Israeli tech reached unprecedented highs in 2021

The three largest earning sectors in Israel were Enterprise IT & Data Infrastructure (which raised just shy of $6b), Cybersecurity-dominated Security Technologies ($5.9b), and Fintech ($4.2b)

TODAY NEARLY 40% of Israeli start-ups are consumer-facing and more than 20% of Israel’s unicorns are B2C companies. In the photograph: Hi-tech development centTODAY NEARLY 40% of Israeli start-ups are consumer-facing and more than 20% of Israel’s unicorns are B2C companies. In the photograph: Hi-tec (photo credit: GILI YAARI/FLASH90)
TODAY NEARLY 40% of Israeli start-ups are consumer-facing and more than 20% of Israel’s unicorns are B2C companies. In the photograph: Hi-tech development centTODAY NEARLY 40% of Israeli start-ups are consumer-facing and more than 20% of Israel’s unicorns are B2C companies. In the photograph: Hi-tec
(photo credit: GILI YAARI/FLASH90)

Israel’s tech sector has broken new ground and raised an unprecedented $25 billion in 2021, according to a report from Start-Up Nation Central (SNC), a nonprofit organization that catalyzes growth opportunities by bringing Israeli tech innovation to global business and societal challenges.

The unprecedented figure represents a 136% increase over last year, which concluded with a full-year total of $10.8b. raised. This figure is nearly double the global average growth of 71%, and well exceeds the United States’ 78%, Singapore’s 95%, and the UK’s 105%, according to data compiled from PitchBook.

The three largest earning sectors in the fiscal year were Enterprise IT & Data Infrastructure (which raised just shy of $6b), Cybersecurity-dominated Security Technologies ($5.9b), and Fintech ($4.2b), all of which have more than doubled 2020’s figures. The largest funding round belonged to Trax, a company developing computer vision for retail intelligence that raised $640 million, making up around 10% of the total Enterprise IT & Data Infrastructure sector’s funding.

These three sectors made up 65% of total funds raised, compared to 52% of the total raised by the same sectors throughout all of 2020. According to SNC, these sectors emerged as the “Big 3” of the Israeli ecosystem due to the fact that they are primarily made up of pure software companies that are able to move quickly and work efficiently despite the obstacles presented by the COVID-19 pandemic.

“In a world where digital has become the default, Israel is a world-class source of solutions to global challenges,” elaborated Start-Up Nation Central CEO, Avi Hasson. “This resulted in an all-time record in capital raised, increased foreign interest in Israel, and a lot of buzz surrounding our ability to produce unicorns, which raises the question of whether Israel has made the transition from being the Start-Up Nation to the Scale-Up Nation.”

JERUSALEM CURRENTLY has between 600-900 start-ups. (credit: Courtesy)JERUSALEM CURRENTLY has between 600-900 start-ups. (credit: Courtesy)

That question is indeed being discussed. Prof. Moshe Zviran, Dean of the Coller School of Management suggested that Israel’s rapid cash intake is expediting the transition.

“Money is flowing into this country,” he said. “First of all because there’s a lot of money in the market, and secondly – if you look at the success of Israeli companies, you realize that there has been a kind of shift to a Scale-Up Nation.”

The increased foreign interest in Israel’s tech is a definite factor of its rapid growth as well. 2021 saw some of the world’s largest venture capital firms invest in Israeli tech, including Bessemer Venture Partners, Insight Partners, and Tiger Global Management, the world’s highest-ranking VC firm in assets under management and securities. “If you look at what’s happening in Israel you’ll see that more and more companies have led VCs to good or excellent return on investment,” explained Zviran. “This isn’t just attributed to luck. The investors realize that this is the best source for talent; Israel is known for its talent.”