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The Israeli Fintech Sector
Q1 2023 Report​ by Start-Up Nation Central​



An analysis of private and public investments, M&A activity, and IPOs by period and subsectors in the rapidly evolving Fintech landscape.

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Summary of Insights

A Guest Commentary by Viola Ventures, based on data collected by Start-Up Nation Finder.

In 2023, the Fintech industry is facing new realities. The higher cost of capital jeopardizes business models that relied on cheap cash. Consumer/business credit models are therefore suffering from higher defaults and lower disposable income/spending.

Q1 2023 was de-facto a flat QoQ in terms of number of deals and volume, adjusted for the $250M eToro deal. This represents an ~80% decrease from the peak of the market in H2 2022, consistent with the global trend and other verticals.​

One of the strengths of the Israeli fintech ecosystem is its diversification across subsectors and the agility of builders to pursue new innovative domains. While the bar is higher and the market more selective, we remain excited about the future - mainly around gaps in legacy industries that can be disrupted by leveraging financial services (vertical fintech/embedded finance) and the era of AI-everywhere that is starting to demonstrate a material impact across the financial innovation stack. ​


Omry Ben David, General Partner, Viola Ventures​

Content

Israeli Fintech Landscape

Within the Fintech sector, companies that have released products make up the majority (78%), and small companies with 1-10 employees make up a significant portion (41%). ​

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49

Hubs

domain
410

Companies

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70

Active Investors since 2021

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14

Investment Rounds
Q1 2023

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Q4 2022

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$418M

Amount of Equity Invested
Q1 2023

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Q4 2022

Fintech Sector Breakdown​

Interestingly, the size of the subsectors is not strongly associated with the level of investment they receive. Although the Trading and Investing subsector has the highest number of companies, it ranks only 5th in terms of historical levels of investment. On the other hand, the payment and money transfer subsector dominates the investment landscape.​

​Here are the full lists of Israeli companies with solutions specifically for: Trading And Investing, Payment Money Transfer, Lending Financing, Personal Finance Management, Real Estate Tech, and Insurtech.




Private Funding in Q1 2023​

Fintech Investments over Time ​

The level of Fintech activity has decreased from its peak in 2021-2022 with fewer deals compared to historical trends.​

Fintech Top Investments​

Fintech Active Investors​ in Q1 2023

A full list of all investors with investments in Q1 can be found here.

* Top Investors are selected based on number of rounds and rounds value.​

* Companies may be classified under multiple subsectors

Fintech Exits​

In the Fintech sector, the impact of the drought in M&A and IPO markets is apparent,
with no exits recorded during Q1 2023, which was last observed prior to 2018.​

Finder's Report Analysis

This report was composed by Yariv Lotan, VP of Digital Products, Development and Data, and Einat Ben-Ari, Head of Data and BI | hello@sncentral.org


Start-Up Nation Central is a non-profit organization that connects Israeli innovation to the world to help international entities solve global challenges. Inspired by the book Start-Up Nation and immersed in the Israeli technology ecosystem, we provide a platform that nurtures business growth and generates partnerships to strengthen Israel’s economy and society.

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Methodology Notes​


  • The report is based on the START-UP NATION FINDER database.​

  • It is a snapshot of Q1 2023 activity as of April 16, 2023.​

  • Q1 2023 figures might further revise in the future as the activity in this quarter continues to be revealed. In particular, funding rounds in early-stage startups are usually published with a delay.​

  • The definition for companies and investors can be found in the FINDER Glossary under the terms “Companies” and “Investors”, respectively.​

  • The report includes only companies that their primary sector is classified as Fintech. ​

  • Companies may be classified into multiple Fintech subsectors.​

  • Active Investors are defined as investors with at least 3 investment rounds since 2021.​

  • Investments Types included: Pre Seed, Seed, A, B, C, D, E, F, G Rounds, Convertible Debt, Post-IPO Equity Funding, Private Equity, Undisclosed Round. Excluded: Crowdfunding, Equity Crowdfunding , Debt Financing and Grants.

  • Links are dynamic and provide current snapshots, so the results might not exactly match the figures in the report.


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