Israeli machine learning, computer vision and artificial intelligence technologies at large have been created and sold dating back to 1998, which can be a testament to the country’s leading position in the global podium for AI development.
A common question circulating the global ecosystem: which country is the strongest in developing AI. Which country is winning the race to Artificial General Intelligence? Since corporations and research groups rarely publish their true secrets and breakthroughs until they’ve covered themselves completely with patents and the like, it’s an unanswerable question, however. What we can observe and infer are the number of the established corporations, startups, students, researchers, patents, research papers and the focus of this post; startup exits.
The number of AI startup exits can be an indicator of a country’s AI development capacity, as measured by the rare risks taken (in the form of acquisitions) by leading technology corporations. In a world where leading technology corporations are pushing the boundaries and facilitating development in the field of Artificial Intelligence, exits can be a very accurate depiction of a country’s collective prowess, especially over time.
This post highlights the vibrant exit market for Israel’s Artificial Intelligence (AI) startups. The startups analyzed include software and hardware offerings, from AI enabling technologies to novel applications of learning technologies. The infographic below depicts an exit timeline of Israeli startups utilizing of developing AI technologies with their associated acquirer and purchase price.
Here’s the top 10 highlights from analysis of the startup exit data:
- In total, Israeli AI startups have sold for $5.1 billion in cumulative exit considerations across 82 deals dating back to 1998. 50 deals occurred over the last two years.
- The average exit consideration is $109 million since 1998, and over the last five years averages $119 million.
- The average lifespan of an Israeli AI startup is 6.0 years. Startups that sold between 6 to 8 years after founding yielded the highest exit growth multiples.
- The average amount of funding raised before exit is $17.8 million over an average of two funding rounds. The average exit growth multiple is 7.2 times (exit consideration divided by total funding).
- The most active corporate acquirers of Israeli AI startups are Salesforce, Microsoft and AOL (Oath Inc.).
- 82% of startups that exited were B2B-facing, 12% were B2C-facing and 6% focused on government clients (B2G).
- 86% of startups sold software, while 14% sold hardware with embedded software.
- By sector analysis, the volume count of exits are led by Core AI Technologies (29%), Marketing (26%) and Enterprise (23%). By dollar value, the leading sectors are Marketing (36%), Core AI Technologies (20%), Automotive (17%) and Enterprise (15%). Diving deeper, Computer Vision related software and hardware technologies represent 15 exits totaling $947 million in exit considerations. Marketing startups in the Analytics/Insight segment sold for a cumulative $1.1 billion across 5 exits while startups in the Advanced Targeting segment sold for a cumulative $458 million across 10 exits. Lastly, 7 Enterprise startups in the Cyber Security segment sold for $513 million in total.
- The average number of founders per team is two.
- Nearly one third of exits are comprised of deals between $100 million and $500 million. The largest Israeli AI startup exits to date are Mobileye’s IPO in 2014 for $890 million and Salesforce’s acquisition of Datorama earlier this year for $800 million. That cohort should see more new additions in the next two years considering the large number of mature unicorn/pre-unicorn Israeli AI startups set for either IPO or entertaining exit discussions.
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The infographic above (Israeli AI Startup Exits) is registered under the creative commons license with terms attribution, noncommercial, and no derivatives work.