2020 was a year of many, many, many ups and downs (2021 has proven to be full of changes so far as well). A LOT changed around the world.

Many businesses failed in the past year, but some startups thrived.

I’m excited to write about many of the incredibly impressive startups in Israel that you need to watch in 2021. These startups not only survived the pandemic but thrived in it, managing to grow incredibly quickly by meeting and exceeding customer needs.

Other Startups to Watch in 2021:

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Israel’s Startup Environment

As the COVID pandemic raged around the world in 2020, online traffic and activity increased dramatically. Everyone was stuck at home, working from home, learning from home, and living life (almost exclusively) at home.

With this rapid uptick in online activity, one of Israel’s most well known industries, Cybersecurity, was poised to benefit substantially.

In 2020, the average Cybersecurity seed funding round in Israel increased to $5.2MM and the number of new startups in the industry raising funding stayed relatively consistent year over year at 64.

Several cyber companies raised massive rounds of funding including SentinelOne ($467MM), Snyk ($350MM), and CATO ($207MM).

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Source: YL Ventures

In 2020, overall funding across all rounds for cybersecurity companies in Israel grew 97% from $1.4B to $2.7B (!)

Interesting, 2020 also saw more serial entrepreneurs founding new companies in the sector than ever before (36%). With investors largely gun-shy to invest in brand new founders during a pandemic, these serial entrepreneurs likely saw an opportunity to jump in and build on their past successes.

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Overall, in 2020, Israeli tech startups saw 578 investments (+14% YoY) and an increase in total funding (+28% YoY) to $9.9B.

Howver, M&A activity was down significantly (-46% YoY). Instead of M&A deals, Israeli startups generally opted for public offerings.

In 2020, Israeli tech companies raised $6.5B in public offerings, by far the highest amount in the past 6 years.

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What were the biggest funding rounds in 2020?

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Not only did the number of investments increase, but also the average investment round sizes increased dramatically in 2020 from ~$15.4MM to ~$17.2MM.

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But the picture wasn’t all up-and-to-the-right in 2020.

Seed rounds suffered significantly Q1 — Q3 2020 as most investors preferred to wait on the sidelines instead of invest in largely unproven startups.

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As investors focused on doubling down on existing bets and “safer” later-stage bets, the proportion of mega-deals (>$100MM) also grew dramatically in Israel in 2020 to 20 and the number of deals over $30MM grew even faster from 65 to 96!

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What Israeli startups exited in 2020?

Top M+A Activity

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Top IPOs

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Despite a global pandemic, it was a record year in many ways for Israeli startups and the tech sector. The country is poised to continue its rapid growth in 2021.

Let’s dive in and look at some of the Israeli companies you need to watch!

Sources: TechCrunchIVC-Online

How Did I Choose This Top 10?

For this list of Israeli startups to watch in 2021, I focused on industries that demonstrated rapid growth and adaptability in 2020 and are poised to continue that growth into 2021 (Cyber for example).

Additionaly, I’ve identified several emerging AI-first companies for this year’s list. Israel has demonstrated (for many years now) strong competence and strong personal network effects in this field.

The Top 10 Israeli Startups to Watch

  1. ActiveFenceMalicious Content Detection at Scale

It wouldn’t be a post about Israeli startups if I didn’t begin in the cybersecurity industry, now would it?

But in all seriousness, it’s hard to argue that what ActiveFence has focused their mission on isn’t crucial in today’s world. The company has built technology that detects malicious content online, at scale.

They support both technology platforms (think social networks) and government agencies as customers as they fight terror, hate speech and other harmful activities online and offline.

With the recent crackdowns/bannings on highly visible platforms like Facebook, YouTube, and Twitter, bad actors have fled to less visible platforms, making this mission a tall order for ActiveFence, but I’m hopeful they’ll succeed.

Offices In: Binyamina, Israel

Total Funding: Not disclosed

2. HyperguestConnecting Hotel Inventory with Travel Providers

A travel-related company in the middle of the pandemic?! Correct.

Now, with somewhat of a light at the end of the pandemic tunnel, is the time to start identifying the travel companies that will lead the way out of the darkness.

Hyperguest has built a modern, open, and scalable technology layer to connect inventory (hoteliers) to demand (travel providers). There is no cost to hotels that use the platform, hotels have full control over rates and commission, there is no contracting required with the travel provider and hotels have full guest ownership from the moment of booking.

If you aren’t familiar with some of the older-school booking technologies that form the backbone of many hotel booking sites you use today, you may not fully appreciate how big of a deal these details are!

Hyperguest’s biggest challenge will be penetration.

If the company can sign a significant number of hotels and travel providers onto their platform in 2021, they’ll be in a great position to grow rapidly.

Offices In: Netanya, Israel

Total Funding: $5.15MM

3. MDGoAutomated Crash Detection and Claim Processing for Insurers

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MDGo, founded in 2017, is a hardware and software solution for automated crash detection and claim processing for car accidents.

MDGo partners directly with insurers who want to better leverage technology to understand and support their customers. When an accident occurs, the MDGo “Tag” detects it and instantly sends crash data to the insurer, where deep learning networks generate accident analytics, real-time vehicle damage reports, and even injury predictions.

MDGo has been growing quickly and raised an undisclosed Series A round in August 2020, adding to the $4MM Seed round they raised in 2018. I’m excited to see them continue to build partnerships with insurers and roll out more technology in this space in 2021.

Offices In: Haifa, Israel

Total Funding: $4MM

4. SwimmHelping Developers Onboard Faster

Speaking from personal experience, it can often take 2–3 months for developers to fully ramp onto a new codebase. This is an incredibly long amount of time and is very costly as every company I’ve worked at is also dev-constrained!

