2020TEL AVIV INNOVATION ECOSYSTEM REPORT: RESILIENCE & GROWTH 2 3

REPORT HIGHLIGHTS ’s tech sector not only remained resilient during the global pandemic, but even outperformed itself by breaking records in capital raised, exits and number of companies. The Israeli tech sector witnessed similar trends.

The local tech ecosystem demonstrated increased levels of maturity with 14 new unicorns, a greater impact of scaleups, and a growing number of local and foreign investors.

Over two-thirds of investments were made by a diverse mix of international investors.

AI, Fintech, Big Data and SaaS are the leading clusters in number of companies, fundraising and exits, enhancing the evolution from a startup to a deep tech capital. INDEX

Tech Companies Tel Aviv’s talent accounted for 20% of tech employees in Talent and generated nearly half of Israel’s capital raised Clusters and exits. Investors Capital Raised Exits Multinational companies showed confidence in Tel Aviv’s ecosystem and talent by opening 9 new foreign R&D centers during a year of lockdowns and restrictions on international movement. 4 5

TECH COMPANIES

THE TEL AVIV ECOSYSTEM 29% 25% Tel Aviv 2,750 47% 2,203 Greater 2,865 Tel Aviv 166 TECH COMPANIES New companies were created in 2016 2020 2020

2,750 115 Israeli tech companies GROWTH IN NUMBER Tel Aviv Tech Foreign R&D Greater Tel Aviv tech companies OF TECH COMPANIES Companies Centers Tel Aviv tech companies (Nationwide increase of 16%)

Number Of Israeli Tech Companies Tel Aviv Tech Companies: Opened vs. Closed

452 462 9,329 9,161 374 8,469 8,765 8,049 310

225 217 4,282 4,352 183 166 3,750 3,974 4,152 123 2,400 2,552 2,679 2,750 2,203 47

2016 2017 2018 2019 2020 2016 2017 2018 2019 2020

In Israel In Greater Tel Aviv In Tel Aviv # of Closed Tel Aviv Companies # of Opened Tel Aviv Companies 6 7

TECH COMPANIES

BREAKDOWN OF 2,865 NUMBER OF TEL AVIV TECH COMPANIES IN TEL AVIV TECH COMPANIES BY STAGE 4% 6% Foreign R&D Scaleup 161 centers REVENUE GROWTH 20201,153 INITIAL REVENUES 973 RESEARCH & DEVELOPMENT 50% 40% 463 Startup Pre-scale SEED 8 9

TECH COMPANIES

FOREIGN R&D CENTERS

44% 115

80 coming from GROWTH IN NUMBER OF FOREIGN R&D CENTERS 115 16 2016 2020 (Nationwide increase of 12%) 2020Foreign R&D Centers countries Number of Foreign R&D Centers Foreign R&D Centers: Opened vs. Closed

390 16 378 350 348 354 14

12 9 195 211 179 172 174 5 7 5 115 107 84 93 2 80 3 1

2016 2017 2018 2019 2020 2016 2017 2018 2019 2020

In Israel In Greater Tel Aviv In Tel Aviv # of Closed Tel Aviv - Foreign R&D # of Opened Tel Aviv - Foreign R&D 10 11

TECH COMPANIES

FOREIGN R&D CENTERS IN TEL AVIV 12 13

TECH COMPANIES

SCALEUP COMPANIES SCALEUP COMPANIES IN TEL AVIV REPRESENT 161 6% 54% 60% A CENTRAL PILLAR IN THE LOCAL ECOSYSTEM. Scaleup Of Tel Aviv Of Tel Aviv Of total HOME TO APPROXIMATELY HALF OF THE HUMAN companies tech companies tech talent capital raised CAPITAL EMPLOYED BY TECH COMPANIES IN THE CITY, SCALEUPS SECURED OVER HALF OF ALL INVESTMENTS IN TEL AVIV. IN 2020, APPROXIMATELY 40% OF THE CITY'S SCALEUPS JOINTLY SECURED SOME $4.126 BILLION - AT AN AVERAGE OF $66 MILLION PER DEAL.

Capital Raised by Scaleup companies 4,126 M$ 62 DEALS

2,820 M$ 51 DEALS

1,294 M$ 1,042 M$ 33 DEALS 26 DEALS 617 M$ 19 DEALS

40 32 39 55 66

2016 2017 2018 2019 2020

Capital Raised Average round 14 15

TECH COMPANIES

UNICORNS

RECORD YEAR FOR THE EMERGENCE Armis Security BigID Cato Networks Cybereason Labs 2020 OF UNICORN COMPANIES

14 20 33 BN $ New unicorns total Tel Aviv in accumulated Forter Fundbox Gett Infibond were created based unicorns valuation

Tel Aviv Tech Unicorns by Valuation Year Rapyd Financial IronSource Monday.com MoonActive Technologies

1 0 3 2016 2017 2018 Redis Labs REE Automotive Riskified Sentinel Labs

10 14 2019 2020

SimilarWeb Snyk Trax Solutions Retail WalkMe A unicorn is a privately-held startup company valued at over $1 billion, categorized according to the year of its $1 billion valuation A unicorn will lose its status if its valuation decreases, if it is acquired or merges with another company 16 17

