Israeli Venture Capital Raising Flat in Q3, Seed Investments Decline

The latest IVC Online Report is out and Q3 results are in: 96 Israeli high-tech companies raised $341 million from venture capital funds and other venture investors – both local and foreign – in the third quarter of 2010.

Koby Simana, CEO of IVC Research Center, said:

“The data suggest a slow recovery in the local high-tech sector’s ability to raise capital. The third quarter was similar to the previous quarter in terms of capital raised by high-tech companies, and essentially better than what we have seen over the past two years. However, capital raising for Israeli VC funds has been frozen for quite a while, and therefore we expect further difficulties in future venture capital raising by high-tech companies.”

Israeli VC share of investment is lower than 2009

The Israeli VC share of the total amount invested in Israeli high-tech was 32 percent in Q3, with the remainder of capital coming from foreign investors as well as non-VC Israeli investors. In the first three quarters of the 2010, the Israeli VC fund share was 30 percent, compared to 36 percent in the corresponding period of 2009.

First investments in Israeli startups are down

First investments by Israeli VC funds accounted for 28 percent of total investments in the third quarter, compared to 36 percent and 20 percent in Q2 2010 and Q3 2009, respectively. In the first three quarters of 2010, first investments accounted for 30 percent, equal to the 30 percent in Q1-Q3 2009.

The average first investment by Israeli VC funds in Q3 2010 was $1.94 million, while the average Follow-on investment was $1.04 million

Chart 1: Capital Raised by Israeli High-Tech Companies by Quarter ($M)

Seed investments decreased by HALF

During the first three quarters of the year, Seed companies attracted $29 million, 3 percent of the total funds raised, compared to $52 million or 6 percent in Q1-Q3 2009. Early Stage (R&D) companies accounted for 33 percent, Mid-Stage companies (up to $10 million in revenues) 48 percent, and Late Stage companies 16 percent.

BUT not all is bad

The amount raised was similar to $343 million raised by 104 companies in the previous quarter, and 13 percent above $303 million raised by 108 companies in the third quarter of 2009.

Capital Raised by Israeli High-Tech Companies by Quarter ($M)

Eze Vidra
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Eze Vidra

Chief Innovation Officer at Antidote
Eze is the Chief Innovation Officer at Antidote, a startup helping patients search and match to clinical trial, to accelerate medical breakthroughs. Previously, Ezewas a General Partner at Google Ventures Europe. Before GV, Eze founded and led Campus London, Google's first physical hub for startups, and was the Head Google for Entrepreneurs in Europe. He's an experienced product manager and startup mentor. In 2012 Eze founded Techbikers, a non-for profit supporting children education in developing countries.
Eze Vidra
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Eze Vidra

Eze is the Chief Innovation Officer at Antidote, a startup helping patients search and match to clinical trial, to accelerate medical breakthroughs. Previously, Eze was a General Partner at Google Ventures Europe. Before GV, Eze founded and led Campus London, Google’s first physical hub for startups, and was the Head Google for Entrepreneurs in Europe. He’s an experienced product manager and startup mentor. In 2012 Eze founded Techbikers, a non-for profit supporting children education in developing countries.