Deloitte: Israeli VCs say gaming interesting for investment

Most Israeli fund managers do not think that their funds will make foreign investments in the next five years.

The Second Quarter VC Indicator survey by Deloitte Brightman Almagor Israel states that 61% of Israeli fund managers think that gaming is an interesting and attractive field for investment. Half of the fund managers believe that Israeli start-ups should develop both hardware and software for games, as well as create content and develop games.

38% of Israeli fund managers think that Israeli start-ups should focus only on the development of hardware and software, and 6% think that Israeli start-ups should focus only on creating content and developing games.

The survey also indicates that Israeli venture capital funds are increasingly interested in virtual reality. 51% of fund managers are prepared to consider investing in this area; 39% are prepared to invest now and 12% will be willing to consider investment only in the future. US venture capital funds are also increasingly interested in virtual reality.

Deloitte Brightman Almagor Israel partner, technology, media, and telecommunications (TMT) leader Asher Mechlovich says, “Israel is lagging several years behind the global gaming industry, which has a huge turnover. In contrast, virtual reality is a fairly new world and the gap between the local and global industry is narrow. Therefore, the conditions are better for the creation of substantial Israeli companies in this field.”

The VC Indicator survey states that 71% of venture capital managers do not think that their funds will expand their investment positioning beyond Israel in the next five years. The corresponding survey by Deloitte Touche Tohmatsu in the US found 54% of fund managers are considering expanding their international positioning, almost double the 29% of Israeli funds considering this.

The main arguments that Israeli fund managers give for not investing in other countries are the quality of deals in Israel (35% of respondents), limited resources (35%), and contractual restrictions (16%).

88% of Israeli fund managers predict that they will make more investments in cleantech over the next six months, the same proportion of managers who made this prediction in the First quarter VC Indicator survey. Only 20% of fund managers believe that we’re in the midst of a new internet bubble, compared with 38% who thought this in the first quarter and 23% in the fourth quarter of 2006.

81% of Israeli fund managers predict that five Israeli companies will hold IPOs on Nasdaq during the next six months. 58% of fund managers predict an increase in private venture capital investments (angels), compared with 9% who predict a decline in angel investments.

Published by Globes [online], Israel business news - www.globes.co.il - on July 30, 2007

© Copyright of Globes Publisher Itonut (1983) Ltd. 2007

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