38 Israeli venture capital-backed high-tech companies raised $232 million during the first quarter of 2014, 18% more than the $196 million raised by 51 companies in the corresponding quarter of 2013, but 23% less than the $300 million raised by 44 companies in preceding quarter of 2013, states the Kesselman & Kesselman PwC Israel MoneyTree Report for the first quarter. The average investment rose to $6.1 million in the first quarter from $3.8 million in the corresponding quarter, but less than the $6.8 million in the preceding quarter.
52% of total venture capital investment, $121 million, was made in seven deals of over $10 million each, compared with 65% of total investment, $128 million, in nine such deals in the corresponding quarter.
Israeli venture capital funds also invested $114 million in four foreign high-tech companies that have no operations in Israel.
Software companies accounted for 41% of total venture capital investment in the first quarter, followed by communications and networking companies, with 19%, Internet companies with 16%, semiconductor companies with 14%, life sciences companies with 6%, and cleantech companies with 4%. Early-stage financing rounds accounted for 51% of total investment, third rounds accounted for 3%, later rounds 33%, and bridge loans 12%. Seed-stage companies accounted for 9% of total investment, early stage companies accounted for 51%, expansion stage companies 34%, and later stage companies 5%.
Five companies, 13% of all companies raising venture capital in the first quarter, are supported by the Office of the Israel Chief Scientist, and raised $45 million (19% of total investment).
Much has been said about the present period in the Israeli high-tech industry, with its unprecedented exit and IPO success stories, and the resulting significant improvement in venture capital fund returns. Yet, as this report shows, we still don't see venture capital investment side picking up with full force," says PwC Israel's high-tech practice co-leader Rubi Suliman. "Some stability in investment flux is indeed evident, with a mild upward trend over the last few quarters. Venture capital funds and other high-tech investors do have now significantly more capital in their disposal for making investments. For that, it is reasonable to expect, as high-tech successes continue, that the amounts invested will follow suit."
Suliman added, "In the last two quarters, we have witness a new high in the average investment per company. This is another piece of evidence for the maturity of many Israeli high-tech companies with need for larger investments, as well as the availability of money for making such investments. In addition, we see yet another rise in investments channeled to seed-phase companies, mainly thanks to the abundance of companies in early stages, and, again, combined with the availability of financial resources from new or follow-up funds of long-standing venture capital funds."
Published by Globes [online], Israel business news - www.globes-online.com - on May 7, 2014
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