Back in the early 2000s, Israeli tech companies were valued at a discount of 20%-30% compared to their global peers, but over the years this gap was completely erased, with the establishment of the Israeli ecosystem and its significant achievements. These days, we are witnessing what seems to be the return of the Israeli discount.

The discount is measured by the valuation gap between an index of Israeli public companies to general indices of global companies such as the EMCloud and NASDAQ. Viola has constructed The ITI: Israeli Technology Index, which measures the value of 32 public Israeli technology companies. The index includes prominent companies such as SimiliarWeb, Global-e, Wix, Taboola and


Following the increase in interest rates and subsequent burst of the bubble in late 2021 – beginning of 2022, both the ITI and other indices saw a decrease in overall value. However, it is clear that the ITI index experienced a sharper decline in comparison to the others.


Moving into 2023 all indices began to recover, yet a noticeable gap emerged between them in the second half of the year.


When examining the factors leading to this valuation gap there could be several potential reasons:

Scale: on average, Israeli companies both IPO’d at an earlier stage and are smaller in scale compared to their peers: The median trailing twelve-month (TTM) revenue for ITI companies is only 2% of that of NASDAQ 100 and 40% of the EMCloud companies. the disparity in scale can result in companies being traded at a discount.

Performance: on the other hand, Israeli-based companies consistently display a high growth rate. A higher growth rate indicates higher quality. Such companies should not be traded at such a deep discount compared to other public companies.

Discipline: during the bubble period of 2021-2022, the expense growth of Israeli companies was relatively high – indicating poorer expense control. This was corrected in 2023, proving Israeli companies’ ability to shift their mindset from ‘growth at all costs’ to ‘efficient growth’. This is yet another quality indicator of these companies.

Public Israeli companies are doing all the right things and are still being traded at a discount.

We believe that other possible explanations for the return of the Israeli discount must be considered. 2023 has been characterized by general instability in Israel caused by the proposed Judicial Reform and the current geo-political conflict. Both had a major contribution to the valuation gap.

We identify a unique opportunity among the public Israeli companies. As they continue to demonstrate a growth-oriented approach, increased efficiency, resiliency, and innovation, the reality is the Israeli tech ecosystem is much stronger than the valuation suggests.

Challenging times create immense opportunity. Now is the time to seize this opportunity. #NoMatterWhat