Resilience and Revival: Israel’s High-Tech Ecosystem Post-October 7th
Since October 7th, nearly every meeting with our investors and partners has begun with the question: “What’s happening on the ground?” Initially, our messaging was centered on the immediate response to the crisis with an emphasis and business continuity as it took time to fully grasp the impact and assess its broader effects on our portfolio and the ecosystem at large. Within 48 hours, 300,000 reservists were mobilized, and at peak, approximately 10-15% of the high-tech sector’s workforce was called up for duty. Understandably, there was an immediate steep drop in investments following the outbreak of the conflict.
In recent months, it has become increasingly clear that, while not entirely weathering the storm, the Israeli high-tech ecosystem is demonstrating impressive resilience. Below are some recent data points and events that demonstrate the strength of the ecosystem and make us feel confident regarding Israel’s position as a leading tech hub.
The Numbers Speak for Themselves
Israeli startups have raised over $6 billion since October 7th. During the first quarter of 2024, $1.7 billion was raised by Israeli startups, a figure which is on par with the amount raised in the first quarter of 2023 and is impressive given the wartime conditions (Data from IVC.com).
Strong Financing Activity in Israel post October 7th
Furthermore, it is noteworthy that foreign investors have not shied away from participating in deals and have increased their investment activity since the outbreak of the conflict. This is highlighted by the nineteen significant mega-rounds, including the record-breaking $1 billion financing round by Wiz, and 19 M&A deals ranging from $100 million to $1.5 billion. Two of 10D’s portfolio companies, Exodigo and Weka, raised mega-rounds in 2024 and are part of this impressive growth. Such transactions underscore that Israeli companies continue to scale as they grow to become global category leaders.
19 Mega-Round Deals Announced Since October 7th
19 M&A Deals Announced ($100M+) Since October 7th
Based on financing figures from the start of the year and the number of mega-rounds in 2024 already surpassing the full year of 2023, we believe that Israeli tech is on track to raise $8-10 billion for 2024.
Israeli Mega_Rounds in 2024 Already Surpassed FY 2023
Top Global VCs Show Long-Term Conviction on Israel
Since the beginning of 2024, industry giants such as Greylock and Sequoia have exhibited their conviction and long-term commitment to invest in Israel by announcing their plan to re-establish their presence in the country with on-the-ground investors and scouters. They join top investors Bessemer, LightSpeed and Battery who have been operating in Israel for decades. Furthermore, Accel has committed a third of its new $650M fund to Israeli startups, underscoring the country’s importance in their investment strategy.
Other prominent investors, including General Catalyst, Eight Roads, and Hamilton Lane, have expressed strong support. Last month, Hamilton Lane held their Annual Investor Meeting in Israel, signaling their commitment and confidence in the region’s future.
Multinationals Betting Big on Israel’s Innovation
Global corporations have flocked to Israel for decades, drawn by the ecosystem’s exceptional talent and cutting-edge innovation. Recently, Nvidia, currently the second most valuable company in the world, spent $1B acquiring two Israeli startups—RunAI and Deci. In 2019, Nvidia acquired Mellanox for $6.9B, which it credits for significantly boosting its growth. In June, SAP acquired WalkMe, a publicly traded company, for $1.5 billion, widening its footprint in Israel where it already employs over 900 people.
These significant investments highlight the ongoing attraction of Israel’s innovation landscape, driven by a highly skilled workforce and a culture of technological excellence.
Entrepreneurs Leading a New Wave of Innovation
Historically, the Israeli tech ecosystem has not only weathered conflicts but thrived in their aftermath and we believe this current conflict will generate additional growth for the ecosystem. Dr. Avi Hasson, CEO of SNC, predicts a “start-up baby boom” of tech companies, a trend we’re already witnessing with the dynamic entrepreneurs we are meeting.
Previous conflicts have produced ideas and innovations that were eventually translated into successful technological developments. This new wave of innovation we are witnessing is characterized by fresh ideas, bold initiatives, and a renewed drive to push the boundaries of technology. The resilience and creativity of Israeli entrepreneurs continue to be a driving force behind the country’s tech success.
The resilience of Israel’s high-tech ecosystem in the face of adversity is a testament to the strength and innovation of its entrepreneurs, investors, and global partners. As the world watches, Israel is not just bouncing back—it’s forging ahead, stronger and more dynamic.
