Is the Israeli high-tech bubble about to burst?

On the one hand: There were 55 exits in Israeli high tech from IPOs and mergers and acquisitions totaling $3.5 billion in 2016, down 67%, compared with $10.69 billion in 2015. The number of deals also fell from 70 in 2014 and 2015, according to a report of exits by the PwC Israel accounting and consultancy firm.

However: 2016 was a strong year for Israeli technology companies in raising capital: $4 billion was raised in the first three quarters of the year. $200 million was raised in December and $620 million in the fourth quarter, while $4.3 billion was raised in 2015.

All the anecdotal evidence points to 2017 being another strong year for the Israeli high-tech scene, the land of the start-up nation.

• Despite upward pressures from USA and elsewhere, the Bank of Interest is not looking to raise interest rates in 2017, and thus making it easier to secure funding.
• Corporation tax is to be lowered to 24%
• A new Innovation Authority is to be set up, headed by the former boss of Apple Israel, Aharon Aharon.

On the ground, there is a tremendous amount of activity. For example, last month HP canned a project overnight, which led to 200 or so redundancies in Israel. Many of these people are already well on the way to securing new positions. In another scenario, I know of one CEO who is so short of software engineers that he is considering the possibility of encouraging professionals to relocate from Western Europe.

The web is full of blogs pointing out Israeli high-tech companies to follow in 2017. And this follows on the success of 2016. As I have mentioned before, a key sector to watch is the support for the global manufacturers in the car industry.

And the investments themselves have not ceased over the Christmas holiday period.

1. A US$2.5 billion dollar Chinese investment company, Yiling, has just sunk US$20 million into HealthWatch, a smart Israeli clothing outfit.
2. Snapchat has made its first venture into Israel, picking up the augmented reality (AR) start-up Cimagine Media for about US$40 million.
3. Qoros has announced that it will set up a smart car r&d centre in Israel, adding to the approximately 350 other conglomerates present in the Holy Land.

So, yes, there may have been fewer large exits in 2016, emerging from Israel. However, the growth projected for high-tech in 2017 is encouraging yet even more overseas players to join in the fun. Happy New Year!