If you've been keeping up with Geektime, you know that 2021 was a year that broke quite a few records when it comes to raising capital, stock issues and exits. Now a new report adds some more interesting insights into the ecosystem over the past year.
1. IPOs were celebrated, but most mergers with SPAC were burned
In 2021, 23 Israeli companies went public by IPO on Wall Street and other foreign exchanges, for a total of more than $ 10 billion. Alongside these 23 companies, 13 companies opted for SPAC, one of the hottest methods in the last two years to enter the stock market, which includes a merger with a stock exchange skeleton company set up specifically for that purpose.
The problem with the SPAC issues is that these companies have been badly burned - and according to IVC and Meitar law firm released yesterday (Monday) they raised $ 2.93 billion, and most saw a significant contraction in their valuation after the merger and entry into the stock market. One company that felt this even before entering the stock market is eToro, which has already announced a merger with Spock worth $ 10.4 billion and in recent days has corrected its valuation to $ 8.8 billion.
2. A record year for Exits, yet investors aren’t did not really enjoy it
Stock issues, which are an exit for investors, have skyrocketed this past year - 238 in total - amounting to $ 22.2 billion. The number also includes exits from acquisitions, mergers and, as stated, stock issues. According to data collected by IVC and Meitar, almost half of this huge amount came from IPOs.
However, although it sounds like a bonanza for entrepreneurs, employees and of course, investors - in practice the latter group was less enthusiastic about these exits. The record amounts raised by Israeli start-ups over the past three years have contributed to low multipliers in mergers and acquisitions, leading to less potential returns on stock investments for investors in those years.
3. The investment in young start-ups has almost doubled, but still doesn’t make much of a dent
One of the interesting data points that emerged from the report relates to investing in young start-ups, such as those that recruit seed and pre-seed funding. According to the data, in 2021 there was a significant jump in funding for the early rounds - and the amount of these recruitments almost doubled compared to 2020 (an increase of 97%). The young start-ups have raised $ 3.7 billion in the past year, a significant jump, but a drop in the ocean compared to the total amount raised. The amount raised by these start-ups was only 14% of the total capital raised in the past year.
4. Almost 800 business transactions this year
The total amount of fundraising reported by Israeli start-ups in 2021 breaks records in every way and certainly seems like a hallucination to those who thought predicted, in 2020, what we would see in 2021 with a global pandemic ahead of us. $ 25.6 billion is the total amount of fundraising reported by Israeli start-ups in 2021, a jump of 146% compared to 2020.
Another interesting part in terms of recruitments is the number of deals reported this year, 773 in total. This is a 28% jump in the number of business transactions made by Israeli start-ups in one year compared to the year before.
5. A fiery fourth quarter
While this whole year has been crazy, one quarter stood out from the rest - the fourth quarter of 2021 with about a third of the total investments. According to IVC and Meitar data, Israeli start-ups reported fundraising totalling about $ 8 billion over 206 transactions in the last quarter of the year alone. For comparison, in the previous quarter, 170 fundraising transactions totalling $ 5.7 billion were made.
6. And the strongest areas this year were… Exactly what you think they would be
The report shows that the companies that have benefited the most from capital investments in the past year were those in the fields of cyber and fintech- surprise, surprise. 23 cyber companies and 21 fintech companies raised more than $ 100 million in 2021 - a jump of almost 200% (for cyber) and 300% (for fintech), in the number of such transactions that occurred in 2020.
Among the cyber-start-up-stars is Claroti which raised $ 400 million (among other things in favour of the acquisition of Medigate) and the crypto security company Fireblocks. For the fintech stars, we saw Alex Boaziz’s Deel and the crypto company Celsius make some money moves.
To read the whole report, click here.