The Israel Venture Capital Research Center - IVC reports that first investments in start-ups by venture capital funds in Israel plunged by 50% in dollar terms in 2009, compared with the preceding year.
The report said that Terra Venture Partners was Israel's most active venture capital fund in 2009 in terms of first investments. Terra made first investments in six start-ups followed by Carmel Ventures, Giza Venture Capital, Jerusalem Venture Partners(JVP), Magma Venture Partners, Pitango Venture Capital, Sequoia Capital and TriVentures LP, which each invested in five companies. Genesis Partners and Gemini Israel Funds each made first investments in four start-ups.
IVC said that the survey relates to investments in Israeli and Israel-related companies and in foreign high-tech companies made by Israeli management firms. The ranking in the report reflects the number of deals, and not capital invested.
The IVC report noted that both Terra Venture Partners and TriVentures are small venture capital funds, managing $25 million each. It said that Terra Venture Partners is dedicated to investments in cleantech, while TriVentures is a new venture fund, with Medtronic Inc. (NYSE: MDT) as its main investor, which invests in the life sciences.
The report continued, "In 2009, Israeli VC funds made 77 first investments in technology companies, compared to 119 investments in 2008."
IVC VP information Doron Rosenbaum said, “The availability of Israeli venture capital for investment is shrinking, and local venture funds are not expected to raise significant new capital in the coming year. As a result, we expect allocations to first investments in 2010 to continue to be reduced.”
According to the report, 38% of first investments (29 firms) were made in seed stage companies, compared with 28% in 2008. JVP made the largest number of investments in seed companies with four deals. JVP owns JVP Media Studio, an incubator for seed stage companies that focuses on media related technology. Of the 26 Israeli venture capital funds which made first investments during 2009, 10 did not invest in seed companies at all.
The report added that the decline in Israeli venture capital fund investment activity in 2009 was demonstrated, in part, by the fact that in 2009 top-placed Terra Venture Partners reached only six first investments, while in 2008 there were four funds with more than seven first investments each.
The software, Internet and life science sectors attracted the largest number of first investments in 2009. Each sector had 17 deals or 22% of the total number of investments. In 2008, software ranked first, with 22%, while the life sciences ranked second with 21% and Internet was third with 20%.
The report said that, "Six first investments were made in foreign high-tech companies in 2009, compared with 10 first investments made in 2008. Greylock Israel made two first investments in foreign companies.
Published by Globes [online], Israel business news - www.globes-online.com - on February 15, 2010
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