, but challenges remain in defining investment criteria. Despite some stabilizing factors in the industry, including mega-rounds and emergency fundings, the drop in investor activity raises concerns about the industry’s future growth potential.
