Tiger Global, Insight Lead $26 Billion Gold Rush for Israel Tech
Jan 19, 2022
12:05 PM IST, 19 Jan 2022
10:30 AM IST, 19 Jan 2022
12:05 PM IST, 19 Jan 2022
(Bloomberg) -- The big money has arrived for what could be the next generation of Israel’s vaunted technology sector. (Bloomberg) -- The big money has arrived for what could be the next generation of Israel’s vaunted technology sector. International investors helped set off a bonanza last year, when Israeli startups raised about $26 billion -- more than double the previous high in 2020 and nearly a quarter as much as the funding that poured into Europe as a whole. Upending the pecking order in local venture capital, U.S. funds made 266 early-stage investments, an increase of almost a fifth from the previous year, according to data from Start-Up Nation Central , a non-profit organization that tracks the industry in Israel. The exuberance comes with more risk. Tiger Global Management and Insight Partners, which have already bankrolled Israel’s largest privately-held firms, are increasingly betting on younger and less proven companies as a way to corner the market of upcoming winners and potentially reap greater returns. SoftBank Group Corp. and Blackstone Inc. are meanwhile opening local branches to better sniff out opportunities. Foreign investors tend to win deals by cutting larger checks than local competition, until now the primary source of funding for Israeli tech companies that are often still figuring out what to sell. “We want to work with good founders and other venture capital,” said Stephen Ward, managing director at New York-based Insight, which has committed more than $30 billion globally. Insight had 70% more Israeli deals in 2021 than the next most active investor. In a single month last year, three of its Israeli-founded portfolio companies -- Monday.com, SentinelOne and WalkMe -- raised more than $2 billion combined when they went public in the U.S.
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SentinelOne, which uses artificial intelligence to protect companies against security threats, also won the backing of investors including Tiger Global and Sequoia Capital before an initial public offering that valued it at nearly $9 billion. The deluge of foreign investment has been a boon for Israel’s tech companies. New York-based Tiger Global, founded by billionaire Chase Coleman, had at least 16 investments in Israeli technology firms in what’s been a record year of fundraising for the industry. Higher Stakes
But the eagerness to spend doesn’t necessarily sit well with some veteran Israeli investors, concerned the newcomers will exacerbate or even create new market distortions. The doling out of serious cash to nascent firms is likely to drive up labor costs when there’s already a talent shortage, said Asaf Horesh, general partner at Israeli technology investment firm Vintage Investment Partners.