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

Having fallen consistently for 3 quarters investments in FinTech companies based in Israel picked up in Q1 2017. Despite the gradual decline in quarterly figures, 2016 was a record year for FinTech investments in Israel. 2016 saw more than 3.5 times the investment in 2015.

  • The number of Investments in Israeli FinTech companies rose by 42% in Q1 2017 QoQ. This increase was mirrored in the total funding which more than doubled in Q1 2017 compared to Q4 2016.
  • Investments fell by 74% YoY in Q1 2017, with a similar trend in the number of investments, which more than halved in the same period.
  • The largest investment in Q1 2017 went to compliance company VATBox, which protects data and specialises in VAT Recovery. The firm received a $20m investment from Target Global and Viola Private Equity in February.

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 particularly prevalent 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 deals valued over $40m, 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

  • In 2015 the percentage of seed deals rose by 20%. This may explain the fall in funding between 2014 and 2015, despite heathy deal number as the average deal size rose from $3.7m in 2015 to $5.9m an increase of 59.5%.
  • The percentage of seed deals halved in 2016 while the share 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 since 2014.

  • Almost 60% of deals 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.

FinTech is flourishing in Israel, despite fluctuations in total funding the number of deals is progressively increasing. For the most part, the fluctuations in funding can be put down to fluctuations in the percentage of seed stage funding. Israel demonstrates a full spectrum of FinTech companies with Payments & Remittances leading the way.

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