In the shadow of mega-deals such as Intel's purchase of Classiq, a quieter trend is under way in Israeli tech: large technology companies are buying young Israeli AI startups with very small teams for tens of millions of dollars. Two deals from recent weeks illustrate it well.
Boomi buys Elementary Data
US integration company Boomi announced the acquisition of Elementary Data, an Israeli startup that develops tools to check the reliability of business data. According to Calcalist, the deal is estimated at about $40 million to $45 million, and all 17 of the company's employees are in Israel. Elementary started in 2022 as open-source software adopted by more than 1,500 data teams, with more than a million downloads a month. Boomi wants to use it to make sure its customers' AI agents work with reliable data.
Rocket buys Geniez AI
In the middle of the month Rocket Software, a software company owned by Bain Capital, acquired Geniez AI in a deal estimated by Calcalist at up to $100 million. Geniez, founded by Gil Peleg and Dan Shprung, entrepreneurs who previously sold Model9 to BMC, raised only a $6 million seed round about a year ago and has about six employees. The company develops AI agents that run directly on mainframes, the large computers that run banks and insurers, and handle incidents from natural-language instructions.
The trend: small team, fast exit
According to a PwC report on Israeli exits, the number of small exits, usually under $50 million, has surged, while the average deal size has fallen by about 40%. According to the report, the reason is large companies' strategy of acquiring young, efficient, AI-focused teams. For acquirers, it is a fast way to get technology and talent without building from scratch. For founders, it is a path to a successful exit without raising hundreds of millions.
There is a less glamorous side too: according to IVC and LeumiTech reviews, some startups are sold below the total capital they raised. The Israeli market is splitting between mega-deals for mature companies and small team acquisitions, with companies in the middle struggling to raise money.
