Shibolet & Co. > Tel Aviv, Israel > Firm Profile

Shibolet & Co. > Firm Profile

Established in 1973, Shibolet & Co. is one of Israel’s largest and most distinguished full-service corporate law firms, building on a sterling legacy as it pioneers tailor-made legal solutions across evolving market sectors. The firm is widely regarded as a powerhouse for business-oriented legal service, expertise, and insight.

Shibolet utilizes a unique multidisciplinary methodology that presents the full spectrum of legal knowledge under one roof. Our highly qualified team of more than 270 full-time law practitioners offers comprehensive commercial-corporate law services,

The firm’s entrepreneurial DNA drives Shibolet activities. Our practices lead the way in identifying, researching, and mastering new legal solutions, offering added-value servicers to our clients, such as innovative business tools and business development solutions. We use Legal Tech solutions in our daily legal work for the benefit of our clients, emphasizing efficiency and accuracy. We offer new types of added value services like Shibolet ESG. Shibolet ESG was founded to help companies navigate the complexities of customer expectations and supplier requirements related to diverse social and environmental matters. Our clients benefit from the finest consulting services through a holistic approach that builds on Shibolet’s compliance-related legal expertise and a complementary “beyond compliance” solution.

Number of partners: 98
The number of lawyers: 253
Languages: Hebrew, English, Arabic, French, Spanish, Russian, Italian, German, Rumanian, Hungarian.

Main Areas of Practice:
Antitrust/Competition
Banking & Financial Institutions
Cybersecurity Energy, Oil & Gas
Environment, Clean Tech & Climate Change
FinTech
Infrastructure, Project Financing & Government Bids
Intellectual Property
Labour & Employment
Life Sciences
Litigation
M&A Corporate & Commercial
Municipal Law
Real Estate
Securities & Capital Markets
Strategic Licensing
Tax
Telecommunications, Media & Internet

M&A, Corporate & Commercial: Shibolet’s corporate and commercial practice serves clients from all over the world. Most of the firm’s business is conducted in English, with legal advice provided in the sale and acquisition of businesses and assets. The firm has extensive experience in M&A and private equity, transactional work, counseling and negotiating foreign and local clients, as well as private equity and other investments.

High-Tech & VC: Shibolet’s high-tech and VC practices are among the top practices in the country. The firm participated in establishing some of Israel’s leading VC Funds and accompanies both domestic and foreign funds in investments and due diligence processes. The firm represents both promising start-ups and many leading high-tech companies and multi-nationals doing business in Israel. Shibolet’s high-tech practice group publishes a unique survey for professionals interested in Israel’s VC scene, which is considered cutting edge in the field of venture funding.

Litigation: Shibolet’s experienced litigators represent foreign and domestic clients before all courts and tribunals, including arbitration and mediation. The firm represents many foreign companies involved in litigation in Israel, both as plaintiffs and defendants. Services include enforcement of judgments against government bodies concerning regulatory and other issues. Shibolet’s experts handle bankruptcies, receiverships and ‘Chapter 11’ like measures, representing leading financial institutions and others.

Infrastructure, Project Financing & Government Bids: The firm advises clients on infrastructure projects, project financing, and bids, both in Israel and abroad. Shibolet is involved in establishing private energy projects, including gas-fired, hydroelectric, and renewable energy (photovoltaic, concentrated solar power, and wind energy) power plants in Israel and abroad.

Securities & Capital Markets: Shibolet’s strong securities practice has been involved in many Israeli public offerings on the TASE and on NASDAQ, as well as offerings of companies whose shares are dually-listed on the Tel Aviv Stock Exchange and NASDAQ. Shibolet has served as counsel to underwriters and issuers on various offerings in Israel and abroad. Shibolet advises clients on regulatory and other legal matters concerning publicly traded companies.

Tax: The firm’s top-level tax department has vast expertise regarding domestic and international tax issues, including tax planning and tax rulings.

Banking & Financial Institutions: Clients include Israeli and foreign banks and other financial institutions, as well as clients seeking financing from the banks and other financial institutions operating in Israel. The firm provides legal services in banking, financing, regulatory issues, formation of banking institutions, branches, and representative offices. Shibolet serves as legal advisor to the Association of Foreign Banks in Israel.

