"Israel's venture capital and startup industry is headed for collapse,"Giza Venture Capital managing partner Zeev Holzman told "Venture Capital Journal".
"Business Insider" notes that Israeli venture capital firms raised "zero dollars" in new funds in 2010, but that things are looking up this year, with Pitango Venture Capital raising $350 million. But the picture is still dire.
According to "Business Insider", one reason for the funk is that Israeli start-ups have often been specialized in sectors like security, semiconductors and networking equipment, which can be capital-intensive and that many feel are "played out" for startups.
Another reason is that, like everywhere else, venture firms got too big too fast with the dotcom bubble and so have been delivering poor returns for the past decade. When the lousy venture capital firms wind down, and "Business Insider" speculates it is going to be felt more in tiny Israel than in Europe or the US.
"Business Insider" says, "There's a bright light however: Israel seems to start to "get" the consumer internet. Facebook just bought a local startup for $70 million. Famously, MyAncestry is the fastest-growing genealogy site, crushing Silicon Valley and PayPal Mafia darling Geni." Read more: http://www.businessinsider.com/israel-venture-capital-startups-2011-5#ixzz1NqcT1uqt" It adds, "The appeal of the consumer internet isn't just that it's sexy, it's that it's much more capital efficient than other sectors, and also seems to be where all the innovation is.
"Saul Klein, usually thought to be Europe's top VC and a big investor in MyAncestry, recently moved to Israel from London, which is a pretty bullish signal. We wouldn't write off Israel just yet." Giza, founded in 1992, manages $560 million in five funds, which invest in companies from the seed through late stages. Sectors include communications, semiconductors, information technology, new media, internet, and the life sciences.
Published by Globes [online], Israel business news - www.globes-online.com - on May 30, 2011
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