Israeli Tech Disruptors Dealmaking: M&A and Funding Trends H2 2023

We are pleased to present an update on M&A and funding trends in Israel, doing so with the aim of helping increase transparency and communication between the companies themselves, as well as financial and strategic investors.

ComCap has been active in the Israeli tech space and our report highlights the M&A and PP deals in key cohorts, including retail SaaS, digital agency and SI, martech, and fintech. The report also showcases the M&A and PP deals in “The Retail Innovation Club (RIC)”, a powerful community of leaders in the retail industry across Israel.

The report also summarizes i) recent acquisitions and funding trends of Israeli startups by US and European acquirers and investors, and ii) M&A and financing activity. 

The report identifies several key factors for the subdued funding activity during 2022 including, i) global political instability and recession fears (reduced investor’s risk-appetite); ii) rising inflation induced the US & European regulators to hike interest rates, thus inflating the cost of capital; and iii) looming recession coupled with interest rate hikes adversely affected the growth-focused Israeli tech firms.

The report also presents ComCap’s views on M&A and funding activity for 2023 in Israel’s tech space, i) rule of 40% regained importance as a valuation indicator for tech firms; ii) sharp drop in valuations will make Israeli tech firms more vulnerable to takeovers; iii) dry powder with VCs is likely to spur equity funding in the later part of 2023; and concludes that the year might end up being a strong year for tech investors as there are ample opportunities to buy into a market where prices and valuations are suppressed.