Israeli venture capital funds endured a major slowdown in the first half of 2024, according to the IVC - Gornitzky - KPMG Investors Report, which was published today. The report indicates a dramatic fall in the funds raised and activities of investors, continuing a trend already seen last year.
The report found that in the first six months of 2024, only ten new Israeli venture capital funds raised capital, amounting to an overall $544 million - a sharp decline from 2023, in which 27 funds raised $1.6 billion. Moreover, this year, two large funds - Red Dot Capital Partners and Vintage Growth Fund - have been responsible for 73% of all funds raised, with each of them raising $200 million.
The report also found that even among Israeli institutional investors, there was a significant decrease in activity. In the first half of 2024, institutional investors participated in only 13 investment rounds totaling $40 million. This figure is a dramatic decrease from 40 rounds totaling $158 million dollars in 2023.
OurCrowd venture capital fund led
The report found that among the large Israeli venture capital funds, managing $200 million or more, OurCrowd, which the report says manages almost $2.5 billion, led the market with 16 new investments in the first half of 2024. The number of OurCrowd's investments in the first half of 2024 was the same as the total of all its investments in 2023.
After OurCrowd was the IN Ventures fund, which manages capital of $250 million, and which made four investments in the first half of 2024. Pitango venture capital fund, which manages the largest capital of nearly $3 billion, made only three deals during this period. Hetz Ventures Management, Hanaco Ventures, Cardumen and Aleph each made only three investments in the first half of this year, with managed capital of $282 million, $740 million, $225 million and $845 million respectively.
Among foreign venture capital funds there was also a major decline in activities by some of the outstanding players. Samsung Next, for example, made only three investments in Israeli startups in the first half of 2024, compared with 13 in all of 2023. However, funds like NFX maintained stability by making five investments in the first half of 2024 compared with six investments in all of 2023. Funds like Andreessen Horowitz and Lightspeed also increased their activities in the Israeli market, the report says.
AI attracted investors
In terms of investment trends, companies in the field of generative AI attracted most investments, with 26 deals, while fintech and cybersecurity were placed second and third. At the same time, there was a noticeable decrease in investments in the automotive and deep tech fields.
Despite the bleak picture, the report indicates that there is still significant free capital for investments in Israeli tech companies. As of the first half of the year, the report shows that there is free capital (dry powder) of over $10 billion, of which $2.4 billion dollars is intended for investments in new companies.
IVC CEO Ben Klein said, "Due to the ongoing war and instability, we did not expect 2024 to be a normal year. The analysis of investor activity in the first half of 2024 reflects a challenging period for Israeli venture capital funds." According to Klein, the findings of the current report show, "Total capital raised by Israeli venture capital funds has decreased compared to previous years, but the market remains resilient, with significant free capital for investments. We anticipate that in the near future, investors will prefer to focus on their portfolio companies and will selectively choose new companies."
Published by Globes, Israel business news - en.globes.co.il - on September 10, 2024.
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