A report published by Israeli media unveiled that the local fintech sector saw a significant rise in 2021. The Times of Israel noted that investments in startups and companies of the industry hit $4.5 billion over the year, citing a report from Viola Group, an Israeli investment firm.
The surge implied a 136% increase from 2020, where fintech startups and firms experienced $1.9 billion in funding.
Among the companies that raised significant funding in 2021 were Melio, which developed a payment platform for small and medium-sized businesses, with a Series D round of $250 million, as well as Tipalti, which developed a payments and compliance software platform with a $270 million investment and HoneyBook, which raised $250 million in a Series E round in late 2021 as well as $155 million earlier.
Fintech funding accounted for 17% of the total investments in Israeli tech companies, which is the highest figure in six years, with single investments over $100 million, driving ‘the lion’s share of growth in the fintech space’, the authors write. Moreover, over $3 billion of the total funding was raised in mega rounds in 2021.
Investments by Segments
Fintech companies accounted for 23% of all IPOs and SPAC mergers for Israeli companies in 2020 and 2021 combined. Among them are Payoneer, a payment processing company that went public on the New York Stock Exchange last summer, Riskified, an e-commerce fraud prevention company that went public on the New York Stock Exchange in July, and insurtech companies, Hippo and Lemonade.
The fastest-growing fintech segments, according to the report, were insurtech, payments, trading and investing, as well as lending and financing.
Despite this, cryptocurrency and blockchain-based security technologies were the segments with the highest traction. However, these emerging fields inspire reluctance in traditional investors due to the lack of transparency and regulation.
