Israelis don't like to pat themselves on the shoulder too often. Quite the contrary, in fact – Israelis probably feel more comfortable when they're providing constructive criticism, casting doubt, or downright complaining. And while this cultural trait is a critical driver of the Startup Nation and therefore shouldn't be downplayed or stifled, it wouldn't be reprehensible to say that 2019 was probably the best year of the past generation of Israeli high-tech.
Since its blooming in the late 80s, the Startup Nation has faced many existential questions. It started with "how can we build a thriving tech ecosystem?", continued with "how will we integrate Russian olim?" and "will this be a national growth engine?" in the 90s, and continued with tougher questions in the beginning of the 21st century. Primarily, there was doubt around our ability to work with large international companies, our ability to build big companies at scale, our potential at doing anything that isn't super high-tech, whether our startups will ever be able to have proper sales and marketing, and so on.
While a year here and there showed glimpses of the Startup Nation's ability to overcome one challenge or another, 2019 was our all-around best year yet. We peaked in exits during 2019, with companies selling for US $7.4B, and with over $132.3M as an exit average. This is our second-best year if you discount the Mobileye exit from 2015 due to its abnormal size. The average exit size was up from just over $72.3m in 2018. Interestingly, more and more exits see foreign private companies turning Israeli startups into centres of excellence. 2019 sees Israel potentially turning into Centre of Excellence Nation.
We revived our IPO activity with 5 new traded companies in New York, after a drought during which Israelis learnt how to IPO on secondary exchanges as well.
That's in terms of exit potential. But what makes 2019 unique is that it was all-around amazing. The number of unicorns in the country almost doubled in 2019. Israeli companies raised $8.25B, up 13.4% from 2018, so it looks like we're building those bigger companies we were questioning our ability to build just five or six years ago.
The Startup Nation is performing in a very wide variety of sectors, with Enterprise SaaS leading the way (how are we getting those sales?), but with many other sectors looking fine and dandy too (life sciences and digital health, anyone?).
But what makes 2019 so great is that it feels like a prelude to an even greater decade. If we focus, make sure to retain our brains in the country, continue to strengthen business development and sales capabilities, continue to foster the relationships of government, military, academia, R&D centres and our youth, and continue to avoid the threats that surround us – there will be many more reasons to celebrate come 2029.
Previously published in Geektime Annual Report 2019
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