Environment, Cleantech & Climate Change: As a pioneer in this field, Shibolet represents alternative energy projects, both in Israel and abroad. Shibolet has been involved in significant litigation, representing plaintiffs in class actions against entities failing to comply with the environmental codes and entities accused of criminal offenses for purportedly infringing upon environmental laws.

Energy: A pioneer in the field, Shibolet established Israel’s first private power plant. The firm is involved in many projects worldwide in renewable and conventional energy, including project financing. The firm specialises in both renewable and conventional energy.

Oil & Gas: The firm has vast practical experience in all aspects of exploration and production of oil and gas, having represented numerous international groups that explored hydrocarbons in Israel. The firm has now begun a concentrated effort on behalf of an Israeli group to seek exploration concessions in several jurisdictions worldwide.

Antitrust/Competition: The firm’s team advises clients on a complete range of antitrust, competition, regulatory, and trade issues, including merger control, licensing and distribution, franchises, and restrictive practices, which permeates all aspects of the firm’s business practice. The team works in conjunction with the firm’s clients to proactively structure transactions to align the client’s business objectives with legal antitrust constraints.

Real Estate: The firm has a wealth of experience in residential and commercial real estate transactions for Israeli and foreign clients and represents some of Israel’s largest building companies. The real estate practice group has extensive expertise in town-planning, taxation, accompanying acquisition groups, representing developers, and litigation.

Municipal Law: The firm represents local authorities, water and sewage corporations, and other municipal corporations in various legal Issues, including real estate, infrastructure, large scale public tenders, and innovative projects.

Labour & Employment: The firm’s experienced team provides ongoing legal advice to management on a wide range of employment related issues, including labour and employment aspects of complex M&A transactions, APAs, and IPOs, as well as drafting, reviewing, and interpreting collective and individual employment agreements and human resources policies. The firm has prepared and implemented many ESOP plans, both for Israeli companies and international companies with Israeli subsidiaries

Telecommunications, Media & Internet: The practice is among the leaders in this field in Israel, representing global and Israeli companies, including major Internet portals, cable and satellite companies, and media owners. Transactions have included some of the most complex M&A cases in Israel.

Life Sciences: Shibolet advises healthcare and life sciences, clients, from incorporation through exits and beyond, assisting them as they take their new ideas through product development challenges, patent approvals, clinical studies, and regulatory endorsement. The team draws upon dozens of years of cumulative experience and holds superlative expertise in the life sciences sector. The roster of clients served by Shibolet is deeply entrenched in this sector. It includes the most prestige Israeli academics, filed specialised venture capital funds, most promising emerging companies, and leading mature biotech companies.

Pro Bono Activities: The firm places great emphasis on assisting non-profit organizations. Shibolet provides pro bono legal services to The Israel Spirit, A Different Lesson (Shiur Acher), Symphonette Ra’anana Orchestra, the Ramat Hadassah, and Kiryat Yearim Youth Villages, Keren Shemesh, as well as other NGOs. Shibolet’s partners serve on the boards of several non-profit organisations, such as Hillel Israel and DocAviv.

Doing Business In

The Startup Nation: High Tech in Israel

The fast and phenomenal success of Israeli high-tech starting in the early 2000s earned the country the moniker “startup nation.”

And it has retained its fame over the past two decades for hosting the most tech companies per capita, investing more GDP (5%) in R&D than any other country, and attracting more per capita startup investments than any nation besides Singapore.

According to the Israel Innovation Authority, Israel ranks first in the world for percentage of GDP from high-tech industries (15%) and percentage of the workforce in high-tech (10%).

Since 2021, Israeli high-tech products – primarily fintech, cybersecurity, and communications software – have accounted for approximately half of total national exports.

Even during the stormy years of the pandemic, mega-rounds of $100 million-plus and valuations of $1 billion-plus were commonplace occurrences.

At Shibolet, we have identified five main trends emerging in Israel’s high-tech ecosystem beginning in the second half of 2022.

1. Financing rounds, which form the basis for the entire ecosystem, have declined in number.

“It is much harder for startups to raise funds, especially seed and A rounds, and it takes longer,” says Ofer Ben-Yehuda, Head of Shibolet’s High Tech Practice and a member of the firm’s Executive Committee. “If it used to take between three and six months, now it takes between six and 12 months to secure funding.”

