Deloitte Touche in Israel produces a Venture Capital and Private Equity survey every other quarter in an attempt to identify trends within the venture capital arena and give a summary of VC expectations of the Israeli VC community for the next six to twelve months. This is the survey’s 33rd installment in Israel with the responses were collected in June this year.
Here are the top 10 takeaways from this quarter’s VC indicator survey:
- 76% of respondents believe that the Treasury Department’s “Competitive Advantage” program to encourage the high-tech industry should focus on encouraging Seed investments.
- 38% of venture capitalists believe that their focus should be on updating the technological incubators program.
- Only 14% believe that the Treasury should encourage mature Israeli companies to acquire Israeli startups
- Only 60% of respondents claimed deal flow activity will increase, in comparison to 72% in previous quarter.
- 77% of venture capitalists believe the gap is in Seed and First Round. 13% of respondents believe this gap to be in Mezzanine financing and no venture capitalist believes that there is no investment gap.
- A striking 77% of respondents claim that venture capital fund raising will become more difficult; whereas only 23% claim that venture capital fund raising will remain the same.
- Nearly half of respondents (45%) forecast the Gaza conflict to have negative affects on venture capital fund raising.
- All venture capitalists forecast that heavily indebted European countries will negatively impact venture capital
fund raising in Israel. The silver lining is that four out of every five surveyed participants (80%) believe this impact to be a minor one, with only 20% stating the opposite.
- 53% of venture capitalists expect a drop in assets under management(AUM), whereas, only 14% of respondents expect an increase in AUM.
- there was a significant increase in optimism pertaining to Israel embarking on its first IPO on the NASDAQ since July, 2007 (Voltaire). This was easily understood by an impressive 72% of respondents believing for this to occur by the end of this year. Despite the evident increase in NASDAQ IPO optimism there is still roughly one quarter of venture capitalists who believe an IPO on the NASDAQ will occur only later than 2011.
In general, the survey results show a tone of cautious optimism with regards to Israel’s economic climate. VCs are concerned about their ability to raise additional funds, but are relatively bullish when it comes to M&A activity ramping up as well as the resuscitation of the IPO market next year.