2019 was not a fabulous year for various people in the blockchain space. Yet, notwithstanding widespread employee downsizing and some projects hanging by the wayside, blockchain in Israel is flourishing. The number of companies in the blockchain and crypto fields rose by 32% in 2019.

Blockchain expanding in Israel 

 There were 150 active blockchain and crypto-related businesses in Israel, according to a report by the Israeli Bitcoin Association advertised in local financial site Globes, in December 2019. This signifies an increase of 32% from the 113 registered at the end of 2018.

Of course, this percentage growth rate doesn’t explain the entire picture. Not every company working in blockchain in Israel has found victory. The survey discovered that out of the 113 blockchain companies listed at the end of 2018, just 63 of them proceeded to operate.

Nevertheless, according to the Israeli Bitcoin Association, it could also be that they altered the nature of their work from blockchain to fintech or software development.

Furthermore, while a 32% increase is absolutely a positive for the industry after another challenging year, the number faints into significance compared to the previous year. At the end of 2018, the development of companies in blockchain in Israel was 113% from the last year with just 53 in Dec 2017.

Besides, while blockchain is unwaveringly growing in this land, it remains a small drop in the ocean-related to the tech industry at large. A new report by PwC on the health of the tech sector in Israel discovered that the number of unicorns rose from 11 to 20 in 2019, with the number of exits multiplying from the previous year.

More companies but more petite and more niche

The report on blockchain in Israel moreover observed that companies in this area tend to be minor, hiring fewer than ten members of staff. This would seem to be a notable drop from previous years. 

According to the Israeli Bitcoin Association, 65% of companies said that they hired up to 10 employees. 31% had between 11 and 50 employees on their books, while just four companies employed between 50 and 200 people.

Funding was also significantly decreased in 2019, related to the last two years. This is unsurprising given that Israeli companies collected some of the most capital in the 2017 ICO frenzy – and at least $600m in 2018 alone.

Raising capital has become more troublesome for companies all around the world in this space, and the condition is no different in Israel. Sources of financing in 2019 involved some seed funding (around 34% of companies), round A funding (just 1%), and round B funding (6%). The bulk of businesses operating in blockchain in Israel are self-funded.

While companies are slightly geographically scattered, the majority are placed in Tel Aviv, Israel’s business hub. Of the 150 companies, 91 are located here, with others in Netanya, Jerusalem, Herzliya, and a few other towns and cities.

When it comes to the level of maturity, most of the businesses remain very much in start-up mode. 

Half have delivered some MVP (Minimum Viable Product), with some 19% in the beta stage. A part is still in the research and development stage.

Blockchain in Israel may be overshadowed by the broader tech industry here. Companies are small, strive to raise capital, and many have had to whirl to survive. However, notwithstanding the challenging market conditions, the blockchain scene here continues to grow. 

With 32% more companies working in the space, no matter their stature, we can anticipate some exciting developments to come out of Isreal this year.

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