Economic relations between Japan and Israel reached new heights in 2021, with Japanese firms investing some $2.9 billion across 85 deals in Israeli companies last year, almost triple the amount in 2020, according to a new study released Sunday by consulting firm Harel-Hertz Investment House.
In 2020, Japanese firms invested $1.1 billion in 63 investment deals, up from $914 million in 2019; in 2015 this figure totaled just $87 million.
Japan now accounts for 15.8% of all foreign investments in the Israeli high-tech industry, compared to just 1.8% in 2016, and 12% of the total investment (foreign and Israeli), indicated Elhanan Harel, the founder and president of Harel-Hertz and the author of the report.
In absolute numbers, however, Japanese investments in Israel are still small, compared to those of US (and Israeli) investors. Japanese VCs and corporate VCs still do not take lead investors positions, preferring to join Israeli or global VCs in funding rounds, the report said.
Total Japanese investments in Israel since 2000 amounted to $13 billion in some 400 deals, the Harel-Hertz report showed.
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Since 2015, the areas of interest for Japanese investors have diversified. The vast majority of investments that year (61%) focused on communication and IT companies, falling to 13% by 2021 as more investments flowed into life science, food tech, cybersecurity, automotive, fintech, and cleantech companies.
2021 saw nine new Japanese investors make their first forays into the Israeli tech industry, with two new funds and seven corporations joining the local Japanese investment community. Overall, Japanese companies and brands run 97 offices in Israel in 2021, up from 15 in 2015, according to the report.
A man wearing a protective mask looks at an electronic stock board showing Japan’s Nikkei 225 and Shanghai indexes at a securities firm with a traditional New Year decoration at it entrance, December 29, 2021, in Tokyo. (AP Photo/Eugene Hoshiko)
The most notable relative newcomers were Japanese telecommunications giant NTT (Nippon Telegraph and Telephone), which opened an innovation lab in Ra’anana last summer, and multinational conglomerate Softbank, which in 2021 invested the largest amount (just over $2 billion of the total) in Israeli companies across 24 deals. Japanese trading company Mitsui participated in the highest number of transactions — 41 deals and $299 million in investments, according to the report. Mitsui’s activities in Israel include those with Magenta Venture Partners, an equal partnership between Mitsui and two Israeli venture capital professionals, and MGI (Mitsui Global Investments), a subsidiary of the corporation.
Last year, Softbank bought a $25 million stake in Israeli crowdfunding firm OurCrowd, and co-led a $400 million investment in Israeli cybersecurity firm Claroty, a maker of software to defend factories and industrial plants from cybersecurity …….