The economic recovery is in full throttle, but Israeli high-tech companies are still struggling to raise funds. According to IVC Research Center, Israeli high-tech companies raised $1.2 billion in 2009 compared with $2.08 billion the preceding year, a fall of 46%.

There was even no sign of a recovery in raising funds in the fourth quarter of 2009 when Israeli high-tech companies raised $275 million, 30% less than the $394 million raised in the corresponding quarter of 2008, and 9% less than the $303 million raised in 2008.

447 Israeli high-tech companies raised venture capital funds in 2009, 124 of them raised money for the first time in the fourth quarter.

There was also a drop in the average amount of capital raised by each company. The average amount fell to $2.22 million in the fourth quarter of 2009 compared with $3.61 million in the corresponding quarter of 2008 and $2.8 million in the preceding quarter.

Sixty seven companies attracted more than $1 million each. Of these, 17 raised $5 million to $10 million each, and four companies raised more than $10 million.

IVC Research Center CEO Koby Simana said, “Even though 2009 capital raising was sharply lower than previous year’s - consistent with our projections - a further decrease to about $800 million is foreseen for 2010. The decline in capital raising in 2009 reflected the impact of the economic crisis on Israel’s high-tech industry, but despite talk of recovery, the effect of the economic situation continues to linger. Israeli companies are likely to have an even harder time raising capital in 2010."

In 2009, Israeli venture capital funds invested $410 million in Israeli high-tech companies. The Israeli venture capital fund share of the total amount invested in Israeli high-tech companies was just under 37%, compared with 38% ($780 million) in 2008 and 39% ($678 million) in 2007.

In the fourth quarter of 2009, Israeli venture capital funds invested $102 million or 37% of the total capital invested in Israeli high-tech companies, compared with $151 million invested in the fourth quarter of 2008 and $89 million invested in the preceding quarter. The remainder came from foreign investors as well as non-VC Israeli investors.

Published by Globes [online], Israel business news - www.globes-online.com - on January 18, 2010

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