TALENT

EMPLOYEES IN TECH COMPANIES

135 65% Number of tech Accelerators Tel Aviv residents employees in & incubators proceed to higher Israel in Tel Aviv education

87,480 Tel Aviv tech employees account for 20% of tech employees in Israel TEL AVIV ENJOYS A HIGHLY EDUCATED AND SKILLED TALENT POOL WITH A “PAY IT FORWARD” 10,070 21,515 46,985 8,910 CULTURE, IN WHICH SUCCESSFUL Startup Prescale Scaleup Foreign R&D ENTREPRENEURS FREQUENTLY MENTOR AND SUPPORT THE In Tel Aviv In Israel YOUNGER GENERATION.

Curtsy of SOSA, a business networking company in Tel Aviv 18 19

CLUSTERS

AI leads with number and value of fundraising rounds, followed by FROM TO Cybersecurity. Cybersecurity with its $41M average round was STARTUP CITY DEEP TECH CAPITAL 70%higher than the next highest cluster - Big Data with its average round $24M 1 ARTIFICIAL 2 3 4 5 6 INTELLIGENCE FINTECH BIG DATA SAAS IOT CYBERSECURITY 714 291 235 230 191 187 companies companies companies companies companies companies 1,992 872 854 8 3,150 2,983 $M exits value $M exits value $M exits value $M exits value $M exits value $M exits value 3,024 1,068 1,175 918 1,193 2,448 $M capital raised $M capital raised $M capital raised $M capital raised $M capital raised $M capital raised 159 54 49 62 52 59 capital raised in deals capital raised in deals capital raised in deals capital raised in deals capital raised in deals capital raised in deals 7 8 9 10 ADTECH RETAILTECH BLOCKCHAIN AUTOMOTIVE 144 125 125 103 companies companies companies companies 117 24 2 23 $M exits value $M exits value $M exits value $M exits value 51 409 137 314 $M capital raised $M capital raised $M capital raised $M capital raised * Clusters appear by number of companies 9 25 10 20 * A company may be capital raised in deals capital raised in deals capital raised in deals capital raised in deals included in more than one cluster 20 21

INVESTORS

TEL AVIV BASED INVESTORS GROWTH BETWEEN 2016-2020

26 72 34 44% 70% 89% 2016 79 in investors in Venture Capital in VC funds 67 54 Management Company 28 75 34 2017 94 77 54 31 80 34 2018 111 88 54 32 85 36 2019 129 98 55 33 87 2020 37 149 114 57

Angel Club / Group VC Fund Investment Company Venture Capital Management Company Private Equity Fund Others Photo Kotliar by Ilia 22 23

INVESTORS

FOREIGN & ISRAELI INVESTORS INVESTORS IN TEL AVIV COMPANIES

717 53% coming from 470 68% of investors in Tel Aviv 35 INCREASE IN NUMBER OF companies are foreign investors countries INVESTORS IN TEL AVIV 2016 2020 TECH COMPANIES

Number Of Foreign vs Israeli Investors Number of Investors from Leading Regions that Invested in Tel Aviv Companies

9 215 227 29 203 32% canada UK 19 184 19 144 475 490 301 Germany 443 68% US China 326 359 17 japan 18 SINGAPORE

2016 2017 2018 2019 2020

Foreign Investors Israeli Investors *Only straight equity deals included 78 investors from 28 other countries 24 25

INVESTORS

FOREIGN & ISRAELI INVESTMENTS INVESTMENTS INCREASE BETWEEN 2016-2020

Foreign vs Israeli Investments - in Tel Aviv Tech Companies* 62% 69% 51% In Tel Aviv In foreign In Israeli companies investments investments 3,882 M$ 857 DEALS

3,011 M$ 755 DEALS

1,826 M$ 1,849 M$ 674 DEALS 485 DEALS

1,196 M$ 1,034 M$ 1,163 M$ 1,156 M$ 507 DEALS 476 DEALS 491 DEALS 538 DEALS

567 M$ 451 M$ 408 DEALS 321 DEALS

2016 2017 2018 2019 2020

Foreign Investors Israeli Investors *Only straight equity deals included

Curtsy of Panthera, Coworking space for women entrepreneurs in Tel Aviv 26 27

CAPITAL RAISED

34% 2020 RECORD YEAR IN CAPITAL RAISED 6,839 M$ 5,089 M$ 48% of capital raised TOTAL CAPITAL RAISED THE AVERAGE ROUND 2019 2020

GROWTH IN Capital Raised in Tel Aviv 6,839 M$ X3 IN 3 YEARS CAPITAL RAISED Capital Raised in Israel 2017-2020

Tel Aviv Tech Capital Raised 2016-2020 Israel Tech Capital Raised 2016-2020 6,839 M$ 14,231 M$ 416 DEALS 966 DEALS

