Israeli VCs seen raising $800M in 2011
Israel Venture Capital Research Center presents cautiously optimistic forecast due to strong local economy, government incentive program for Israeli institutions to invest in local VC funds
The Israel Venture Capital Research Center forecast local venture capital funds would raise $800 million in 2011, returning after two lean years close to pre-crisis levels around $1 billion seen from 2006-08.
IVC said it was cautiously optimistic for capital raising due to a strong local economy and a government incentive program for Israeli institutions to invest in local VC funds.
The program was expected to increase investment by $220 million in 2011-12, IVC said on Tuesday in a report issued with consultancy KPMG. The report said Israeli VCs raised no money in 2010 after just $234 million in 2009.
"The global VC current trend is to invest more in non-US investments," said Ofer Sela, a partner in KPMG's Israel affiliate. "We believe that Israel will benefit from this trend as more funds will be diverted to Israel from VCs that were less focused on Israel in the past."
Israel's high-tech sector is one of the largest in the world.
IVC said high-tech start-ups in Israel were facing funding shortages after two years of virtually no capital raising.
"Without improvement, it threatens the survival of numerous Israeli high-tech companies that cannot raise needed capital," IVC chief executive Koby Simana said. "Moreover, VC funds will not be able to finance new companies or, in some cases, support their existing portfolio companies."
About $1.4 billion of capital is currently available for investment – $230 million for first investment and the rest for follow-on investment.
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