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Market
Trends and
Insights
As of the end of 2014, Israel boasts the highest country-wide number of hi-tech
startups per capita in the world.However, since authors Dan Senor and Saul Singer
called attention to “Startup Nation,” an increasing number of analysts, investors, and
entrepreneurs have been asking whether Israel can build not only a wealth of startups,
but an industry that creates and sustains Israeli-based global corporations. Based
upon recent findings, Israel has begun producing a considerable number of sizeable
companies, a trend that will continue. According to current studies,Israel is the first
ranked hub outside the United States based on performance, funding, talent, market
reach, and startup experience – a mature ecosystem able to support this growth.
The drastic growth in the number of IPOs of Israeli hi-tech companies has also
contributed to the total increase in number of exits. Not a single Israeli hi-tech IPO
was reported in 2012. In 2013, however, eight Israeli companies closed IPOs, while
in 2014, 17 Israeli hi-tech companies went public. And based on published first-half
numbers, the number of IPOs at the end of 2015 is expected to settle at points lower
than 2014, but still higher than 2013. In no uncertain terms, Israeli hi-tech IPOs have
returned.
This rise in exit numbers has not transpired because Israeli companies are carelessly
opting to exit. Between 2004 and 2007, the average time-to-exit for Israeli hi-tech
companies was between 5 and 10 years, while from the end of the financial crisis,
between 2011 and 2014, the average time-to-exit was lengthened to between 10
and 15 years.This expansion is particularly noteworthy in light of the relatively stable
global average time-to-exit for hi-tech companies (with a slight rise in the average
time-to-IPO and a slight drop in the average time-to-M&A).It is striking, furthermore,
that average Israeli hi-tech company proceeds from exit reached $212 million in 2014
– more than 2.5 times average exit proceeds in 2011.
On the IPO side, returns of late have similarly swelled. Total proceeds from IPOs in
2013 amounted to $361 million,and in 2014, IPOs raised more than $2 billion, with
2015 expected to maintain this level.
In addition, IPO proceeds represented only
Since the market low in 2010, a steady rise in the number of exits of Israeli
hi-tech companies has occurred. This trend, which has consistently applied to
Israeli hi-tech companies on the selling side, has, in the last couple of years,
also come to include Israeli companies large enough to be on the buying side.