10 Israeli fintech startups shaping financial services today

Israeli startups are embracing machine learning, big data analytics, and cloud to reinvent payment systems.

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With more than 500 companies ranging from fledgling startups to unicorns, Israel's fintech ecosystem has pioneered the use of technology such as machine learning, big-data  analytics, and cloud-based services for the financial industry.

It has also attracted global attention, billions in venture investment and the embrace of major companies and financial institutions abroad. 

Venture investment in the sector has surged over the last three years. In 2019, Israeli fintech firms raised $1.7 billion in venture funding, more than twice the amount the previous year, and triple the figure for 2016, according to the Israel Venture Capital Research Center, which tracks venture investments.

 The startups run the breadth of the fintech category, from payments and loans, to accounting and antifraud, to insuretech and asset management.

The strength is all the more notable given the relative lack of competition in Israel's domestic banking sector, the fact that Israel isn't a center of finance, and that the country's capital markets are small.

Tomer Michaeli -- general partner at Viola FinTech, part of Viola Group, which manages several Israel-based venture capital funds -- suggested the country already has a fintech "legacy." He explained that veterans from an older generation of Israeli fintech companies, many of them acquired by financial multinationals, have used their knowhow to found their own startups.  

Other skills come from professionals who have gone abroad to work at multinational institutions in financial capitals in the U.S., Europe and Asia, he said. With an understanding of what financial products and tools those large institutions might need, those alumni have struck out with their own ventures.

The financial background combined with Israel's culture of innovation and tech knowhow has prompted foreign institutions like Citibank and Barclays to set up accelerators and prowl the ecosystem for venture investment.

"If you want to interact with the global financial institutions you don't even need to take an airplane," said Michaeli.

Below is a list of several hot startups founded, funded and staffed by Israelis.


Year Founded: 2005

Funding: $270 million

Headquarters: New York City

CEO: Scott Galit

What they do: A digital payment platform that provides online money transfer and payment services, including cross-border transactions for third-party sellers on websites like Amazon. Payoneer also offers loans to third party sellers. 

Competitors include: PayPal, Transferwise

Customers: Amazon, Airbnb, Google.

Why they are a hot startup to watch: The company is profitable and is reportedly mulling a new funding round. In December 2019, Payoneer acquired a German payment company. 


Year Founded: 2012

Funding: $229 million

Headquarters: Tel Aviv

CEO: Eido Gal

What they do: Riskified helps brick and mortar retailers transition to online shopping platforms. The company offers products that utilize machine learning algorithms and behavioral analytics to monitor payments and detect identity theft that leads to account takeovers.

Competitors include: Signifyd, Forter, Kount.

Customers: Macy's, Footlocker.

Why they are a hot startup to watch: Riskified raised $165 million in 2019 at a company valuation of more than $1 billion. The Israeli business newspaper Calcalist ranked Riskified the most promising Israeli startup in 2019.


Year Founded: 2015

Funding: $170 million

Headquarters: London

CEO: Arik Shtilman

What they do: Offers a so-called "fintech as a service" app allowing customers to accept payments and transfers, as well as payment disbursement and foreign payment exchanges. The app also offers compliance, verification and anti-money laundering services.

Competitors include: Ayden, PayPal, WorldPay, Stripe.

Why they are a hot startup to watch: With a unicorn valuation, Rapyd raised $160 million in 2019 over two funding rounds. Shtilman said the company is looking for acquisition.


Year Founded: 2013

Funding: $433 million

Headquarters: San Francisco

CEO: Eyal Shinar

What they do: Provides payment services and loans to small- and medium-size businesses to speed B2B payments and ease cash flow. Fundbox uses machine learning and data analytics to analyze businesses' creditworthiness. 

Competitors include: Brex, Square.

Why they are a hot startup to watch: In 2019, the company raised $156 in venture funding and got another $150 million in credit.  The company counts the personal investment arm of Amazon founder Jeff Bezos as an investor.


Year Founded: 2013

Funding: $242 million

Headquarters: Redwood City, CA

CEO: Eyal Lifshitz

What they do: BlueVine offers financing and banking services to small- and medium-size businesses. BlueVine developed an online, cloud-based platform that offers cash advances on unpaid invoices and six to 12 month lines of credit.

Customers: 20,000 small business owners.

Competitors include: Kabbag, Mercury

Why they are a hot startup to watch: The company raised $102 million in a venture round in November. BlueVine's investors include the venture arms of Citibank and MFUG Bank, Japan's largest bank. The company also received $200 million in debt financing from Credit Suisse.

Pagaya Investments

Year Founded: 2016

Funding: $119 million

Headquarters: New York City

CEO: Gal Krubiner

What they do: Payaga uses artificial intelligence and big data to manage asset-backed securities in debt classes like consumer credit for financial institutions and pension funds.

Competitors include:  dv01

Customers: Citibank, Bank Leumi, Clal Insurance

Why they are a hot startup to watch:  Pagaya has $1.2 billion assets under management. Its investors include Harvey Golub, a former chairman and chief executive of American Express.


Year Founded: 2013

Funding: $66.5 million

Headquarters: Hod Hasharon, Israel

CEO: Mark Gazit

What they do: The company uses big data analytics and machine learning to enable financial institutions to detect anomalies in their systems that indicate potential money laundering activity and hacking attacks through ATM and SWIFT transfer networks.

Competitors include: Feedzai, Ayasdi, Nice

Customers: Tier-1 banks in the U.S., Europe and Asia.

Why they are a hot startup to watch: ThetaRay's investors include ABN Amro, General Electric and Israel's Bank Hapoalim.


Year Founded: 2015

Funding: $480 million

Headquarters: New York

CEO: Daniel Schrieber

What they do: Lemonade uses artificial intelligence to provide property and casualty insurance. Homeowners and renters download an app, answer a few questions, and get an insurance quote. 

Competitors include: Hippo, Jetty

Customers: Property owners and renters with some 425,000 homes.

Why they are a hot startup to watch: The company's investors include Google's venture arm, German insurer Allianz, and Softbank.


Year Founded: 2010

Funding: $129 million

Headquarters: San Mateo, CA

CEO: Chen Amit

What they do: Tipalti offers a cloud-based automation for companies' back office accounting. It provides account payable services, money laundering prevention, tax form recording, and invoice recording. 

Competitors include: AppZen, Gusto

Customers: Twitter, Uber, Foursquare

Why they are a hot startup to watch: Tipalti raised $76 million in September, with an investment company run by former Twitter CEO Dick Costolo.

Next Insurance

Year Founded: 2016

Funding: $381 million

Headquarters: Palo Alto, CA

CEO: Guy Goldstein

What they do: Next Insurance offers general and professional liability insurance to small businesses, serving sectors that are often overlooked by larger insurers.

Competitors include:

Customers: 100,000 business owners.

Why they are a hot startup to watch: Next Insurance got a $250 million investment from Munich Re, one of the world's largest insurers. The deal reportedly valued Next Insurance at more than $1 billion. American Express is also an investor.

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