FinTech Investment in Israel declined in the second half of 2016 but bounced back in Q1 2017

Israeli FinTech companies raised $52m in the first quarter of the year, more than twice the amount raised in Q4 2016.

Having fallen consistently for the past three quarters both the number of deals and total FinTech investment in Israel picked up in the opening quarter of the year when seven deals were closed totaling $52m. However, this total was still 74.6% lower than the highs reached in Q1 2016 when $205m was raised across fifteen deals. The increased funding in Q1 of this year was boosted by a $20m venture round raised by VATBox, a cloud-based VAT recovery automation service.

FinTech Investments in Israel reached record levels in 2016, after total investments almost halved in 2015

  • The total investment to FinTech companies in Israel fell by 44.1% between 2014 and 2015 despite a 28% increase in the number of deals. This decrease was mostly caused by a decline in deals valued between $20-$40m which fell by 73.6% compared to a 22% fall in deals below $20m.
  • Between 2015 and 2016 total investments more than tripled. This was mainly due to three deals valued above $40m. Excluding these large deals, investments in Israeli FinTech companies only grew at a 7.7% CAGR between 2014 and 2016.
  • 2016 saw three investments to Israeli FinTech companies valued above $40m. Zerto and Jfrog raised $50m each while the debt/ equity financing platform OurCrowd-GCai raised $72m in the largest investment to an Israeli based FinTech company to date.

The percentage of seed deals rose sharply in 2015, explaining the fall in total funding that year

  • In 2015 the share of seed deals rose by 20%. This may explain the fall in funding that year, despite healthy deal number as the average deal size was only $3.7m compared to $8.5m in 2014, a decline of 56.5%.
  • The percentage of seed deals halved in 2016 returning to levels comparable to 2014 while the shares of series A-C deals all grew. The most significant growth was in Series C deals which surpassed 10% for the first time.
  • There were two Series E deals closed in 2016 making up 7% of the total number of deals. Big data company Zerto, which is dual-headquartered in Israel and the United States, raised $50m in their Series E round in January with a follow up round of $20m in June.

Payments & Remittances companies have received the largest percentage of deals in Israel since 2014

  • Almost 60% of deals raised by Israeli FinTech companies went to three sectors; Payments & Remittances, Infrastructure & Enterprise Software and RegTech.
  • The largest deal to the Payments & Remittances sector between 2014 and 2016 went to Zooz, which runs a data-driven payments platform. Zooz raised $24m in a Series C round led by Target Global in May 2016.
  • 9% of deals was made up of companies falling into the other sector. This category includes deals to WealthTech and Marketplace lending companies.

The data for this research was taken from the FinTech Global database. More in-depth data and analytics on investments and companies in Israel as well as across all FinTech sectors and regions around the world are available to subscribers of FinTech Global. ©2017 FinTech Global

 

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