SPACs creates breakthrough opportunities for Israel Start-ups
Written by Ms. Florence Ip
How can Israel be Outstanding in Start-up industry?
Israelites are creative adventurers. Israel is recognized as the start-up nation, which is ranked the world’s fifth most innovative country by the Bloomberg Innovation Index. They have been spending the highest ratio of GDP on civil R&D in the world for years, reporting 4.95% in 2018 according to World Bank data. They are also one of the most patents filed per capita, too. Moreover, their government has established supportive policies to back up innovation and help their entrepreneurs grow, sponsoring exhibitions of all sectors, including Biotechnology, Industrial processing, Chemical engineering, Agricultural Technology, Defence Security, Electrical engineering, Mobility transportation, Green energy and Environmental technology, throughout each year. Over 50% of government spending was allocated to university research and industrial-technological development. Google Chairman, Eric Schmidt, has complimented ‘Israel has the most important high-tech center in the world after the U.S.’ in his visit in 2012.
Israeli start-up companies are attractive to many global investors. In Mar 2021, a Tech investment firm Flashpoint, which is based in London, plans to raise U$200 million for their secondary fund and half of the fund will be allocated to Israel start-up companies with U$350 million in managed assets in the next 3 years. Frankly, Flashpoint has already invested in Israel-based technology companies for their first fund a few years ago.
What can SPACs give contribute?
In the U.S., ION’s first SPAC raised U$260 million and went public in October 2020, making the largest deal in the Middle East and merging with an Israeli tech company, Taboola, at U$2.6 billion valuations. The deal was multiple times oversubscribed, and the fundraising was more than initially planned. The company claims to be the leading discovery platform globally, reaching over 1.4 billion individuals or 44.5% internet users, generating U$1.2 billion revenue and U$34 million operating income in 2020.
Continuously, Israeli electric vehicle tech company Ree with a valuation of U$3.6 billion, smart car company Innoviz which makes sensors for self-driving cars and a fintech company Payoneer will all go public on Nasdaq through merging with SPACs this year. 20 more Israeli companies are joining too. U.S. investors are attracted by their strong share price performance, taking advantage of their 10% to 30% discount versus American peers.
Intelligent Israelites prefer merging with SPAC to raise funding quickly, expand operation faster and gain the advantages of being a public listing company. Everything moves rapidly in the technology industry, so tech companies cannot wait for 2 to 3 years for a traditional IPO. Nevertheless, they can get money from private investors and stay privately owned forever. By listing as a public company, disclosing financial reports and following regulatory requirements, the company will be able to build up a reputation and provide confidence to partners doing business together. Partners will believe that they will not be acquired or disappear tomorrow.
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