By Steven Scheer
JERUSALEM (Reuters) – Israeli cybersecurity exit deals grew by 65% in 2023 to $7.1 billion, more than half of total tech sector exit deals, a report showed on Sunday that underscored the importance of cyber to Israel’s high-tech industry.
Total tech sector exits – mergers and acquisitions, initial public offerings and buyouts – were some $11 billion last year, down from $13.5 billion in 2022.
Cyber comprised just $2.5 billion of total exits in 2022, according to the report from Cybertech Global and data and research firm Israel Venture Capital (IVC) ahead of a Cybertech global conference in Tel Aviv this week.
The high-tech sector drives Israel’s economy and accounts for 16% of employment, more than half of Israel’s exports, a third of income taxes and nearly a fifth of its overall economic output, according to Bank of Israel data.
With many of Israel’s 522 cyber firms borne from the military, Israel has become a global cybersecurity leader.
In the first quarter of this year, there were 8 exits totalling $1 billion versus 24 exits in all of 2023, the report showed.
Cybertech founder Amir Rapaport said cyber firms were resilient and served as an anchor for Israeli innovation even in a tense security situation.
“The trend of increased mergers and acquisitions in Israeli cyber, which began last year, continues into 2024, as global cyber threats grow year by year,” he said. “In contrast to other sectors, geopolitical tensions increase interest and investment in cyber companies. Therefore, we expect to see more investments in Israeli cyber companies and new startups that address emerging threats.”
High tech startups raised $6.9 billion in 2023 in 393 rounds, down from $15.7 billion in 2022, according to IVC, a decline attributed to a global slowdown, investor jitters over a now shelved plan to overhaul the country’s judicial system and the start of the war in Gaza.
Funding raised by Israeli cyber companies in 2023 was $2.4 billion – the lowest figure in the past five years and down 43% from 2022.
In the first quarter, the cybersecurity sector stood out with funding rounds totalling $620 million, or 38% of the total tech funding raised, according to Sunday’s report.
(Reporting by Steven Scheer; editing by Christina Fincher)
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