While 2021 was a record year for investments in Israeli tech companies, raising an accumulated total of $26.6 billion, data from Start-Up Nation Finder revealed that a lot of the growth was concentrated in three dominant sectors.
The three sectors that surged ahead in investments last year were FinTech, Enterprise IT & Data Infrastructure, and Security Technologies (predominantly Cybersecurity), all three more than doubling FY2020 figures. The three sectors combined drew in 66% of the total equity invested in Israeli tech companies this year, up from 52% in 2020.
Security solutions, led by Cybersecurity, remained the largest sector as it has been for the last few years. However, the Enterprise IT and Data Infrastructure sector is catching up quickly, more than tripling its investment total, raising 15 mega-rounds (rounds of more than $100 million) and producing seven new unicorns. The winner in terms of growth, however, was FinTech, raising almost 3.5x its 2020 total and securing 12 mega-rounds.
These sectors emerged as Israel’s “Big 3” due to the fact that they are comprised primarily of pure software companies capable of delivering rapid solutions to challenges that were in high demand during the COVID-19 pandemic.
The Life sciences and HealthTech sector was the fourth largest in terms of investments, raising $2.5 billion. While it is made up of many more companies than the leading three sectors, far fewer of them are currently raising capital. In 2020 the sector raised more than FinTech and similar amounts to Enterprise Solutions, but the 2021 frenzy for fast-growing companies passed it by. Solutions in this sector tend to have longer development and go to market times, so there is often less hype surrounding them.
The fastest-growing sector this year was Content and Media where investments increased almost sixfold and crossed the $1 billion mark for the first time, resulting in three new unicorns. Only one sector, EnergyTech, saw a decline in investments over the past year, falling from $103 million in 2020 to $48 million in 2021. This sector is characterized by older companies who are not currently focused on raising new funding, however, the surge of market interest in ClimateTech is likely to see more capital allocated to the sector in 2022.