The Shiboleth, Yisraeli, Roberts, Zisman & Co. law firm and Fenwick & West LLC have published a survey on the legal terms of venture capital deals by Israeli high-tech companies. The survey compared the terms to that prevailed in Silicon Valley during the first half of 2004.
Fenwick & West has been conducting its Venture Capital Survey on financing rounds by Silicon Valley companies for the past two years.
The Israeli Venture Capital Survey examined the terms for 50 financing rounds by Israeli high-tech companies of at least $500,000 and involving the participation of venture capital funds.
For the first time since the Fenwick & West Venture Capital Survey has been conducted in Israel, the number of Israeli financing rounds covered accounted for 60% of all relevant transactions during the relevant period, including the more important rounds in financial terms.
The survey states a turnaround during the first half of 2004. The number of financing rounds held at a high company value (up rounds) increased. The improvement trend for up rounds identified in the previous survey continued strongly in the present survey: 55% of financing rounds were up rounds in the first half of 2004, compared with 42% of down rounds (financial rounds held at lower company values).
In addition, a comparison of second quarter results with those for the first quarter indicates a clear 2.5:1 advantage of up rounds compared with down rounds. The survey warned, however, that the number of financing rounds covered in the second quarter were too few to draw final concrete conclusions.
If one looks at the half-empty part of the glass, the figures also indicate 42% of companies during the first half of the year and 27% during the second quarter were still struggling to survive, while holding down rounds.
The survey cautioned that the period covered ended on June 30, 2004, before the latest downturn on Nasdaq.
The Fenwick & West Venture Capital Survey for Silicon Valley for the second quarter of 2004 also showed an improvement over the previous survey. Up rounds outnumbered down rounds three to one.
Published by Globes [online] - www.globes.co.il - on August 22, 2004