For the first time in the history of Israeli high tech, in 2011, internet start-ups was the sector that raised the most capital, according to The MoneyTree report by Kesselman & Kesselman pwc Israel. Internet start ups raised $279 million in 2011.
Eight internet start ups raised $71.8 million altogether in the fourth quarter of 2011, up from the $23.4 million raised by eight companies in the third quarter, and the $35 million raised by seven companies in the corresponding quarter of 2010. The amount raised in the fourth quarter was 207% times the amount raised in the preceding quarter and 106% times the amount raised in the corresponding quarter.
pwc Israel partner, High Tech Assurance Practice, Rubi Suliman said that 2011 was characterized by changing tastes by venture capitalists. Previously, they invested cautiously and skeptically in internet start-ups, but they invested a record amount last year.
Venture capital-backed Israeli start ups raised $1.2 billion in 2011, 39% more than the $884 million raised in 2010, and 67% more than the $735 million raised in 2009. Israeli start-ups raised $324 million in the fourth quarter, 63% more than the $198 million raised in the preceding quarter, and more than the $256 million.
Cleantech start ups raised $106 million in 2011, the second highest amount.
The dominant feature in Israeli high tech since the 2008 credit crunch is investment in late-stage start-ups. Expansion-stage start ups raised $574 million in 2011 - 36% of total investment, double the $281 million raised in 2010; and later-stage start-ups raised $304 million - 37% of total investment, up from $141 million in 2010.
Looking forward, Suliman said, "We face uncertainty about how 2012 will turn out for Israeli high tech. On one hand, venture capital firms will struggle to raise capital, while on the other hand, there are attractive late-stage companies in the market which have ability to attract new investors, which could balance the equation."
Published by Globes [online], Israel business news - www.globes-online.com - on January 22, 2012
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