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Emerging Maturity:
Recent Trends in the
Israeli High-Tech Market
In June 2016, Eric Schmidt, the executive chairman of Google’s parent company
Alphabet, noted upon visiting Israel that it “has matured as the start-up nation in
the four years since [he] first visited.” We have seen this trend materializing over an
even longer period of time. Later stage companies that might have raced to exit are
now investing in long-term growth. Mature companies are taking in increased funds
and thriving. And at the same time, seed-stage companies continue to receive the
financial backing necessary to take off. It is not surprising, then, that in the 2015
Compass index (ranking ecosystems along five major components: performance,
funding, talent, market reach, and start-up experience), Israel is the top-ranked hub
outside the United States.
Several market trends point to a growing willingness among entrepreneurs to build
their companies methodically, rather than sell them at the first opportunity. Between
2004 and 2007, for example, the average time-to-exit for the most notable exiting
Israeli high-tech companies was between 5 and 10 years, according to data from the
IVC Research Center, while from the end of the financial crisis, between 2011 and
2014, the average time-to-exit for the most notable exiting Israeli companies 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 high-tech companies
(with a slight rise in the average time-to-IPO and a slight drop in the average time-
to-M&A).
Other data also clearly shows companies are not exiting flippantly at lower valuations,
but opting to wait until they receive the right valuation at the right time. At the upper
end of the market, unicorns have emerged. Since the beginning of 2013 alone, Waze
was sold to Google for US$1.1 billion, Mobileye raised almost US$890 million at a
market value of US$7.6 billion, D&H purchased Fundtech for US$1.25 billion and Wix
has been valued at over US$1 billion following its IPO. Other companies that have
yet to exit include online software and mobile distribution company ironSource and
enterprise class storage company Infinidat.
Later stage companies that might have raced to exit are now investing in long-
term growth. Mature companies are taking in increased funds and thriving.
And at the same time, seed-stage companies continue to receive the financial
backing necessary to take off.