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.
— Adam Fisher (@AdamRFisher) February 6, 2014
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.
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.
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.