Israel Sees Surge in Cybersecurity Exits, but Funding Drops in 2023

In 2023, Israeli cybersecurity exit deals boomed by 65%, hitting $7.1 billion, making up more than half of all tech sector exits. This info comes from a report released on Sunday, emphasizing the vital role of cybersecurity in Israel's tech industry.

However, total tech sector exits, including mergers, acquisitions, and IPOs, fell to $11 billion from $13.5 billion in 2022. The report was a joint effort by Cybertech Global and Israel Venture Capital (IVC) ahead of a Cybertech global conference in Tel Aviv.

The tech industry is a major driver of Israel's economy, contributing 16% to employment, over half to exports, a third to income taxes, and nearly a fifth to overall economic output, according to data from the Bank of Israel.

With many of Israel's 522 cyber firms originating from the military, Israel has emerged as a leader in global cybersecurity.

In the first quarter of 2024, there were 8 exits totaling $1 billion, compared to 24 exits throughout 2023, the report revealed.

Amir Rapaport, the founder of Cybertech, praised the resilience of cyber firms, stating that they continue to innovate even amidst challenging security situations.

He highlighted the growing trend of mergers and acquisitions in Israeli cyber, driven by increasing global cyber threats. Rapaport expects to see more investments in Israeli cyber companies and new startups addressing emerging threats.

However, overall funding for high-tech startups decreased to $6.9 billion in 2023, down from $15.7 billion in 2022. This decline is attributed to global economic slowdowns and local factors like uncertainty over judicial reforms and conflict in Gaza.

Funding for Israeli cyber companies also saw a dip to $2.4 billion in 2023, the lowest in five years, representing a 43% drop from 2022.

Despite these challenges, the cybersecurity sector stood out in the first quarter of 2023, securing $620 million in funding, comprising 38% of total tech funding.

Also Read: Coro Secures $100 Million in Funding, Valued at $750 Million