Monday, 2024 March 4

Israeli fintech sector raises record USD 2.3 billion in H1 2021, report says

Investments in Israeli fintech (financial tech) firms soared to a record USD 2.3 billion in the first half of 2021, representing a record-breaking 260% increase over funding in the first half of 2020. It also surpassed 2020’s full-year total of USD 1.8 billion by 28%. These fintech investments made up 19% of the USD 12.2 billion invested in Israeli tech companies in the first half of 2021, according to a newly published report by Start-Up Nation Central, or SNC.

Israel’s fintech sector has already had 68 funding rounds in the first half of 2021, nearing the 74 total funding rounds last year.

The report displayed a breakdown according to round type, which showed an increase in both the number of seed rounds and also in the number of rounds for Series C and above. “This indicates that while fintech is a mature sector, new startups are continuing to emerge,” SNC said in a statement.

There were 26 seed rounds in the first half of 2021, compared to 18 in all of 2020, and 15 C+ rounds in the first half of 2021, compared to just 13 in all of 2020.

Seven companies have raised investments of more than USD 100 million in the first half of 2021, compared to only five in all of 2020.

Israeli-founded global fintech-as-a-service provider Rapyd raised USD 300 million in a Series D in January 2021, while e-commerce fraud prevention firm Forter raised USD 300 million at a USD 3 billion valuation in a Series F round in May. Supplier payment platform Melio also raised USD 110 million at a USD 1.3 billion valuation in a Series D round in January 2021.

The last two years saw 70% of Israeli fintech funding funneled into three sub-sectors—payments, anti-fraud, and insurtech. The report shows that the trend has continued in 2021, with payments in the top spot comprising 35% of fintech funding in the first half of 2021, as the demand for online payments skyrocketed with COVID-19 restrictions.

The first half of 2021 also saw investment growth in enterprise solutions, according to the report. This new demand was “largely spurred by the pandemic-induced rush for corporate innovation, which created an opportunity to modernize legacy processes,” SNC said.

The first half of this year also had seven acquisitions, one IPO, and one completed SPAC, compared to eight acquisitions and one IPO in all of 2020. SNC said the rise in exits could be linked to the US Federal Reserve’s monetary policies, which promote a cash influx in financial markets. This has led to a surge in public capital market activity.

This year has been “encouraging” for the Israeli fintech sector “so far” with a record number of large late-stage funding rounds, notable exits, and emerging early-stage companies,” said Nicole Krieger, Start-Up Nation Central fintech analyst.

“COVID-19 drivers aside, Israeli fintech companies have grown rapidly and globally, building commercial partnerships and contributing significant technology to payments and enterprises. Tech innovation significantly upgraded legacy financial services processes. The sector now stands poised for a new era. We see a digital age emerging and are watching digital currency evolution enter a new digital age. It seems the stage could be set for subsequent fintech evolution such as the adoption of digital currencies,” she added.

Read this: The good, the bad, and the unexpected | Here’s what entrepreneurs learned while building startups in 2021

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The article was originally published by NoCamels, a leading news website covering breakthrough innovation from Israel for a global audience.


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