Digital experience analytics firm Glassbox raised US$100m in its initial public offering on the TASE – the latest in a series of debuts in Tel Aviv signalling the region’s emerging public markets strength.
Israel is renowned as one of the world’s leading technology hubs; a thriving ecosystem of start-ups, high calibre of talent, and support from a broad base of investors, but of late it has been seen to enter a new phase in its evolution as an international market.
From a “start-up nation” that emerged in the 1990s, Israel and Tel Aviv today have become an epicentre of businesses ready to scale to new heights, and a common base for homegrown unicorns.
The Tel Aviv IPO boom
There are few better indicators than the region’s IPO tally so far in 2021. A recent slate of high-growth, high-impact tech firms have turned to the Tel Aviv Stock Exchange (TASE) to raise capital and maintain their own momentum of growth. In the first quarter of 2021 alone, a total of 33 companies, mostly in high technology sector, listed on the exchange. This figure represents the highest number of initial public offerings made in a single quarter since 1993 and has surpassed the total number of IPOs of 2020.
For investors who have kept an eye on the Tel Aviv tech scene, the IPO boom of 2021 is a carry-over of investment activity from 2020. A total of 19 out of 30 new listings last year came from the tech sector, and the TASE is still gearing up for dozens more tech IPOs in the months ahead.
Overall, the Q1 newcomers raised NIS 3.1bn (approx. US$956m) in the process of going public. A number of these companies are attempting to become, or are already, category leaders in advanced technology sectors – and the TASE has proven itself a favourite choice to accelerate growth and, in doing so, has given the Israeli public a stake in their region’s continuing success.
One recent example has been our very own portfolio company Glassbox, which just last week debuted on the TASE and raised US$100m. The enterprise software firm – whose platform tracks and measures the digital experience of millions of customers – has been striving towards the category leader position in advanced customer analytics since we invested and a long time before.
In Q1 of 2021, Glassbox hit an annual recurring revenue of US$35m and has, over the past five years, seen a triple-digit CAGR. Albeit larger than the average TASE IPO this year, Glassbox personifies the type of company that is starting to consider the TASE as the next logical step: Israeli-founded, high-growth technology companies with revenue between $20m and $70m and a recurring go-to-market model.
The Israeli investment landscape
The TASE in return is providing several advantages for companies intent on following Glassbox’s path. It’s proven through the start to 2021 that investor demand, both of local institutional investors and from the Israeli public, is strong enough to enable substantial capital raises as part of the going public process. The Israeli investment landscape has become more attuned to evaluating and investing in enterprise SaaS and high-growth companies, but is still presented with scarce opportunities for high-quality candidates, driving an overage in demand for companies that stand out.
An IPO on the Tel Aviv stock exchange can also provide a stepping stone for companies intent on listing on the larger US exchanges. Aside from the capital to fuel the next leg of growth, companies crossing from the TASE will bring with them a wealth of experience and organisational robustness required to operate and excel in the US public markets.
Finally, we hope we join many investors in welcoming the opportunity for the Israeli public to share more actively in the success and scaling of some of its strongest businesses.