Vertex Israel was the most active venture capital fund in Israel with 12 new investments, according to the IVC Research Center - Amit Pollak Matalon & Co. (APM) venture capital fund report, which analyzes first investments in Israel performed in the past five years.
Vertex Israel ranked at the top of the 2017 list with 12 first investments. aMoon Partners, a life sciences fund managed by Check Point founder Marius Nacht, ranked second, with 11 new investments from its $150 million fund. Three funds shared third place - F2 Capital, iAngels Seed Fund and Mindset Ventures with ten new investments each.
While Vertex, with $800 million under management in four funds, and in the process of raising capital for its fifth fund, has been active for 20 years, aMoon and F2 Capital ($50 million), iAngels ($100 million) and Mindset Ventures ($20 million) started their activity in 2016 vintage year. The top-ranked funds are varied in terms of investment focus on sectors and stages, and in the amount of capital they manage and invest.
Six investments seemed to be the preferred number of new deals. Among the first six ranks in 2017 - ten funds performed six new investments each. All top ranks were captured by Israeli funds, except for Brazilian Mindset Ventures (see Table 1). Twelve Israeli funds were ranked in the first six leading spots, two were U.S. funds, and one from Japan, Brazil, China, and Hong Kong each.
The Most Active Funds report also found traces to the early stage slope in terms of exits and amounts of capital raised. Several funds, ranked higher in previous years due to high investment rates in early stages, slowed down in 2017. Singulariteam, managing $152 million in three funds, ranked first in 2015 with 12 new investments, performed eight new deals in 2016 and no new investments were registered in 2017.
The same happened with OurCrowd and UpWest Labs, co-ranked first in 2016. Upwest Labs, (managing $9 million) ranked second with 11 new deals in 2015 compared to eight and six new deals in 2016 and 2017, respectively. OurCrowd, managing $20 million in two funds, ranked third in 2016 with seven deals, and did not reach the first six places in 2017. OurCrowd’s equity crowdfunding platform was very active in 2017, but wasn't included in this report.
Israeli venture capital funds increased their first investment activity with 212 new deals holding 48% of the total new investments, a record in the last five years. The ratio between Israeli and foreign funds decreased, as the foreign funds performed 233 new deals holding 52% of the total - the lowest share in five years.
IVC Research Center research manager Marianna Shapira said, “IVC found a certain slowdown in foreign VC activity in Israel in 2017, both in number of funds and their first investments, compared to the three previous years. It appears that foreign VCs were more cautious in 2017; their average first investment stood at $1.5 million compared to $1.7 million in 2016. In previous years, foreign VCs made most of their first investments in early stages. In 2017, IVC noticed a sharp decline of 23% in the number of first investments in seed and R&D companies. The majority of their investments went to mid-stage companies that already had products and revenues. Israeli funds, however, were busy enlarging their portfolio; quite a few new Israeli funds began their activity in 2017, showing an increase in their first investments."
The number of first deals by Israeli funds increased by 18% (212 new deals) compared to 179 new deals in 2016. The number of Israeli investors increased by 75% (63 Israeli funds) compared to 36 Israeli funds in 2013. Foreign activity decreased by 13% from 2016 - 233 deals by 151 foreign investors in 2017, down from the number of first investments in three previous years.
APM chairman Yonatan Altman said, "2016 and 2017 were very successful for Israeli fundraising, among other reasons due to the low interest rate and large amounts of capital that transitioned from public to private investments, with part of the capital flowing into the high-tech market. In 2018, if the macro-economy, the low interest rate, and growth figures in the US, Europe and Asia remain stable, I expect that VC fundraising ability will continue to be strong. The end of the previous year and the beginning of this year have already proven this trend, as many VC management companies have already established follow-on funds, and new VCs and investors have joined the VC market. All this is very positive and demonstrates that investors are more open than in the past to working with new management teams, understanding that there is a place for new teams in addition to the existing ones, and giving the new ones a chance to express themselves."
He added, "New investment areas, such as blockchain and transportation, represent new investment growth vehicles for the venture capital industry. On the other hand, old growth vehicles, which suffered from a negative image, such as life sciences, biotechnology, medical devices, and pharmaceuticals, are winning their way back to center stage."
The number of early rounds (seed and A rounds) was 4% down to 314 new investments, compared with 328 new deals in 2016. A decrease of 12% was noted in the number of new A round deals - from 190 new deals in 2016 to 168 new deals in 2017. The number of first investments in late rounds increased since 2013 (38 new deals), and kept stable for the three last years with 60 new deals, including 2017. The number of B rounds increased by 22% in 2017 to 71 deals, compared to a low of 58 deals in 2016.
In 2017, micro-VC funds (with $50 million or less under management) were less active - 99 first investments compared to 104 in 2016. Israeli micro-VC funds new deals performance kept their share with 77 first investments (78% of the total) in 2017. Foreign micro-VC funds first investment activity decreased (22 new deals and 22% of the total).
Published by Globes [online], Israel business news - www.globes-online.com - on January 29, 2018
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