The latest venture capital survey by Ernst & Young and Dow Jones Financial Information Services unit VentureOne, published today, indicates that most venture capital investment in Israel during the second quarter of 2006 was in early-stage companies. $251.8 million was invested in Israeli companies during the second quarter, 45% less than was invested during the first quarter, and 17% less than during the corresponding quarter of 2005. 48 investments were made during the quarter, the same number made during the corresponding quarter.
$6.7 billion was invested in 619 venture capital transactions in the US during the second quarter. The number of transactions in the US was 3% than during the corresponding quarter of last year, and the amount invested grew 5%. The increase in venture capital investment was mostly in healthcare and IT companies. Investment in IT during the second quarter was the highest since 2004.
In Israel, seed and early-stage investment totaled $58.7 million during the second quarter, almost double the amount invested during the corresponding quarter of last year. The reason for the overall drop in venture capital investment during the quarter was the few investments made in late-stage companies.
In Israel, there were positive signs in several investment sectors, including IT, software and biopharmaceuticals. Although investment in Israel was not focused on healthcare as in the US, investment in this sector in Israel was 43% higher than last year. $19.5 million was invested in ten biopharmaceutical companies. Investment in healthcare fell 35% to $4 million.
Ernst & Young Venture Capital advisory group global director Gil Forer said financial activity during the second quarter indicated that investors were concentrating on their existing portfolios, and injecting capital into companies that needed it to develop technologies and exploit business opportunities. Investors were also financing new fast-growing sectors.
In Israel, information technology continued to attract the bulk of venture capital investment. $161 million was invested in 33 transactions in the sector during the second quarter. Although the number of transactions was stable, the aggregate amount invested was down 25%. Investment in software rose 3% to $82 million, investment in semiconductors totaled 48 million, and investment in IT totaled $22 million during the second quarter. External investment in IT in Israel totaled $6 million during the second quarter, compared with $5 million during the corresponding quarter of last year.
Investment in new fields increased: $18 million was invested in advanced materials, chemicals and other new fields.
Published by Globes [online], Israel business news - www.globes.co.il - on July 24, 2006
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