Swimm helps engineers ramp-up to new codebases faster and easier by keeping documentation and tutorials automatically in sync with code.

Swimm also provides hands on tasks and learning paths for new developers to help them gain experience with particular parts of the codebase, further accelerating ramp time.

I’m incredibly excited by what Swimm is doing and I sincerely hope they and others succeed in this space to help developers around the world get up to speed faster and be able to contribute earlier to their teams!

Offices In: Tel Aviv, Israel

Total Funding: $5.7MM

5. D-IDProtecting You From Facial Recognition

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I’ve written about many facial recognition companies (especially in my “Chinese Startups to Watch” posts), but D-ID is my first facial recognition protection company.

With the rise of largely unregulated facial recognition systems around the world, the D-ID founders recognized significant risks and were determined to take on the challenge by building a solution that restores privacy and protects identities.

D-ID has several products including a “Face Blurring as a Service” solution which is exactly what it sounds like and a “Reenactment Suite” that enables the creation of high-quality, realistic video footage, using any “driver” video to guide the movements, expressions, and speech of a target actor or still photo subject. With this “Reenactment Suite” video creators can further protect the identies of their subjects.

D-ID may be one of the most well known company in the facial recognition protection space, but they will definitely not be the only one for long as consumers look to protect themselves more in 2021.

Offices In: Tel Aviv, Israel

Total Funding: $22.9MM

6. VerbitSmart Captioning and Transcription

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Verbit is highly focused on transcription and captioning. Since their founding in 2017, the company has built API-based solutions for transcriptions, captioning, and translation.

In this industry, it’s all about accuracy and speed and Verbit has demonstrated both, attracting customers like Coursera, Canvas, and many universities. The company also has received 12 patents for its technologies.

Verbit raised a massive $60MM Series C in November 2020 and I’m excited to see Verbit continue to grow rapidly in 2021 and leverage this funding for new product development!

Offices In: Tel Aviv, Israel; Kyiv, Ukraine; New York, NY

Total Funding: $125MM

7. SafebreachBreach and Attack Simulation

Safebreach, founded in 2014, was one of the first companies in the breach and attack simulation sub-industry of Cybersecurity.

The company helps test your existing Cybersecurity infrastructure to identify gaps in protection and to help justify the investments to close those gaps.

The company is a strategic partner of Microsoft, Palo Alto Networks, and IBM and counts PayPal as one of its customers. Early in the pandemic (April 2020), the company also raised a Series C round of $19MM.

The need for Cybersecurity companies has only grown in the past year and I’m excited to see Safebreach continue to help companies protect their data and other assets.

Offices In: Tel Aviv, Israel; Sunnyvale, CA

Total Funding: $53MM

8. GavitiHelping Businesses Get Paid Faster

Founded in 2018, Gaviti is a SaaS company that focuses on receivable collections acceleration.

If you’ve ever worked in or near a finance department for a larger company, you know how annoying it can be to collect payments from customers. It’s often a very low tech process, involving countless calls, emails, negotiations, and disputes.

Gaviti works with big names like Monday.com, EW, and PWC to automate their accounts receivable collection, helping these companies get paid faster and with significantly less stress and manual intervention.

While accounts receivable acceleration may sound unsexy, it can make a massive impact on a company’s ability to scale, on their financial stability, and even on the multiple they command in their funding rounds.

Offices In: Tel Aviv, Israel

Total Funding: Not disclosed

9. MedorionAI and Behavioral Science → Healthcare Predictions and Improvements

Medorion uses a combination of AI and behavioral science to help health insurers better understand member’s behaviors and how they can effectively influence them.

The company is focused on driving people to take action for their own health by increasing engagement and communication between them and their insurance companies.

During COVID, Medorion has been applying their technology to create highly personalized engagement and communication plans targeted at those individuals who are at the highest risk of COVID-19.

The company last raised funding (Seed) in November 2019 and I’m hopeful they’ll be able to capitalize on the massive increase in interest in the medical field we’ve witnessed in the past year and continue to scale and apply their technology.

Offices In: Tel Aviv, Israel

Total Funding: $2.8MM

10. Sensi.ai:Audio-Based AI for Long-Term Care Environments

Pioneers like Amazon, Standard Cognition, and many many others have leveraged cameras and AI to great effect to unlock checkoutless-shopping, facial detection, and anomaly identification.

Sensi.ai has taken a different approach and also focused on a much different use case. The company, founded in 2019, utilizes an audio-only approach to detect falls and other issues in long-term care environments.

The company allows continuous monitoring and reporting to caregivers, families, and agencies without many of the privacy fears of a camera/visual- focused approach. Imagine if your Amazon Echo was able to provide this functionality!

Sensi.ai is still in its early days, but I’m excited by their focus, approach, and the $3MM Seed round they closed in December 2020.

2021 should be a great year for the company!

Offices In: Tel Aviv, Israel

Total Funding: $3.2MM

Honorable Mentions

WiliotBattery Free Bluetooth Tags

Offices In: Tel Aviv, Israel

Total Funding: $89MM

AcrochargeCharge-back Mitigation for eCommerce

Offices In: Tel Aviv, Israel

Total Funding: Not disclosed

XtendImprovingHuman Machine Interactions

Offices In: Tel Aviv, Israel

Total Funding: Not disclosed

What Israeli Startups Did I Miss?

I’m sure I missed quite a few prolific, fast-growing Israeli startups. Let me know which ones on Twitter at @amitch5903!


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