In 2022, we first mapped out data and AI infrastructure investment trends in the Israeli ecosystem. Since that time, we’ve seen a notable shift from pure data infrastructure companies to a rising batch of AI infrastructure solutions. At the same time, existing data infrastructure and analytics companies have implemented AI into their products and shifted to serve the rapidly emerging AI market. We’ve seen Israeli data and AI infrastructure companies rise to the occasion, continuing to punch well above their weight.
Israeli tech has continued to demonstrate impressive resilience over the past year with the Israeli data and AI ecosystem demonstrating exceptional growth in the first half of 2024. Even in the face of adversity, Israeli data companies managed to raise substantial capital and record some significant exits.
Several Large Deals Carried the Market in the first half of the year
H1 2024 witnessed a staggering 267.9% increase in total disclosed capital raised compared to the same period in 2023. While the number of deals decreased from 17 to 6, the total capital raised jumped from $81 million to $298 million. This shift indicates a trend towards larger, more strategic investments, with the average deal size increasing from $4.8 million to $50 million. Notable funding rounds in H1 2024 included Aerospike, which raised $114 million in a Series E round on April 4th, and WEKA, which secured $140 million in a Series E round on May 15th. These investments reflect the confidence investors have in the Israeli Data Ecosystem and its ability to scale with larger rounds.
Nvidia Announced Acquisitions totalling $1B
The ecosystem also saw impressive exits, highlighting the global presence of Israeli data companies. Run.AI was acquired by NVIDIA for $700 million on March 17th marking the second-largest data exit globally, alongside Tabular during H1 2024. Other notable exits included Deci, acquired by NVIDIA for $300 million on May 2nd, and Qwak, acquired by JFrog for $230 million on June 26th (1). Out of 438 exits in the data ecosystem in H1 2024, these companies’ exits were among the top 15 largest deals.
Safe Superintelligence and Nvidia Recruiting Israeli AI Talent
An additional major development for the Israeli ecosystem was the launch of Safe Superintelligence (SSI) by Ilya Sutskever, co-founder of OpenAI and a leading figure in artificial intelligence. SSI is set to have a major presence in Tel Aviv; their establishment not only highlights the rich talent pool already existing in Israel but also introduces additional advanced AI research and development to the region alongside AI21 Labs. The arrival of SSI is poised to drive innovation and further solidify Israel’s position as a global hub for advanced technology and AI research.
Strong AI Talent Density Pushing the Ecosystem Forward
Israel has produced the world’s highest concentration of AI talent with 1.13% of its workforce specializing in this field. This expertise translated into Israeli teams developing four notable machine learning models in 2023 – a number that tied for fifth highest globally. Israel ranked fifth worldwide in AI skill penetration rate from 2015 to 2023. The nation’s innovation ecosystem continues to thrive with $1.52 billion in private AI investments and 43 new AI companies created in 2023. These achievements highlight Israel’s position as a global AI powerhouse (2). Looking ahead, Israel is on track to cement its status as a top-tier global hub for AI innovation and development.
Looking Ahead
The trend towards larger funding rounds, coupled with high-value exits and strategic developments like SSI, paints a promising picture for the future of the Israeli ecosystem. As we move into the second half of 2024 and beyond, the Israeli data and AI ecosystem is well-positioned to maintain its upward trajectory.
Click here to explore the global data ecosystem with Team8’s data market map.
