High-tech investment hit a ten year high in 2013, according to the IVC Research Center. 662 high-tech companies raised $2.3 billion in 2013, second only to the $3.1 billion raised in 2000. The figure includes $1.7 billion raised 395 venture-capital backed start-ups, 74% of the total amount raised.
However, while investment by Israeli venture capital funds rose to $546 million in 2013, their proportion of total investment fell to an all-time low of just 24%.
The average financing round rose to $3.47 million in 2013 from $3.37 million in 2012, and close to the ten-year average of $3.56 million.
The fourth quarter of 2013 was the best quarter since 2000, with 191 high-tech companies raising $751 million, 52% more than the $494 million raised by 161 companies in the corresponding quarter of 2012. 110 venture capital-backed companies raised $554 million, 74% of the total amount raised in the fourth quarter, 44% more than the $384 million raised in 99 companies in the corresponding quarter.
KPMG Somekh Chaikin partner and Technology Group head Ofer Sela predicts investment levels by Israeli venture capital funds to remain steady in 2014. "Most of the increase in investments has come from foreign investors, which, in addition to their traditional late stage focus, have begun dedicating substantial capital to a wide cross-section of Israeli investments. Israeli capital markets and institutional investors accounted for a very small share of venture capital industry investments in 2013. Therefore, the Israeli economy will not enjoy the returns and tax payments flowing from these investments. We hope that regulators will remove existing barriers in order to allow institutional investors to participate significantly."
For the second straight year, the life sciences accounted for the largest proportion of capital raised in 2013, with 142 companies raising $522 million, 23% of total investment. Software was in second place, accounting for 21% of investment in 2013.
"The software sector has returned to levels of investments that we saw before the financial fall of 2008," said Sela. "We can certainly talk about a trend of growing investment in this sector, which is traditionally considered to be one of the most influential in the local industry. The growth mostly reflects the data and cyber security segment that reached peak investment levels, as well as cloud infrastructure and big data, which have significant upward trends as well. Former military systems professionals, who have integrated into the civil market in the past two years, provide a huge advantage to Israeli companies, and this becomes apparent in the level of investments."
Published by Globes [online], Israel business news - www.globes-online.com - on January 22, 2014
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