The Israeli tech ecosystem has consistently shown resilience in the face of regional conflicts. Leveraging Start-Up Nation Finder data, this analysis examines the ecosystem’s performance during two significant periods of uncertainty: the 2006 Lebanon War and Operation Protective Edge (Tzuk Eitan) in 2014.
The findings illustrate significant growth and success immediately following these conflicts, suggesting a strong economic forecast and investment potential in the current situation.
- Economic Resilience: Israel’s GDP growth consistently outperformed the OECD average, highlighting the economy’s robustness even during conflict periods.
- Investor Confidence: The Tel Aviv Stock Exchange (TASE) is a reliable investment platform, generating returns for investors following conflicts in 2006 and 2014, indicating sustained investor confidence in Israel’s market stability.
- Fundraising Success: Companies that raised funds during conflicts have shown remarkable success rates, with a higher percentage achieving significant financial milestones such as acquisitions, IPOs, or reaching unicorn status compared to other periods.
- Tech Sector Growth: In 2006 and 2014, the conflict period saw the rise of companies that remain strong and growing.
- Successful Outcomes: The success rate of companies raising funds during H2 2006 was 63%, and for H2 2014, it was 36%. Both rates were higher than those of companies raising funds in conflict-free periods.
- Increased Funding: Despite a decrease in the number of companies raising funds during the conflicts, the amount of funding increased, with a 38% increase in H2 2014 and an 11% increase in H2 2006 compared to the previous halves.
- Emerging Stronger Post Conflict: Companies established in H2 2006 collectively raised significant private equity and public funding upon IPO, and those from H2 2014 had a higher success rate compared to other periods.
- Long-Term Growth: The data indicates that the Israeli tech ecosystem is not just surviving but also expanding in the long term, with companies established during conflict periods showing increased funding and success over a 5-year period following their founding.
- Macro Parameters:
Israel’s GDP growth outpaced the OECD average during both the 2006 Lebanon War and Operation Protective Edge in 2014, signaling economic strength despite adversity. This resilience suggests that the Israeli economy can withstand and quickly recover from regional upheavals.
The Tel Aviv Stock Exchange (TASE) provided consistent returns post-conflict, reflecting sustained investor confidence in Israel’s market stability. This shows that the Israeli public market is still a reliable destination for investment, even during times of conflict.
- Raising Funds:
In H2 2006, 52 companies raised funds, with a 63% success rate for significant financial events compared to ~52% in other periods. The total funding was $0.5 billion, an 11% increase from the previous half.
Approximately 290 companies raised funds in H2 2014, with 36% reaching significant financial milestones. The total funding was $1.74 billion, a 38% increase from the previous half. Despite a decrease in the number of companies raising funds during the conflicts, the amount of funding increased, and the success rates were higher than in the periods immediately before and after.
This demonstrates that companies raising funds during times of conflict can yield substantial returns, suggesting that investing during times of uncertainty in Israel can be strategic.
- Raising Funds Comparative Analysis:
The increase in funding amounts during both conflicts, coupled with higher success rates, suggests that the Israeli tech ecosystem is not just surviving but also expanding in the long term. Smart investors can contribute to the ecosystem while securing potentially high ROI assets.
- Notable Companies (2006 and 2014):
Companies that raised funds during the 2006 Lebanon War include Kaltura, Wix, SolarEdge, Taboola, Valens, and LiveU.
Companies that raised funds during Operation Protective Edge include JFrog, ironSource, Fiverr, HoneyBook, Payoneer, Datorama, Argus Cyber Security, Augury, Tipalti, Forter, eToro, SimilarWeb, and Trax Retail.
These companies have since become global leaders – even in the aftermath of conflict. The continued strength and growth of these companies reinforce that the Israeli tech sector can deliver strong returns even in the face of geopolitical uncertainty.
- Companies Founded:
The 2006 conflict period saw the establishment of companies like Seeking Alpha, Trusteer, and Gamida Cell, which collectively raised $1.2 billion in private equity and $1.8 billion in public funding upon IPO.
Around 370 companies were founded during H2 2014, with a 17% success rate for significant financial events, which is higher than the ~10% for companies founded in other periods.
Companies founded during conflict periods not only survived but thrived, showing the resilience and potential of companies that secure investment during conflict times and suggesting that new ventures initiated during times of uncertainty have the potential to achieve long-term growth and success.
- Founding New Companies Comparative Analysis:
Companies founded during H2 2006 and H2 2014 raised more funds over the next 5 years and had higher success rates than those established in other periods. This indicates that the Israeli tech ecosystem can deliver strong returns and growth immediately following periods of conflict, making it a promising destination for savvy investors.
The data from both the 2006 Lebanon War and Operation Protective Edge in 2014 illustrate the Israeli tech ecosystem’s capacity to not only endure but also to prosper following periods of conflict. The consistent growth in GDP, successful funding rounds, and the emergence of influential tech companies illustrate the ecosystem’s resilience and the potential for positive ROI for investors even in times of uncertainty.
As we consider the current situation, the historical data from Finder shows that the Israeli tech ecosystem is likely to show resilience and growth during and following the current situation, offering smart investors the opportunity to contribute to the ecosystem while securing potentially high ROI assets.
* Charts and Data Notes: The provided charts reflect the performance and success rates of companies that raised funds and were founded during H1 and H2 of 2006 and 2014, with the conflict periods marked in dark blue. Success rates are defined by the companies’ ability to go public, be acquired, or reach unicorn status.
For more information on how Israel’s tech ecosystem continues to deliver, visit Start-Up Nation Central.