Start-Up Nation Central reported that in 2022, Israeli high-tech companies received $15.5 billion in VC investments. Though this was the second highest amount in history, it couldn’t match 2021’s astronomically high total of $27 billion.

IVC Research Center data shows that the largest investments reported in 2022 occurred in the first half: A $550 million Series E round for IT and enterprise software security maker Fireblocks in January, a $400 million Series D for industrial-tech startup Veev in March, and a $600 million Series A in life-sciences company Ultima Genomics in June.

Capital raised in deals over $50 million continued to make up the majority of Israeli high-tech’s annual capital in 2022. Mega deals over $100 million, though much less significant overall than in 2021, accounted for almost 40% of the total capital.

Notably, seed investments in Israeli startups grew by 22% in 2022 compared to 2021, from $1.3 billion to $1.6 billion. Between 2019 and 2022, the average number of investors in each seed round nearly doubled. At the other end of the spectrum, the amount of money invested in revenue growth companies in 2022 ($8.1 billion) was more than four times higher than in 2016.

Looking at Q4 of 2022, while fundraising declined, its pace was in line with 2019 quarterly averages: 124 deals with $1,948 million in capital investments.

In terms of venture funding, across the world there was a 35% decline from a record 2021, with a total of $415.1 billion in 2022. VC-backed deals in Israel over 2022 declined even more, 41%, from capital amounts in 2021. Still, per-capita VC investment in Israel ($1,686) far surpassed that of the second-place country, the United States ($584). The OurCrowd, Viola, and Pitango VC funds were the most active Israeli investors in 2022.

Number of deals

The number of investment deals during 2022 totaled 826, compared with 2021’s reported total of 1,103 deals.

While Israeli enterprise software companies saw the lion’s share of investment activity (162 deals), the life sciences/health-tech subsector was close behind with 159 deals.

Security tech, including cybersecurity, clocked 122 deals; agri-food tech and water 87; fintech 71; retail and marketing 56; content and media 54;, industrial tech 49; smart mobility 31; energy tech 23; and aerospace/aviation 11.

The agri-food tech subsector alone remained stable in the number of deals and total amount raised in 2021 and 2022.

2. Dropping valuations provide opportunities for strategic investors to acquire companies that are a good fit for them.

Related to the last point, Ben-Yehuda also noted a lot of M&A activity in agri-food tech as well as climate-tech and healthcare-tech subsectors.

In the last six months, the number of M&As handled at Shibolet’s high-tech practice has doubled. Although these are small or midsize transactions of between $70 million and $300 million, the more affordable price tag has brought new opportunities for strategic investors to make acquisitions.

“We see a lot of M&As – some of them distress M&As — in which the strategic partners have become a massive power,” Ben-Yehuda says. “Two or three years ago, when valuations were much higher, strategic partners could not purchase the companies and we saw more acquisitions by financial players like private equity funds. All around the world, I think we’ll see more and more acquisitions and other joint ventures among multinationals in Israeli startups.”

In comparison to the previous year, 2022 saw a 45% dip in first-time M&As and a 40% decrease in their overall sum. Israeli companies posted 89 mergers and acquisitions in 2022, slightly less than the multi-year trend, in addition to 17 IPOs and SPACs. Only four tech public offerings took place in the Tel Aviv Stock Exchange in 2022, compared with 48 IPOs in 2021.

The highest-value M&As were Tower Semiconductor’s acquisition by Intel ($5.4 billion) and ironSource’s acquisition by Unity ($4.4 billion). Intel also bought Granulate for $650 million. All of these took place in the first half of the year.

Whereas two additional Israeli high-tech companies achieved a valuation of $1 billion or more in Q4/2022, this brought the total number of new unicorns for the year to 23 – much less than the 42 new unicorns in 2021 but still surpassing all other previous years. However, capital raising among existing unicorns fell sharply closer to the year’s end.

3. Startups that had successful IPOs in the last couple of years are now struggling to secure additional funds.

“Two years ago, there was a boom on the Tel Aviv Stock Exchange. At Shibolet we had about 30 IPOs of companies with zero revenues that were still in the R&D stage, and they were successful IPOs that raised money,” says Ben-Yehuda.

“But now a lot of those companies are struggling to secure additional funds because there is no liquidity in the market and they are too small with respect to the market cap for insurance companies, banks and other institutional investors, so it’s very hard for those shares to be traded. Since there are still no revenues and a long way to go to get to the break-even point, some of these companies will not have sufficient funds to continue operations, and I suspect some will become shells.”

