Venture capital funding at seven-year high

In the first quarter of 2008, ninety-six companies attracted more than $1 million each.

A new Israel Venture Capital Research Center survey shows that high tech start-ups in Israel have not been affected so far by a posssible global slowdown, and that in fact venture capital fund raising ran a pace not seen in seven years.

In the first quarter of 2008, 135 Israeli high-tech companies raised $617 million from venture capital investors both local and foreign. The amount raised, the highest in seven years, was 52% higher than the amount raised by 121 companies in the first quarter of 2007, and 23% above the previous quarter’s amount raised by 115 companies.

Ninety-six companies attracted more than $1 million each. Of these, 29 companies raised between $5 million and $10 million each, 14 companies raised between $10 million and $20 million each, two companies raised between $20 million and $30 million each, and two companies raised more than $30 million.

“2008 started exceptionally well, demonstrating the strength of the local high-tech industry,” said Zeev Holtzman, chairman of IVC Research Center and Giza Venture Capital, though he added, "Capital raising activity will probably moderate in upcoming quarters. Yet, we expect that the $1.6 billion average investment level of the last few years will be maintained in 2008.”

Israeli venture capital funds invested less than half of the first quarter overall total, but they accounted for several large investments. Israeli VCs invested $262 million in Israeli companies, 53% more than in the first quarter of 2007 and 84% above investments made in the fourth quarter of 2007. “We haven’t seen such high figures since the first quarter of 2001.” said IVC Director of Research Efrat Zakai. “The quarter was characterized by a high level of investment by Israeli VCs, as six funds each invested more than $15 million.”

The Israeli VC investment share of the total capital invested was 43%, very close to the previous year’s average of 42%. First investments accounted for 42% of total dollar investments by Israeli VCs in the first quarter, compared with 51% in the corresponding quarter of 2007 and 33% in the fourth quarter of 2007. The average first investment by Israeli VCs was $2.6 million, while the average follow-on investment was $1.2 million.

The survey was based on reports from 86 venture investors of which 47 are Israeli management companies and 39 are other mostly foreign investment entities. For purposes of the survey, all venture capital investments are made in high-tech fields, including cleantech and life sciences.

Published by Globes [online], Israel business news - - on April 29, 2008

© Copyright of Globes Publisher Itonut (1983) Ltd. 2008

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