Q3 2022 In Review

Q3 2022 In Review

Executive Summary

Prepared by the Greenfield Partners Team

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We are excited to share with you our review of Q3 2022 in the Israeli Tech Ecosystem.

Greenfield Partners extends its congratulations to the 85 companies that raised capital this quarter, totaling $2.58 billion in funding.

State of the Israeli Venture Market

Major Correction in Public Markets, In Particular Growth Tech

  • Growth tech has seen a more significant decline than the broader indexes. Causes include interest rate impact on valuation frameworks, funds flows out of public equities, economic challenges (supply chains, Ukraine, recessionary fears, etc.), and market sentiment

Decline in Venture Market Broadens

  • Venture market driven by same primary drivers as public markets, but in a more pronounced manner. Since the asset class is not traded, there is no immediate pricing indication to quantify the effect, but the bid/ask spread is significant, as evidenced by the sharp decline in dealmaking, and in all likelihood the asks will likely have to converge towards the bids

Doubling Down on Efficiency

  • Continued focus on unit economics while efficiency is being prioritized earlier on given market sentiment towards improving them at scale

Scenario Planning for 2023

  • Many dominos need to remain upright for a soft landing and smooth 2023, e.g., interest rates, labor market, oil prices, Ukraine, supply chain, real estate, inflation, etc. Companies are planning and preparing for a scenario of a deeper recession in 2023

Downturn Broadens with a 43% decline in capital raised QoQ. Growth Rounds Hit Harder vs. Early Venture Rounds which continue to Close

First Capital in Continues to flow while Later Stage Investors opt to focus on Current Portfolio, rather than New Investments

Q3 Breakdown - By the Numbers

Cloud / DevOps, Cybersecurity, and Data / AI / ML Account for Nearly 50% of both Capital Raised and Deals Closed this Quarter


Valuation Multiples continue to trade below their Trailing Averages with no clear indication of a near term Bottom

Widespread Budget Reassessment with continued emphasis on Efficiency over Growth

Growth-adjusted Multiples continue to Trade Closer to Trailing Average, suggesting part of the Drop is related to Lower Growth, as well as that there may be further room to go before reaching the Bottom

The Fed is seeking to raise Interest Rates enough to curb Inflation without causing a Recession, a so-called Soft Landing. Risk is if Demand falls too low, Production Cuts and Layoffs could follow, pushing the Economy into a Recession



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