Israeli Tech Industry will Miss Good Old Days of 2019, Survey says
The rate of companies that raised in early rounds rose to about 38% according to the survey held by Israeli law firm Shibolet & Co. in collaboration with Fenwick & West LLP
The annual survey held by Israeli law firm Shibolet & Co. in collaboration with Fenwick & West LLP from Silicon Valley shows how much Israeli hi-tech is going to miss 2019.
According to the survey, the rate of companies that raised in early rounds rose to about 38% of the rounds surveyed compared to just 30% in 2018. Of the companies surveyed, some 89% saw their evaluation increase between rounds.
"2019 was an amazing year and will be used as a comparison to the world before the arrival of the coronavirus (Covid-19) pandemic," Adv. Lior Aviram of Shibolet & Co. told Calcalist. "A large portion of the year was a bubble and bubbles burst. We are only now understanding what happened. It started with WeWork and continued with others like car-sharing company Lime, which lost 80% of its value. Companies with a high evaluation will not raise money now or will have to lower their valuation."
"There will be less of a hit for early-stage companies raising money but they will also have to do so with a lower evaluation," Aviram added. "A VC which invests after a crisis will do so in quality companies with a low value. Companies that have a higher evaluation and low sales are going to have a much more difficult time raising money. As there are more question marks regarding the state of the economy these companies are going to have a tougher time raising funds."