Israel saw larger venture-backed exits than NY in 2013 and would have dominated if not for several companies that moved their operations to the U.S. Waze of Israel and Tumblr of NY were the largest exits in each market last year.

After our brief on NY’s rise in venture capital funding last week, Adam Fisher who heads up Bessemer’s Israel office commented on Twitter.

While NY has seen more VC interest and has seen growth in the number of tech VC investors as well as seed VC dealflow and benefits from very positive sentiment, the comparison that Fisher and colleague Amit Karp highlighted between Israel and NY’s venture markets was an interesting one.  From a population perspective, the 2 markets are quite similar – Israel has 7.908 million people and NYC has 8.337 million folks.  Note: 90% of the VC activity in NY is to NYC.

So how do they fare against each other?

Here’s what we found with a look at the largest VC-backed exits in each market from last year.

Looking at the largest VC-backed of Israel headquartered exits last year, we see that the top 5 venture-backed exits in Israel netted an aggregate valuation of $2.70B at the time of exit. The largest was Google’s acquisition of Waze and the top 3 was rounded out by Wix’s IPO and Cisco’s $475M acquisition of Intucell, which took just $6M from Bessemer Venture Partners (also in Wix) prior to exit. Of note, while notable venture-backed exits including Trusteer, CyOptics, ScaleIO and Adap.tv (all $250M-$900M acquisitions) are hailed as Israel exits, all were headquartered in the U.S. at the time of acquisition despite being founded in Israel. (Note: Evogene’s IPO was not listed given its prior IPO on the Tel Aviv stock exchange). Today’s exit for $150 million by Cyvera as well would fall into this camp of Israeli but HQ’d in California.

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Conversely, New York’s top 5 disclosed venture-backed exits last year saw an aggregate valuation of $2.29B at the time of exit. Yahoo’s acquisition of Tumblr was the largest at $1.1B, followed by Tremor Video’s IPO and Stratasys’ acquisition of MakerBot Industries. But outside of the top 4, NY saw mostly smaller disclosed exits last year. For example, GetGlue’s acquisition by iTV (5th on the list) was largely viewed as the latest downer for the Social TV market. Of course, NY is seen to have several billion-dollar startups in the wings, as well as an influx of tech VC dollars, so its exit environment will be one to monitor moving forward.  And in 2013, it did get the “never had a billion dollar exit” monkey off its back.

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But at present, Israel continues to be a more robust market from a VC-backed exit perspective than NY.  If you add in the companies founded in Israel but which ultimately exited after they moved their headquarters to the U.S., Israel looks significantly better.  Of course, some might argue that this logic would give Massachusetts the right to claim Facebook’s exit given the firm was founded there.

Note:  When we issued our brief that Silicon Valley is the only relevant market for tech venture capital, many of our VC customers investing in NY wrote us saying that it wasn’t a fair comparison as NY is a less mature market.  That is a fair point and holds in this case too. Compared to Israel, NY is a relatively immature market for VC as it’s ascent has really happened quite recently.  If current momentum continues, NY may overtake Israel on the VC-backed exit front.  But as of right now, Israel reigns.

For more geographic exit data and analytics, check out the CB Insights Venture Capital Database. Sign up for free below.

  • Amit Karp

    Great post. Though I would argue that the ‘right’ comparison should include Israeli companies which are headquartered in the U.S.
    Israeli companies sell mostly to the US market and not the Israeli one so are forced to move business functions to the US at some stage in order to be close to the market. However, they typically keep the engineering and product which are the heart of the company in Israel. The comparison to Facebook is not fair since Facebook doesn’t have any real presence in MA while for many US-based Israeli companies, the majority of the team is still in Israel.
    NY-based startups are not faced with the same issue and don’t need to relocate part of the team somewhere else.

  • http://www.4044walnut.com Anand Sanwal

    Amit – Thanks for reading and for the comment.

    Your point is a good one as it seems much of the “guts” of these companies remain in Israel but the marketing/sales functions are here to serve the larger US market.

    So once we include those in the mix, the disparity between NY and Israel is even larger further supporting your point. I suspect that NY will close the gap a bit but perhaps Israel should get a bit more love :)

    Of course, our comment on FB was a bit tongue & cheek as we wanted to preempt the inevitable comments we will get. But I hope that people who read the comments will see your point which I think is great context for why Israel is actually a powerhouse in venture land.

    Again, thanks for reading and for the inspiration for this analysis with your original tweet. Keep ‘em coming.

    Thanks,
    Anand

  • Eyal Bino

    This is a great stat Amit, thanks for sharing. One thing that keeps coming back to me is that NYC is still a pretty new tech ecosystem compared to the Israeli one. Most funds in NY are small (focused on seed/Series A) and many are new so exits will take time. Israeli is dominated by US venture firms that have an eye for good talent and how to scale companies in the US, which helps Israeli startups become more successful over time. It’s interesting to see how the VC landscape is changing though, and I agree, the next 5 years will bring more success stories to the NYC VC market. Thanks for sharing!