The 2021 Israeli Unicorn Map

The global rise in venture capital didn’t skip Israel, which has been breaking new records the amount of venture capital raised by companies in 2021. In the first half of 2021, Israeli startups raised a staggering $12.2 billion a 125% increased compared to the equivalent period in 2020, the number of Unicorns, private companies valued at $1 billion or more has grown significantly, with several companies achieving “Decacorn” status – achieving valuations of $10 billion and up, including eToro, soon to complete a SPAC merger, and Rapyd payments.

According to CB Insights there are currently 832 unicorns globally, valued at a total of $2,702 billion. Generally speaking this breakdown applies to Israel as well, with a number of huge outcomes in fintech (Melio, Rapyd, eToro, Papaya Global, etc) and of course Cybersecurity.

What is less obvious is the growing number of Unicorns that grew in the consumer space in Israel and how diverse they are: consumer health, consumer insurance, media, music, gaming etc. Israel was historically known for semiconductors and cybersecurity but it’s now punching above its weight in consumer (B2C), gaming and commerce. As a fund that specialises in consumer tech, we at Remagine Ventures find it very encouraging and we believe we’ll see many more billion dollar companies built in Israel in the consumer space.

Global unicorn breakdown by category (Source: CB Insights)

Unicorns aren’t rare in Israel, but it’s hard to track them

Unicorns often attract media attention, as it’s not trivial to build a business valued at $1 billion. But they are by no means a rare occurrence – according to my updated list below, there are 57 current Israeli founded Unicorns. more than 20 new Israeli unicorns were added to the list so far in 2021.

But they are often hard to spot in global databases like Crunchbase, Pitchbook or CBInsights, because even though they originate from Israel, they are registered as US companies. In some Unicorns, the company was co-founded by Israelis but the centre of operation is US (like in the case of Coursera), so curators have to apply their own judgement on whether the startup is considered Israeli or not.

Another challenge with keeping this list current is that many of the Israeli unicorns ‘graduate’ by getting acquired or going public via SPACs or traditional IPOs. More than 17 Israeli unicorns graduated so far in 2021. In this post, I’ve included a visual for both current and graduated unicorns.

Without further ado, below are the updated 2021 Israeli unicorn landscape as well as recently graduated unicorns (with some exceptions):

The updated list of Israeli Unicorns (sep 2021), Credit: Eze Vidra (Remagine Ventures/VC Cafe)
Israeli graduated unicorns (2020-2021), with minor exceptions (Checkppoint, Wix, Mobileye, Autotalks) which exited earlier.

Worth remembering that Unicorn status isn’t necessarily runaway success

Becoming a unicorn doesn’t equal immortality – it’s just a value pegged in the private markets and Unicorns are susceptible to failure like any other startup. Case in point, Israeli startup Infibond, which delivered insights on users personalities based on their phone usage patterns, reached unicorn status and subsequently sold for scraps.

Moreover, several of the Israeli startups that chose a SPAC merger as an exit, are trading at lower valuations than they entered Wall Street with given that the valuations were set on future projections and not current revenues.

Israeli unicorns have evolved in recent years

In an interesting analysis published by Israeli venture firm Viola earlier this month, there are some new characteristics of the 61 Israeli unicorns companies included in their list:

  • Companies can reach Unicorn status in less than 5 years – compared to 6-10 years up to 2015
  • The average amount of capital raised by Israeli unicorns stands on $109.2 million, with a standard deviation of $55M
  • Companies are hitting Unicorn valuations with $25M or less in revenue, compared to $75M-$100M in the period of 2013-2016
  • The majority of Israeli unicorns are still managed by their founders, who come from relatively diverse backgrounds and prior experience. The CTOs of Israeli unicorns, are typically 8200 alumni or come from a strong tech units in the IDF
  • Most unicorns founding teams have 2-3 co-founders
  • Over 50% of the Israeli unicorn CEOs are based in Israel – a departure from the Israeli startup adage that in order to succeed the company has to be based in the US. Examples include: Monday, Similarweb, Wix, Ironsource,

Thousands of new millionaires, but more work is needed for Israeli tech to continue to thrive

High Tech represents 15% of Israel's GDP -  Israel's Innovation Authority
High Tech represents 15% of Israel’s GDP (Source: Israel’s Innovation Authority)

The impact of these new unicorns and especially the graduated unicorns which provide liquidity to both investors and employees (after lock up periods), have meant that potentially thousands of employees have become millionaires. For example, in the case of Ironsource alone, Israeli newspaper Calcalist estimated that over 230 employees made over $1 million. That’s generally great, but it hasn’t all been well received in the public opinion.

Much of the new riches have been going into real estate, which contributed to price increases and some public backlash on the increasing gaps in the Israeli society. Only 400,000 Israelis participate in the high-tech sector in Israel and there’s low inclusion in tech by large parts of the Israeli society, including Israeli Arabs and Orthodox Jews. Several great initiatives are getting traction and funding (Kamatech, Moona, etc) , but a lot more work is needed in order to increase the diversity in the tech industry, and address the talent crunch that Israeli startups already feel – competing with cash-rich unicorns, multi national tech giants and other startups.

Further reading:

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