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UAE-Israel ties: High-tech market beckons investors

Dubai - More maturing tech companies expected to turn to capital markets this year.

Israeli high-tech market, a cynosure of global investment firms, having raised $10.2 billion in 2020 alone, offers UAE investors an opportunity to capitalise on the immense growth trends in the wake of the historic Abraham Accord.

According to the IVC-Meitar Israeli Tech Review 2020, with more maturing tech companies expected to turn to capital markets this year, the market will have a greater appeal to foreign investors who far outperformed their Israeli counterparts during funding rounds and in follow-on investment in 2020.

Foreign investment was also behind the vast majority of the year’s largest deals above $100 million.

Published by Meitar and IVC Research Center, Israel's leading research specialists in high-tech and venture capital, the report provide a comprehensive analysis of the Israeli high-tech ecosystem activity, now of high interest to UAE investors for the first time.

The report reveals that Israeli tech companies raised $10.2 billion in 607 deals in 2020, an increase of 31 per cent in the volume of capital and a 20 per cent increase in the number of deals compared to 2019.

A record number of publicly-traded Israeli tech companies raised $6.96 billion by 128 companies compared to $1.95 billion by 68 companies in 2019, and Israel’s leading law firm in the high-tech market, Meitar Law Offices, forecasts a continuing trend of maturity and development in 2021.

According to Dorian Barak, co-founder of the UAE-Israel Business Council, from an Israeli perspective, no sector stands to gain from the peace accord more than Israel’s world-class technology ecosystem, which encompasses over 6,000 start-ups and has produced companies such as Mobileye, Waze, Viber, Mellanox and many other household names.

“For the first time, the ‘Start-Up Nation’ has an opportunity to bring to the region its unique capabilities in the fields of water, energy, renewables, biotech, agriculture, cybersecurity and artificial intelligence,” said Barak.

The IVC-Meitar report shows foreign investors contributed $6.26 billion in funding rounds and $7.34 billion in follow on investments last year compared with $1.91 billion and $2.58 billion respectively by Israeli investors. In large scale deals, foreign investors accounted for 88 per cent of those over $100 million and 82 per cent of deals over $30 million.

M&As deals under $5 billion fell to $7.96 billion (99 deals) in 2020 from $14.26 billion (143 deals) in 2019, primarily due to COVID-19.

“Despite this, we simultaneously experienced an increase in financing rounds by Israeli and foreign investors, in the number of deals as well as the capital invested,” said Shira Azran partner at Meitar.

“Specifically, financing among growth companies showed a significant increase, as did the total number of rounds. This demonstrates the maturity and development of the Israeli high-tech industry, manifested, among other things, in the increased number of companies that have crossed the billion-dollar valuation.

Guy Holtzman, CEO of IVC, said the first comprehensive report on the Israeli high-tech industry, combining data on financing, exits, and capital markets activity, will be particularly helpful to UAE investors exploring opportunities in Israel for the first time.

“After a challenging but successful year for Israeli start-ups, the Israeli high-tech ecosystem will continue to be a source of attraction for leading international financial and strategic players.”

issacjohn@khaleejtimes.com