2015 a Record Year for Israeli Exits
A powerhouse in the international business community is emerging. Israel, a country of only 7.6 million people (New York City has 8.4 million people), has fostered thousands of startups in recent years. These startups are achieving tremendous success both in terms of the products and services that they create and the value they generate for investors. The year 2015 continued the trend as the money generated by exits in Israel topped the $5 billion mark for the fifth straight year. This consisted of Israeli companies that were either sold to larger corporations or made Initial Public Offerings in 2015. This is an unprecedented success for a country its size and a true testament to the determination of the Israeli people, their penchant for innovation and the significant support given by the Israeli government.
In 2015, 96 Israeli startup and high-tech companies were sold and eight companies had IPO’s totaling $9.02 billion. This is highest total since 2012, when exits totaled $9.75 billion, according to a report by the IVC Research Center and the law firm Meitar Liquornik Geva Leshem Tal. Among these exits were a record $4.98 billion in venture capitalist-backed deals (highest in 10 years) and eight IPOs tallying $609 million. It should be noted that the number of IPO’s dropped sharply from previous years. According to the IVC report, markets, including the NASDAQ, are looking less favorably on these transactions.
The most notable Israeli exits in 2015 included:
- HeartWare’s $860 million acquisition of Valtech Cardio. Valtech is a cardiac valve repair company.
- Microsoft’s acquisition of Adallom ($325 million) and Secure Islands ($150 million). Adallom provides a secure platform for cloud applications. Secure Islands produces information protection and control systems.
- D & H Corporation’s $1.25 billion acquisition of Fundtech. Fundtech is a financial software developer.
Analysts point to several reasons for the banner year, including the patience of venture capital companies to let startups reach their potential, the successes of other Israeli startups and emerging interest from Chinese companies (although their investment in Israeli tech has been limited thus far).
All signs point to this being the start of a bigger trend. Interest is growing rapidly in a number of industries including, cyber-security, the Internet of Things software and big-data analytics. These are all areas that, according to an article in Israel 21c, “happen to be the country’s specialty.” With continued government backing for startups, things will continue to look bright for the country dubbed “startup nation.”