Israeli chip company Hailo, long considered one of the most promising startups in the local artificial intelligence industry, is preparing for a Wall Street IPO under conditions that reflect the dramatic shift in the technology market.
Financial statements from Delek Automotive, which owns a 12.1% stake in Hailo, published on Tuesday, reveal that the AI processor manufacturer is merging with a SPAC to raise critical capital for ongoing operations. The deal is taking place at a substantially lower valuation than previous fundraising rounds, forcing Delek Automotive to record a sharp loss of approximately NIS 242 million (approximately $77 million) on its investment in 2025.
Hailo’s remaining investment on Delek Automotive’s books now stands at roughly NIS 170 million ($55M) at the end of 2025, down from around NIS 412 million a year earlier. According to Delek Automotive, Hailo’s valuation has fallen by more than half from its peak of $1.2 billion, now worth less than $500 million. This new valuation is based on offers received from multiple SPACs, further discounted by about 26% to account for expected lock-up periods and the time needed to complete the merger.
The report also highlights Hailo’s urgent cash flow needs. In January 2026, Delek Automotive provided a $9 million loan at an interest rate of 1.5% per month, which could rise to 3% if a liquidity event is not completed within a year. This financial reality contrasts sharply with Hailo’s earlier “unicorn” status.
Founded in 2017 by Orr Danon, Avi Baum, and a group of Unit 81 alumni, Hailo develops dedicated processors for AI tasks at the edge. In 2021, the company became a unicorn after raising $136 million at a valuation of about $1 billion. In April 2024, it completed a Series C extension of $120 million, increasing its valuation to $1.2 billion. The round was led by notable investors including the Zisapel family, Alfred Akirov, and Gil Agmon, and coincided with the launch of the Hailo-10 accelerator for GenAI applications.
However, 2025 and early 2026 brought signs of change, including the January 2026 layoff of approximately 10% of Hailo’s workforce as the company refocused on robotics. Now, Hailo faces a challenging capital market and an urgent need for liquidity. A non-binding memorandum of understanding signed in March is expected to lead to an official IPO in the coming months, but at the cost of significant value erosion for existing investors.