Israeli tech exits crash to one-fifth of 2021 level, PwC Says

The value of initial public offerings and mergers and acquisitions in Israel’s tech industry this year fell to one-fifth of 2021 levels as rising interest rates and economic uncertainty forced “a reckoning,” according to a report by PricewaterhouseCoopers LLP.

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There were 72 deals raising a total of $16.9 billion in 2022, down from 171 deals that brought $82.4 billion the previous year, with most of of transactions taking place in the first half, PwC Israel analyst Yaron Weizenbluth wrote in the report published Wednesday.

“We will need to adjust, like in the past, that cash means something. You cannot sell a dream and that’s it,” said Weizenbluth, who heads the High-Tech Cluster at PwC Israel. The Israeli tech market may not start to recover until the second half of 2023, he added.

Investment in the Israeli tech sector was hurt by rising interest rates and plunging valuations for public technology companies after a record year in 2021. However, it was still higher than 2020 levels.

The report did not cover several major follow-on deals, including the Mobileye Inc. listing on Nasdaq that raised $861 million in an initial public offering in October.

The downward trend extended to startup funding, with Israeli tech startups raising $13.9 billion in capital during 2022, down from $25.8 billion a year earlier, according to data compiled by Vintage Investment Partners’ general partner Asaf Horesh and presented to a Tel Aviv conference Wednesday.

“We see it in everything — in the drop in funding, in the number of unicorns, in the beginning of the correction of the valuations, Horesh said.

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