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Unlocking Growth in 2023

State of the Israeli B2C Ecosystem

Navigating challenges, expanding opportunities: Insights and trends from Israel's thriving consumer-facing industry. A comprehensive review of the B2C ecosystem's performance and future prospects.cking Grpow

report by Meta (Facebook)


Opening notes

From a branch of the startup nation that virtually didn't exist 15 years ago, through to the first seeds planted by gaming companies, to a thriving industry riding on the waves of rising digital consumption - the Israeli B2C industry is nothing short of a success story. Reaching roughly 30% of the tech industry today, B2C is no longer a foreign concept to Israeli entrepreneurs, product experts, marketeers and investors. In fact, it may be the industry that finds the right opportunities for growth even in a time of crisis.

I know it's not trivial to talk about opportunities during this period, but as the Disruption Nation - this is what we do best. In times when reality is perfect, we as Israelis often can't find the cracks through which to break in and do something different. Instead, we're are at our best when reality requires innovative and out of the box solutions. When we have to break the rules and re-build, we have the ability to bring the same creativity we put into our products and technologies to cracking efficiencies, org structure and financial models. As scarcity drives innovation, this challenging period might actually be an opportunity to shine.

So for this upcoming period, our challenges are around maintaining profitability and efficiency, while continuing to innovate and drive growth. But if there’s an industry that can work through this delicate balance, it's the Israeli B2C industry.

In this report, you'll find our perspective on the opportunities that lie ahead, across all verticals, and the knowledge and tools you and your companies will need to seize them. As a sworn optimist, I truly believe this global economic crisis will make all of us better, stronger and more resilient and, despite all of its challenges - it will be a moment of growth.

Adi Soffer Teeni, VP & GM Israel

Despite a turbulent year, Israeli consumer-first startups showcased strong resilience, both in growth and profitability.

US GDP growth returned to a positive outlook in 2022: 3.2% in Q3 and 2.9%
in Q4.

In Q4 ‘22, the number of people daily using Facebook, Instagram and WhatsApp was at its highest ever.


Non-VC backed companies have the opportunity to win market share

Read chapter →

Digital Health

We’re seeing more bootstrapped digital health brands emerge

Read chapter →

Entertainment and Media

Publishers are looking to optimize revenue from programmatic ads

Read chapter →

Consumer Tech

Product diversification and data-driven decision making is increasing

Read chapter →


AI and the metaverse are fueling the Israeli ecosystem with innovative ideas

Read chapter →


Challenging macroeconomic conditions have pushed the industry towards a more conservative marketing approach

Read chapter →

Self-Serve B2B SaaS

Primary KPIs are now customer acquisition cost and net dollar retention

Read chapter →

Unlocking the Creative Machine

A recent Meta survey found that top performing advertisers create 50-70 new ads a week

Read chapter →

Unlocking the Creators Economy

93% of Israeli B2C startups leveraged creator marketing in 2022

Read chapter →

Unlocking the Reels Opportunity

Reels is now seeing 140 billion plays across Facebook and Instagram every day

Read chapter →

Unlocking the Future: Metaverse

If metaverse adoption began in 2022, then its estimated total contribution to global GDP in 2031 would be $3.01 trillion

Read chapter →

The evolution of consumer-first digital companies in Israel

The landscape of consumer-first digital companies scaled massively over the last few years.

From a startup nation that mainly focused on B2B and mostly B2E (such as cybersecurity), we’ve seen a growing share of global consumer focused brands out of Israel.

2023 is shaping up to become a year of sobering, in which companies and investors alike are focusing on healthy unit economics, agile operations and ROA (instead of CAC) based growth marketing spend.

Ron Tamir
Founding Partner, Kaedan Capital


B2C landscape in 2023: Fast facts


Out of ±9,000 startups in the startup nation, consumer-first startups accounted for more than 25% of the ecosystem with over 2,500 companies. Source: IVC


In 2022, 35% of newly founded startups were consumer-first companies (up from 30% during 2018-2021). Source: IVC


In 2022, consumer-first companies accounted for 36% of unicorns and 24% of exited companies (public and acquired). Source: IVC


In 2022, B2C companies raised $1.7 billion (80% growth vs. 5 years ago) in an average deal size of $8 million. This accounted for ±10% of funds raised in Israel ±18% of deals. Source: IVC


Self-serve B2SMB companies raised $2 billion in 2022 with an average deal size of $23 million and accounted for 11% of deals in 2022. Source: IVC

Consumer-first verticals in Israel: Vertical map

10 years ago there were a few large consumer-first startups in Israel, mainly just gaming companies. Over the last few years, as this landscape evolved, new industries emerged as seen in the verticals map below.

Digital Health



Entertainment & Media


B2B SaaS

Consumer Tech



Estimated industry size


Estimated industry size


Estimated industry size


Estimated industry size


Estimated industry size


Estimated industry size


Estimated industry size

“Every year should be the year of efficient growth, not just 2023. However, just as overspending to buy growth at all costs was a mistake in 2020 and 2021, so is underinvesting in the down markets of 2022 and 2023. The strong get stronger and the weak get weaker in tough markets. Now is the time to take market share and now is the time to invest in efficient growth.”

Alan Feld
Co-Founder and Managing Partner, Vintage Investment Partners


Our annual ecosystem survey

At the end of 2022, we ran a survey [1]. We wanted to dig deeper into the latest trends from 2022 and the ecosystem sentiment towards 2023.

Despite a turbulent year in 2022, consumer-first startups in Israel showcased strong resilience, both in growth and profitability:

  • 80%

    of companies surveyed reported positive growth YoY, despite the turbulence of 2022 and a high base of 2021.

  • 66%

    of surveyed companies reported growth of over 20% YoY.

  • 82%

    of companies that reported YoY revenue growth, also reported higher profits vs. 2021.

  • 40%

    of companies reported higher profits by more than 20% YoY vs. 2021

2023: The year of efficiency

While in 2020-2021 growth was the name of the game, with digital transformation that occurred given the tailwinds behind COVID-19, 2022 brought a wind of change, with companies shifting from a growth mindset to profitability focus.

Only 36% increased marketing budgets during 2022 vs. 2021.

For 2023, only half of the companies reported they will focus on growth:

Efficiency improvements will be based on a mix of measures:

Reducing customer acquisition cost (CAC) is top of mind - 63% of companies mentioned they’re worried about CAC:

Over the following chapters, we'll focus on the main opportunities to drive efficiencies in order to balance scale and growth with profitability.

“In 2023 and continuing through the next few decades, Israeli tech companies will aspire to earn a spot on the distinguished Fortune 500 global enterprise list. These companies will focus on sustainable growth with a positive impact on our society and environment. They will aim to scale bigger than before – exceeding $1 billion, $5 billion, and even $10 billion in annual revenues – making Israel one of the most vibrant and attractive innovation economies on Earth.”

Chemi Peres
Managing Partner and Co-Founder, Pitango


Funding trends