2016/17
|
High-Tech & Technology -
DUN’S
100
7
Industry trends
At the end of 2016, there was much discourse
concerning the downward trend in the total
amount of exits in the Israeli High-Tech indus-
try, from $7.2B in 2015 to $3.4B in 2016, and
the meaning of this trend to the industry. The
Israeli High-Tech industry must be evaluated
by other parameters, which are just as impor-
tant (and perhaps more important) in order to
reach conclusions concerning its situation and
the direction in which it is developing. In this
review, we present several additional param-
eters that may provide a better indication on
the current situation of the Israeli High-Tech
industry and its evolutionary path.
According to data from the Central Bureau
of Statistics, the number of tech jobs as of
October 2016 was 292,000, about 8.57%
of the total number of jobs in the Israeli
environment.
Between January 2015 and October 2016,
15,000 jobs were added to the Israeli High-
Tech industry. The average annual growth rate
of tech jobs in the past three years amounted
to approx. 9,000 jobs per year. The growth rate
might have been faster if the human capital
supply were to match the demand.
As of January 2017, approx. 6,650 High-Tech
companies are operating in Israel, of which
about 4,750 (roughly 71.5% of High-Tech
companies) are start-ups in various stages of
the VC cycle. About 3,650 start-ups (roughly
77% of the all start-ups) raised capital at least
once from an external source, such as gov-
ernment funding, angels and VC funds. One
of the strongest indicators for the evolution
of the industry, is the clear upward trend in
the number of mature Israeli tech companies
– 385 companies in the industry are large
companies with more than 100 employees
(approx. 6% of all companies), a 29% increase
over the past six years.
Another indicator for the industry’s maturity
and the increase in hidden value is the in-
crease in the number of start-ups that prolong
their bootstrapping stage. This trend indicates
that more start-ups are being managed with a
lean structure and prefer to receive funding at
High-Tech Industry Snapshot
By Tzah Berki, Senior VP Data & Research and Chief Economist
Profitability
Stage
Idea
Pre-Seed
Seed
Early-Stage
Later-Stage
Positive Ebitda
Funding
Grants & Relatives
or Bootstrapped
Grants & Angels
Angles /
Early Stage VC's
VC's
PE's / Banks /
IPO / M&A
No. of Israeli
companies
A lot(!)
1,900
1,400
500
950
1,900
Break Even point
Timeline
High-Tech Companies in Israel Across the VC Cycle
Cash Flow