Israeli VC investments to hit record $1.7bn in 2007
Israeli high-tech companies have already raised $1.256 billion for the first three quarters of 2007 – 10 percent above the $1.145 billion raised in the corresponding period of 2006. In this article, we look at which technology sectors and stages of companies these investments are going into.
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In the third quarter of 2007, 108 Israeli high-tech companies raised $414 million from venture investors – both local and foreign. The quarterly amount was nine percent above the $381 million raised in the third quarter of 2006, but down five percent from the $436 million raised in the previous quarter.
On target to hit $1.7 billion and positive IRRs
“Q3 figures indicate 2007 may set a five-year record with high-tech investments reaching $1.7 billion,” said Zeev Holtzman, chairman of IVC Research Center and Giza Venture Capital. “In order to complete the positive picture, we hope that the intensive investment activity will be expressed in substantial exits of over $500 million in the upcoming year that will enable the Israeli VC industry to show significant returns on their investments.”
Israeli VC investment activity
The average company financing round was $3.83 million in Q3, compared with $4.38 million in the third quarter of 2006 and $3.69 million in Q2 of this year. Seventy-three companies attracted more than $1 million. Of these, 13 companies raised between $5 million and $10 million each, 11 companies raised between $10 million and $20 million each, and three companies raised over $20 million.
In Q3, Israeli VCs invested $172 million in Israeli companies, compared with $142 million invested in Q3 2006 and $193 million invested in Q2. The Israeli VC share of the total amount invested in Israeli high-tech was 42 percent, with the remainder of capital coming from foreign investors as well as non-VC Israeli investors.
First investments accounted for 51 percent of total dollar investments by Israeli VCs in the third quarter, compared with 44 percent in the in the third quarter of 2006 and 38 percent in Q2. The average first investment by Israeli VCs was $3.25 million, while the average follow-on investment was $0.83 million.
In the first three quarters of 2007, the Israeli VC fund share of investments in Israeli high-tech companies was 43 percent, compared to 41 percent in the corresponding period in 2006.
Chart 1: capital raised by Israeli high-tech companies ($m)
Capital raised by sector
Chart 2: capital raised by Israeli high-tech companies by sector (%)
In Q3/07, the communications sector led capital raising with $83 million or 20 percent of capital raised followed by semiconductors with $74 million or 18 percent of total capital raised. The amount raised by semiconductor companies reflected two especially large financing rounds aggregating over $50 million. The software and the internet sectors share third place with 17 percent of capital raised.
“Internet companies attracted $71 million, up ten-fold from the third quarter last year and the most raised by this sector since the first quarter of 2001,” remarked Efrat Zakai, director of research at IVC. “The internet sector show consistent increase and capture more distinguished part of the total funds. From the beginning of 2007 internet companies captured 14 percent of total capital raised, this compared with six percent in the first three quarter of 2006 and only two percent in 2005 parallel period.”
Growing the seeds for future
Eighteen seed companies attracted $28 million, seven percent of the total amount raised in Q3, compared to $20 million (five percent) in the third quarter of 2006 and $51 million (12 percent) in the previous quarter. During the first three quarters of the year, seed companies attracted 11 percent of the total funds, compared with 7 percent in Q1-Q3 2006.
Israeli VC investments in foreign companies
Israeli VCs invested $9 million in nine foreign companies during Q3 2007, compared to $6 million invested in foreign companies in the third quarter of 2006 and $18 million invested in the previous quarter. All nine investments were follow-on investments.
In the first three quarters of 2007, Israeli VCs invested $36 million in foreign companies. For more information, visit the For more information, visit the IVC web site.
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© Chilli Publishing Ltd 2007 |
26 NOV 2007 |
