Big Tech 50 limited partnership’s mid-2024 reports revealed the volatility that many Israeli tech companies have experienced on their valuations since 2021, through judicial reform and the impact of the war in Gaza.
The partnership was launched with the goal of creating a portfolio that holds shares in 50 leading Israeli companies and selling these holdings at IPO or exit deals. While some companies have maintained or even increased their value, many others have seen significant declines.
The partnership holds small percentage stakes in numerous prominent companies and notes that changes in the fair value of portfolio companies reported by the partnership don’t necessarily indicate a direct decrease in the company's valuation but rather reflect the partnership's assessment of the fair value of its holdings as of the report's date.
According to the report, Verbit, which has faced a tumultuous period, saw its valuation plummet from $2 billion in 2021 to a current market value of $512 million. The partnership notes that Verbit encountered a challenging business environment in 2023 with the development of artificial intelligence (AI) and its impact on the transcription market, particularly in the entertainment sector, where absolute accuracy isn't required and flexibility in pricing is greater.
This led to a reduction in transcription prices, which affected the company's 2023 revenues and, according to the partnership's assessment, will also impact its 2024 revenues. Earlier this year, founder and CEO Tom Livne left the company, and Yair Amsterdam was appointed in his place. The company has invested heavily in developing its transcription models and has many assets in the field.
According to the partnership, its products' accuracy is higher than that of more generic competitors. Therefore, the company has potential in sectors like law, medicine and academia, but it will take time for growth in these areas to offset the decline in revenue. Accordingly, the partnership was forced to adjust its valuation of its holding in the company in a negative way.
The report added the valuation of Via Transportation, a company specializing in public transportation management, has significantly increased from $2 billion at the time of the investment to a current valuation of $2.8 billion.
Similarly, OpenWeb, a company in the ad-tech sector, has managed to maintain its value, which stood at $1.8 billion, with Big Tech now estimating it at $1.75 billion. The cyber insurance company At-Bay also maintained its market value at around $2.1 billion.
The fintech company Fundbox is valued at $246 million in Big Tech 50's reports, although the company previously reached a valuation of over $1 billion. Fundbox has been in crisis for some time due to the significant rise in interest rates, which has made its small business credit operations highly vulnerable.
OrCam, founded by Mobileye founders Prof. Amnon Shashua and Ziv Aviram, has experienced a sharp decline in valuations. According to Big Tech's reports, the company's valuation plummeted from $333 million in the last report to just $31 million. OrCam had previously reported raising funds at a valuation exceeding $1 billion and even considered going public.
The partnership's report said that in July 2024, OrCam announced it would cease the development of its vision aids and focus on its hearing aids. The company intends to continue selling its existing stock while concentrating on the development and sales of its hearing aids, which it believes have significant potential.
As a result, the partnership had to drastically reduce the valuation of its holding in OrCam but hopes the renewed focus on hearing products will prove successful in the future.
Another company detailed in the report was Trax, which developed computer vision and data processing solutions for the retail industry and was valued at $790 million, a significant drop from 2021 when the company reported raising funds at a $2.25 billion valuation.
Sisense, one of the veteran companies in the local tech industry, also once boasted a valuation of over $1 billion. However, it has since undergone numerous changes and rounds of layoffs. Its valuation continued to decline, with an estimated value of $628 million in 2023 now down to just $486 million.
Buildots, a company that developed a system used to optimize the construction sector, also saw a significant decrease in value, dropping from around half a billion dollars in 2023 to a current valuation of $211 million.