IVC Report: VC Investments in Israeli Companies Decline 50% in Q3

IVC_online108 Israeli high tech companies raised a total of $303 million in Q3 2009, according to the latest report conducted by the IVC Research Center. The amount is 50% lower than the whooping record of $600 million in Q3 of 2008. The Survey is based on reports from 81 investors of which 44 are Israeli management companies and 37 are other – mostly foreign – investment entities

2009 has been a tough year. Between Q1 and Q3, Israeli start ups have raised $847 million, in comparison with $1.68 Billion in the equivalent period last year. Q3 was still 9% higher than the $279 million raised in Q2 by 122 companies.

Distribution of First and Follow-on Investments by Israeli VCs (%)

Distribution of First and Follow-on Investments by Israeli VCs (%)

According to Zeev Holtzman, Chairman of IVC:

“While investments in start-ups present a gloomy picture, the future is expected to be even worse. We’re in the midst of the VC industry’s toughest crisis since 2000. There is a major shortage of capital for new investments by Israeli VCs, and as foreign VC funds fail to find Israeli co-investors, they will further reduce their exposure to Israel. The result is that the high-tech sector – the growth engine for Israel’s economy – will experience a major setback from which it will not be able to recover. It is clear that the future for start-ups, VCs and the entire high-tech industry is at risk.”

First time investments have continued to drop this quarter. In Q3 of 2009, first-time investments were 20% of the total, compared to 38% and 28% in Q2/09 and Q3/08 respectively. The average first investment size was $1.2 million, and the average follow-on size round was $0.9 million. This quarter, 16 seed companies attracted $14 million, or 5% of the total amount raised.

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October 21, 2009 | Comments
Filed Under Israel, VC Cafe, Venture Capital Cafe, Venture Capital Funds, ivc, ivc online, venture capital

 

Comments

  • Antony
    We have been talking about the recession for a while now and it was about time that numbers would show it as well, in order to prove wrong to those that claim that there is no real crisis. Unfortunately there is, and the VC world is also affected by it. Try www.vcgate.com ,out of the 4500 investors there must be a pretty high number of them that are not so badly affected by the crisis.
  • tepoyglobal
    thanks for the post this was very informative and helpful..
    cheers

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