Decline in Tech Exits as Startups Prioritize Growth Over Quick Sales
In 2018, Israeli tech exits plummeted to $12.63 billion, a 46.7% decrease from 2017's $23.7 billion, as startups increasingly prioritized growth over quick sales. This represents a 46.7% decrease in exit value, highlighting a clear change in strategy among tech companies. Similarly, Alphabet achieved its first $100 billion quarter, marking a 16% increase.
The technology sector has seen a notable shift in recent years, as startups increasingly favor long-term growth over immediate exits. This trend is evident in the significant decline in tech exits, which totaled $12.63 billion in Israel in 2018, a substantial drop from the $23.7 billion recorded in 2017. This represents a 46.7% decrease in exit value, highlighting a clear change in strategy among tech companies.
Shift from Quick Exits to Growth Focus
Startups are increasingly opting to prioritize growth rather than seeking quick sales through mergers and acquisitions (M&A). In 2018, the number of M&A deals amounted to 103, indicating that while transactions are still occurring, they are not translating into the high exit values seen in previous years. This strategic pivot reflects a broader trend within the tech industry, where companies are seeking to expand their market presence and capabilities rather than cashing out early.
Life-sciences exits accounted for $2.98 billion across 24 deals, while artificial intelligence exits totaled $1.15 billion in 14 deals during 2018.
Cybersecurity exits, in particular, contributed $2.81 billion to the overall exit value, reflecting continued interest and investment in this critical sector. However, despite these substantial figures, the overall decline in exit values underscores a shift in priorities from immediate financial returns to sustainable growth and innovation.
Increasing Interest in Secondary Transactions
The changing landscape of tech exits is further illustrated by the growing interest in secondary transactions. A survey conducted by Inc42 for the third quarter of 2025 revealed that 41% of Indian investors now prefer secondary deals over traditional exit strategies such as initial public offerings (IPOs), buyouts, and acquisitions. This shift is mirrored by the actions of venture capital firms, which are increasingly launching funds focused on secondary transactions.
Secondary share transactions have been recognized for their ability to boost liquidity within the market. In fact, 92% of investors reported seeing increased liquidity as a result of these transactions, and significant liquidity is anticipated in the upcoming 2025 IPO cycle. The rise in secondary funds, particularly in India, is seen as an indication of a maturing market, offering early investors a more organized channel to exit their investments.
Impact on Major Tech Companies
While startups are shifting their focus away from quick exits, major tech companies continue to report strong financial performances. For example, Apple recorded a revenue of $102.47 billion with an earnings per share (EPS) of $1.85. Similarly, Alphabet achieved its first $100 billion quarter, marking a 16% increase. Microsoft reported $77.7 billion in revenue with an EPS of $3.72, while Oracle saw a 28% increase in cloud sales as of September. Meta, despite a $15.9 billion tax charge, reported revenues of $51.24 billion, and Amazon's AWS posted its largest revenue growth since 2022.
These figures highlight the ongoing strength and stability of established tech giants, even as the broader industry undergoes shifts in exit strategies and investment priorities.
Organized Market for Secondary Funds
The market for secondary funds has become more organized, providing a structured pathway for investors to benefit from these transactions. Secondary funds allow early investors to exit their positions while offering new investors opportunities to participate in companies that have already demonstrated growth potential. This organization within the secondary market is advantageous for investors, as it enhances liquidity and offers more predictable timelines for returns.
As the tech industry continues to evolve, the trend towards prioritizing growth over quick exits is expected to persist. This strategic realignment not only supports sustained innovation and market expansion but also aligns with the interests of investors seeking long-term value creation.