The possibilities of what may happen next range from reverse mergers of other startups into these struggling companies, to some unknown trigger that will reopen the spigot and return the flow of fundraising to previous levels.

4. Changes specific to Israeli high-tech startups

While many of the downward trends we have been seeing in Israeli fundraising amounts, number of deals, valuations, and VC investment are also occurring in other major high-tech hubs such as Silicon Valley and Boston, some resulting shifts are unique to the Israeli sector.

One change is that, for the first time, we see Israeli companies seeking synergies with other Israeli companies by way of acquisition, joint ventures, or partnerships.

5. Big money is on hold

In the second half of 2022, the Israeli ecosystem started feeling the effects of the worldwide economic slowdown, fewer investment dollars, and significant layoffs. We saw a decline in the number and value of deals, fewer exits, and sharp devaluations of publicly traded tech companies.

So far, 2023 has brought additional unwelcome surprises including the failure of Silicon Valley Bank, in which many Israeli startups had stashed their cash. While all money deposited there was secured by the US government, the crisis has created a lack of certainty with respect to venture investors in Israeli companies.

As we begin 2023, IVC counts 9,445 high-tech companies in Israel, 91 with unicorn status.

IVC’s Q1/2023 report shows Israeli high-tech companies raised $1.72 billion in 105 deals, including three mega-deals that contributed 38% of the overall amounts. The outcome was a 70% drop from Q1/2022 and 79% from the peak in Q4/2021.

The quarterly report also showed seed deal amounts dropped 50% in Q1/2023 compared to Q1/2022, and just 23 exits (21 M&As and 2 IPOs) completed in Q1/2023.

The report concluded: “For now at least, the big money for Israeli tech is on hold.”

Significant subsectors

Below are snapshots of significant subsectors in Israel’s high-tech ecosystem, using data from Start-Up Nation Central, Israel Advanced Technology Industries, the Israel Ministry of Economy and Industry, and the Israel Securities Authority.

Health-tech and life sciences is the largest subsector, with roughly 1,700 active companies accounting for $5.2 million in exports in 2021 – in addition to technology hubs and R&D centers of multinational corporations such as Boston Scientific, Abbott, AstraZeneca, and Johnson & Johnson.

The COVID-19 pandemic advanced this field as the world sought real-time solutions for pressing needs. Because Israel’s nationalized HMO system has been keeping digitalized healthcare records for the last 25 years, Israel is a prime validation site for health-tech companies worldwide.

Climate-tech companies, a broad category addressing specific aspects of factors involved in climate change, includes some 850 firms in six categories: energy transition, carbon tech, transportation and logistics, industrial tech, food and land use, and water technology.

Cybersecurity companies in Israel numbered 676 as of late 2022. Over the past year, 20 Israeli cyber companies were involved in M&As, the largest of which were Liberty Strategic Capital’s buyout of Zimperium for $525 million and Claroty’s acquisition of Medigate for $400 million.

Fintech companies operating in Israel numbered about 550 as of July 2022. Singapore is the only country with a higher ratio of fintech firms to population. The largest percentage (29%) specialize in payment and settlement solutions. Risk analysis, insure-tech and commerce solution providers each account for 13% of the total. In 2022, Israeli fintech firms raised about $2.7 billion. Currently, 20 fintech companies incorporated in Israel are valued at $1 billion or more.

The agri-tech subsector has always been strong, encompassing industry leaders such as Netafim, which has revolutionized drip irrigation. More than 300 agri-tech companies operate in the areas of agricultural biotechnology, animal agriculture, novel farming systems, precision agriculture, robotics and farm systems, and supply chain optimization.

Food-tech, increasingly grouped with agri-tech, numbers about 200 startups cooking up alternative proteins – such as cultivated meat, fish and dairy as well as analogs made from chickpeas, algae, mushrooms, yeast and more – in addition to novel “clean-label” ingredients, health and wellness formulations, and advanced food packaging materials.

Automotive technologies have become an Israeli specialty, with more than 400 startups. Intel and Google have acquired Israeli startups as part of their global automotive strategies, and carmakers including Ford, BMW, Porsche, Volkswagen, Volvo, and Hyundai have invested in Israeli startups.