Startup Nation Central Presents Israeli Tech Annual Report 2023

Despite the proposed judicial reform turmoil and the Oct 7 war, Israeli tech remained robust in 2023: Private funding for Israeli tech is expected to reach nearly $10 billion, according to Startup Nation Central

Tel Aviv, January 15, 2024: According to an annual report highlighting activity in Israel’s technology sector released by Startup Nation Central, a non-profit connecting global solution seekers with Israel’s innovators, the Israeli tech sector remained robust despite many disruptions in 2023. The year included the proposed judicial reform and civil unrest, Hamas’ heinous terrorist attack on October 7 and the still-raging war, as well as global macroeconomic challenges. The report found that the country’s dynamic startup culture, coupled with the steadfast engagement of global players, maintained resilience, and remains the economic anchor of Israel. The report, based on data and insights from its ecosystem business-engagement platform, Finder, anticipates that private funding for Israeli tech in 2023 will reach nearly $10 billion, factoring in undisclosed rounds and historical patterns of delays in publishing rounds. The disclosed funding currently stands at $7.9 billion.

The report includes sector overviews, private and public funding activity, investor landscape, global comparison, sector analysis, M&As, and the results of surveys reflecting the sentiment of the ecosystem, investors, and MNCs doing business in Israel. The report also includes commentary from leading figures in the investment community, including Alan Feld, founder and managing partner, Vintage Investments; Nadav Zafrir, co-founder and managing partner at Team8; Rona Segev, general partner TLV Partners; and Shlomo Dovrat, co-founder and general partner of Viola.

Start-Up Nation Central CEO, Avi Hasson: “Looking to 2024, the outlook is cautious but optimistic. We hope the ecosystem’s bedrock of innovation, global partnership, and proven resilience will steer it through uncertainty toward a continued growth trajectory. With investments in Israel leveled down to 2019 numbers, the main challenge is attracting investment to the Israeli tech ecosystem and preserving human capital – Israel’s most significant asset. At Startup Nation Central we foster investment opportunities while supporting local companies and promoting the efforts of multinational companies in Israel.”

VP of Digital Products and Data, at Startup Nation Central, Yariv Lotan: “Private funding in 2023 declined from the 2021 peak, reaching $7.9B to date. The estimated total private funding, including unknown rounds, will amount to nearly $10B, similar to 2019 levels. In 2024, 88% of MNCs plan to either sustain or grow their presence in Israel, indicating continued confidence in the ecosystem. However, there is a split in investor sentiment, with 52% predicting a downturn in investments for 2024. Despite this, AI, cybersecurity, and defense tech—are predicted to continue their upward trend.”

Key findings from the report:

Private funding core resilience, despite exogenous circumstances: Amid broader economic uncertainties, the ecosystem’s private funding levels have demonstrated notable resilience, comparable to that of the US. Despite an overall decline from the previous year, 2023’s private funding is estimated to approach $10 billion, factoring in undisclosed rounds, with disclosed funding totaling $7.9 billion. This resilience is further emphasized as funding levels stabilize to 2019 levels, albeit with fewer rounds, indicating a more discerning yet strong investment environment.