The year is not over yet, and it is already apparent that 2019 has been epic for the Israeli FinTech ecosystem. According to Start-Up Nation Central’s Finder, as of November 5, 2019 (year to date), Israeli FinTech startups raised a record $1.54 billion in equity, surpassing the previous annual record of $836 million set in 2018.
Preliminary data suggest that the median equity financing round more than doubled, from $3.5 million in 2018 to $10 million in 2019 (year to date).
InsurTech dominated equity investment
Startups in the InsurTech subsector of FinTech raised significant funds throughout the period, accounting for roughly 38% of the total amount raised by FinTech companies; compared to only 15% in 2018.
Next Insurance recently raised $250 million in equity at an estimated valuation of over $1 billion from German insurer Munich Re – and a new unicorn was born. This is the second Israeli InsurTech unicorn, along with AI-driven home and renters insurance provider Lemonade, which also contributed to the outstanding year 2019 when it raised $300 million from various investors earlier this year. To date, Next Insurance and Lemonade have raised $381 million and $480 million, respectively.
While Next Insurance and Lemonade are responsible for most of the equity raised by InsurTech companies, 93% of the total amount, other companies have also enjoyed financing. In total, one out of every five InsurTech companies have secured funding in 2019.
Joining the prestigious unicorn club
Although equity raises were dominated by InsurTech, other FinTech subsectors were impressive as well. Anti-Fraud, Risk & Compliance accounted for approximately 20% of the equity raised. The main contributor was Riskified, who’s anti-fraud prevention solution attracted $165 million at the beginning of November. With this E round, Riskified has also joined the prestigious unicorn club with an estimated valuation of more than $1 billion. One additional notable round in this subsector was by ID authentication startup AU10TIX, which raised $60 million this past August.
Not far behind, The Payments & Money Transfer subsector accounted for 17% of FinTech equity funding in 2019 year to date. FinTech-as-a-Service payment platform, Rapyd Financial Network, recently announced a $100 million equity financing round, only a few months after the startup completed a $40 million round. Although not published, it is believed that the last round valuation was also close to the desirable $1 billion mark. Other rounds in this subsector include: Automated supplier payments company Tipalti, which raised $60 million; Sunbit raised $26 million; and Rewire $12 million.
The Lending & Investing subsector also demonstrated strong results securing 14% of the total equity raised. This share is mainly attributed to Fundbox, the invoice clearing startup, that raised $176 million in an equity C round this September.
Nearly 600 FinTech companies – and counting
Of the 570 Israeli FinTech companies, roughly 25% offer Trading & Investing solutions, and 23% focus on Payments & Money Transfer. Although these subsectors account for the majority of the FinTech companies, and InsurTech startups account for only 12%, the InsurTech subsector is the one that has experienced the fastest growth in recent years. While in 2014 there were approximately 18 InsurTech companies, in 2019 that number more than quadrupled to 73.
The number of FinTech companies is truly remarkable for such a small country with a population of less than nine million. In comparison to other FinTech hubs around the globe, the Israeli FinTech sector offers a very diversified range of solutions.
Since the local market is small, Israeli entrepreneurs are aiming globally from day one. Trying to solve the world’s problems and not focusing on our own has made Israel a diversified innovative Start-Up Nation.
2019 (year to date) has already proven to set a new record for Israeli FinTech. Not knowing how the year will end, and which sector will take the lead, one thing is certain: Israeli FinTech is growing and gaining additional world recognition.