108 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.
“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.