Israel’s “Startup Nation” bona fides have been firmly established over the past decade. With a population of approximately nine million and home to some 6,500 startups, Israel has the largest number of startups per capita in the world.
In the past five years or so, there’s been a marked shift toward a “Scale-Up Nation” moniker, corresponding with larger-scale investments in companies pursuing growth and the proliferation of “unicorns” – privately-held companies that reach a valuation of $1 billion or more.
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The term “unicorn” to define such companies was first coined by venture capitalist Aileen Lee in 2013. Originally used to portray the rarity of such companies, there are over 600 unicorns globally, including more than 60 that have been founded by Israelis.
In fact, nine Israeli-founded, private companies have joined the unicorn club since January 2021 alone, cementing Israel’s place as a force in the world of technology in both relative and absolute terms. For reference, 15 Israeli-founded companies became unicorns in all of 2020, and 12 joined the unicorn club in 2019.
In addition, unicorns aside, Israeli companies are drawing record investments and growing at impressive speeds, with multiple firms successfully raising funding rounds of over $100 million (dubbed mega-rounds) at a time. In a single day this month, one Israeli company – retail data firm Trax – raised over half a billion dollars. Another company, insurtech outfit Next Insurance, doubled its valuation to $4 billion in six months, raising two rounds of $250 million in six months.
Yet another company, Melio, became valued at over $1 billion in just three years after raising over $250 million in two rounds in six months to fuel its digital payments platform. And cloud security startup Wiz shot to unicorn status in just over a year, securing two founding rounds of over $100 in three months.
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There’s also been a boom this year in companies pursuing mergers through blank-check SPACs (special purpose acquisition company) to bypass traditional IPOs and go public at skyrocketing valuations. These include Innoviz ($1.4 billion valuation), eToro ($10.4 billion valuation), WeWork ($9 billion valuation), Cellebrite ($2.4 billion), Payoneer ($3.3 billion valuation), REE automotive ($3.1 billion valuation), ironSource ($11.1 billion valuation), and Otonomo ($1.4 billion valuation).
In honor of Israel’s 73rd Independence Day, NoCamels compiled a list of some of Israel’s most successful and prominent enterprises that became unicorns in the first quarter of 2021 (Q1 2021), highlighting the country’s booming and ever-growing high-tech sector.
Unicorns – 9 Israeli companies join $1B club in Q1 2021
In January, Ra’anana-based Israeli telecommunications startup DriveNets announced the completion of a $208 Series B funding round at a valuation of more than $1 billion.
Founded in 2015, DriveNets aims to revolutionize the telecom industry by helping Communications Service Providers (CSPs) handle increased demand while remaining profitable through building agile networks and detaching growth from cost. DriveNet’s flagship product, Network Cloud, is a cloud-native software “that turns the physical network into a shared resource supporting multiple services.”
DriveNets emerged from stealth mode in 2019 and works with service providers and cloud infrastructure services worldwide.
Cloud services and recovery company OwnBackup raised $167.5 million at a $1.4 billion valuation in January. Founded in 2012, OwnBackup recovers lost and corrupted data caused by human errors, malicious intent, integration errors and rogue applications.
The company is the top-ranked backup and restore ISV on the Salesforce.com AppExchange and was selected as a Gartner 2015 “Cool Vendor” in Business Continuity and IT Disaster Recovery.
January 2021 was a big month for unicorns and K Health, the Israeli AI-powered telemedicine health platform, joined the club at that time, announcing a $132 million Series E round at a valuation of $1.4 billion.
Founded in 2016 by former Wix CEO Allon Bloch, K Health leverages AI and anonymized reports to diagnose health issues. The free app relies on a unique database that includes physician notes, lab results, treatments, medical histories and prescriptions to provide accurate, data-driven information about a user’s symptoms and health. The data was collected by Maccabi, Israel’s second-largest HMO, over a 20-year period.
Israeli fintech startup Melio, the developer of a digital payment platform focused on US small and medium businesses, raised $110 million in funding, the company announced in January, sending its valuation soaring to $1.335 billion in just three years since it was established.
Melio offers easy account payables services, simplifying the paperwork process for small businesses, and allowing them to pay vendors with credit or debit cards.
Using the Melio platform, clients add invoice details for a vendor manually and they can then manage and schedule payments using their method of choice.
In March 2021, Yotpo, a leading eCommerce and content marketing platform that helps retail brands generate online revenue growth, announced the closure of a $230 million Series F funding round at a valuation of $1.4 billion.
Yotpo works with brands such as Patagonia, Steve Madden, and GoPro to collect customer-generated content including reviews, ratings, photos, and Q&A to build brand awareness, better customer experiences, and strong brand-customer relationships. The platform provides marketers with a unique set of customer behavior data and predictive analytics, and integrates with other tools such as Shopify, and Salesforce. In recent years, Yotpo added loyalty, referrals, and SMS marketing to its offerings through a series of acquisitions (Swell Rewards in 2018 and SMSbump in 2020).
Also in March, Israeli cybersecurity company Orca Security raised $210 million in a Series C round led by CapitalG (formerly Google Capital), the independent growth fund by Alphabet (Google’s parent company), and Redpoint Ventures. This drove Orca’s valuation to $1.2 billion.
Orca Security was founded in 2019 by former Check Point Software CTO Avi Shua and former Check Point executive Gil Geron. The startup says it created the first and only cloud security solution that can find vulnerabilities, malware, misconfigurations, leaked and weak passwords, lateral movement risk, and high-risk data without agents or per asset integrations, within minutes.
Aqua Security announced a $135 million Series E financing round in March 2021 at a valuation of over $1 billion. Founded in 2015, Aqua Security offers a cloud-native security solution that covers the full life cycle of products from development to production.
Just three months after emerging from stealth mode and raising $100 million, Israeli startup Wiz closed on a second funding round of $130 million in March 2021 at a company valuation of $1.7 billion.
Wiz was founded in January 2020 by Assaf Rappaport, the former general manager of R&D at Microsoft Israel, Yinon Costica, Ami Luttwak, and Roy Reznik, the same team that founded cloud security firm Adallom (sold to Microsoft in 2015) and Microsoft’s Cloud Security Group.
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The startup was set up to help companies secure their cloud infrastructure at scale through a contextual risk assessment and clear action plan. Wiz says its unique architecture allows for seamless scanning of a given organization’s entire cloud environment across all compute types and cloud services for vulnerabilities, configuration, network, and identity issues without agents or sidecars.
Papaya Global, a Tel Aviv cloud-based payroll and payment management platform, raised $100 million in a Series C funding round, the company announced in March, bringing its valuation to over $1 billion.
Papaya Global was founded by Eynat Guez, Ruben Drong, and Ofer Herman in 2016 with a vision to reinvent the global payroll, payment, and HR industries. The company offers an automated, cloud-based SaaS platform that provides a comprehensive solution – from onboarding to ongoing management and cross-border payments – and that meets privacy standards and security regulations (GDPR, ISO, SOC).
Papaya says its services are used in over 140 countries.