81 venture capital-backed Israeli start-ups raised $287 million in the fourth quarter of 2008, 27% less than the $393 million raised by 78 start-ups in the preceding quarter, but 30% more than the $221 million raised by 69 start-ups in the corresponding quarter of 2007, according to the MoneyTree report for the fourth quarter by Kesselman & Kesselman - PricewaterhouseCooper Israel.
For the year as a whole, Israeli start-ups raised $1.4 billion, 17% more than the $1.2 billion raised each year in 2007 and in 2006.
The average investment was $3.5 million in the fourth quarter, compared with $5 million in the preceding quarter and $3.2 million in the corresponding quarter of 2007.
Kesselman partner, advisory & high-tech practice leader Joseph Fellus said, "The drop in venture capital investment in Israeli in the fourth quarter of 2008 compared with the third quarter was in line with the 27% drop in the US. However, whereas investment in Israel focused on traditional sectors, in the US, large and growing amounts are being channeled to cleantech, which the new administration has declared it will support and provide incentives."
Kesselman high-tech practice partner Robi Suliman added, "While 2008 as a whole was an excellent year in terms of venture capital investment, unsurprisingly we saw in the fourth quarter the first signs that the global crisis was beginning to affect the industry. We also saw the ongoing process of large Israeli funds going global, reflected by their investments in foreign companies that have no activity in Israel. This investment rose from $68 million in 2007 to $95 million in 2008."
Suliman continued, "Another important figure is the rate of investment in seed companies, which continued to be very low in the fourth quarter, reinforcing the need for government support, especially for these companies."
A breakdown of venture capital investment in the fourth quarter by sector, showed that communications and networking was in first place, with 26 companies raising $93 million, 33% of total investment. The life sciences segment, including medical devices and biotechnology, was in second place, with 13 companies raising $58 million, 20% of total investment. Software was in third place, with 19 companies raising $52 million, 18% of total investment. The semiconductors segment was in fourth place, with five companies raising $39 million, 14% of total investment.
Cleantech, Internet, media, and other sectors brought up the rear, with ten companies raising $27 million in the fourth quarter.
A breakdown of venture capital investment in the fourth quarter by company stage, showed that ten seed-stage companies raised $26 million, 9% of total investment. 25 companies raised $80 million in their first and second rounds, 28% of total investment. Eight companies raised $57 million in their third rounds, and eleven companies raised $62 million, 21% of total investment, in their fourth or later rounds.
Israeli venture capital funds invested $142 million in Israeli companies in the fourth quarter, 49% of total investment, compared with $118 million invested in the corresponding quarter, 53% of total investment.
Published by Globes [online], Israel business news - www.globes-online.com - on February 4, 2009
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