5,089 M$ 10,121 M$ 488 DEALS 1,122 DEALS 8,197 M$ 3,471 M$ 1,220 DEALS 492 DEALS 6,420 M$ 5,767 M$ 1,110 DEALS 2,349 M$ 1,059 DEALS 385 DEALS 2,159 M$ 425 DEALS

6.1 5.1 7.1 10.4 16.4

2016 2017 2018 2019 2020 2016 2017 2018 2019 2020

Total Tel Aviv # of Deals in Tel Aviv Average round Total Israel $M # of Deals in Israel 28 29

CAPITAL RAISED

CAPITAL RAISED BY STAGE In line with the maturity of the ecosystem, 60% of capital was invested in scaleup companies, 30% in pre-scale companies, and 10% in early stage companies in 2020

SEED INITIAL 2,099 M$ 159 DEALS REVENUES 1,531 M$ 1,361 M$ 141 DEALS 929 M$ 146 DEALS 687 M$ 121 DEALS 92 DEALS 204 M$ 262 M$ 295 M$ 299 M$ 166 M$ 236 DEALS 211 DEALS 185 DEALS 207 DEALS 139 DEALS

2016 2017 2018 2019 2020 2016 2017 2018 2019 2020

4,126 M$ 62 DEALS

2,820 M$ 51 DEALS REVENUE R&D GROWTH 1,294 M$ 1,042 M$ 33 DEALS 26 DEALS 617 M$ 417 M$ 521 M$ 439 M$ 448 M$ 351 M$ 77 DEALS 19 DEALS 82 DEALS 78 DEALS 85 DEALS 56 DEALS

2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 30 31

EXITS

x5 4,428 M$ RECORD YEAR OF EXITS 2020 883 M$ 46% of total TOTAL EXIT VALUE 2016 2020 exit value IOT 3 EXITS GROWTH IN Capital Raised in Tel Aviv 4,428 M$ AVERAGING $ 1 BN EXIT VALUE Capital Raised in Israel

Tel Aviv Tech Exits 2016-2020 Israel Tech Exits 2016-2020

23,858 M$ 4,428 M$ 146 DEALS 53 DEALS 22,155 M$ 3,961 M$ 155 DEALS 38 DEALS 3,515 M$ 65 DEALS

12,678 M$ 2,228 M$ 128 DEALS 48 DEALS 10,036 M$ 9,609 M$ 133 DEALS 123 DEALS

883M$ 36 DEALS

2016 2017 2018 2019 2020 2016 2017 2018 2019 2020

Total Tel Aviv $M # of Deals in Tel Aviv Total Israel $M # of Deals in Israel 32 33

EXITS

IPO LARGEST TEL AVIV EXITS 2020

exits by IPO at world-leading ACQUIRING COMPANY EXIT $M ACQUIRED COMPANY 2020 4 stock exchanges

Advent International ForeScout Technologies Inc. Tel Aviv Tech Exits by Type 2016-2020 1,600M$ 3,961 M$ 3,906 M$ 38 DEALS 47 DEALS 3,376 M$ 60 DEALS CapitalG / Insight Partners Armis Security

1,100M$

2,104 M$ 47 DEALS

NetApp Spotinst Ltd.

883 M$ 450M$ 36 DEALS 137 M$ 518 M$ 4 DEALS 4 DEALS 124 M$ 2 M$ 4 M$ IPO at NYSE 1 DEAL 2 DEALS 1 DEAL NYSE Lemonade 2016 2017 2018 2019 2020 319M$ Acquired $M IPO $M Merged $M 34 35

DEFINITIONS & METHODOLOGY

1. The data in the report is updated to January 15th, 2021 7. Company Stage: Each Company is classified according to one of four development stages as follows: 2. Definition of Tel Aviv tech company: The Headquarters of the company located in Tel Aviv The company manage a branch office in Tel Aviv Seed Early stage of product development and fundraising 3. Definition of Greater Tel Aviv company: The Headquarters of the company located in one of the and towns Startup R&D Improvement of the product/process/service nearby Tel Aviv The company manage a branch office in one of the cities and their adaptation to market needs and towns nearby Tel Aviv List of cities and towns included in Greater Tel Aviv: Azur, Bat-Yam, , Ganey Tikva, Givat Savion, Initial A company whose Yearly revenue does not Growth exceed $10M

Givat Shmuel, Givatayim, , , Kibbutz Glil-Yam, Kiron, Pre-Scale , , Petach Tikva, Ramat Efal, , Ramat Hasharon, Savyon-Gani Yehuda, Yehud Revenue A company whose Yearly revenue exceeds $10M Growth AND has a double-digit annual growth rate Scaleup 4. Definition of Tel Aviv investors: The Headquarters of the investors located in Tel Aviv The investor manages a branch office in Tel Aviv

5. The companies included in the report tagged as high-tech companies in IVC’s database

6. The tech cluster’s ranking based on the capital value of investments

2020 Photo by Lior Golbary DATA AND CENTER FOR ECONOMIC INSIGHTS AND SOCIAL RESEARCH

Produced by Tel Aviv Global & Tourism, May 2021 | Data by IVC research center | Graphic design by Studio Touch