Some 422 companies attract total of $1.57 billion in first three quarters of 2011

Photo: Jupiter

High-tech firms raise $522M in Q3

IVC-KPMG quarterly survey shows share of Israeli VCs has markedly declined, while foreign investors have strengthened their presence in Israeli market

Ynetnews|Published: 12.28.11 , 14:12

The third quarter of 2011 saw 137 Israeli high-tech companies raise $522 million from venture investors, both local and foreign – down 8% from $569 million raised by 145 companies in Q2/2011, but up 53% from $341 million raised by 96 companies in Q3/2010.

The following are the findings of the IVC-KPMG Quarterly Survey conducted by IVC Research Center in cooperation with KPMG Somekh Chaikin Israel.

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This Survey reviews capital raised by private Israeli high-tech companies from Israeli venture capital funds, foreign and other investors, and is based on reports from 128 investors, of which 45 were Israeli management companies and 83 were other – including foreign – investment entities.

Four hundred and twenty-two companies attracted a total of $1.57 billion in the first three quarters of 2011. The amount raised was 71% above the $918 million raised by 291 companies in the corresponding period of 2010.

"Data for the first three quarters of 2011 indicates investment activity at the high levels of 2008," observed Koby Simana, CEO of IVC Research Center. "However, one big difference is the mix.

"The share of Israeli VCs has markedly declined, while foreign investors have strengthened their presence in the Israeli market."

In Q3/2011, 83 companies attracted more than $1 million each. Of these, five raised more than $20 million, 13 raised between $10 million and $20 million, and 17 raised from $5 million to $10 million each.

Israeli VC fund investment activity

In the third quarter of 2011, Israeli venture capital funds invested $96 million in Israeli companies, 40% below the previous quarter (which was the highest in three years) and 12% below Q3/2010.

Israeli VC funds invested $393 million in the first three quarters of 2011, a 41% increase from the same period in 2010.

The Israeli VC fund share was 25%, a decrease from 30%.

In the third quarter, first investments by Israeli VC funds accounted for 30% of their total investments, compared to 26% and 28% in Q2/2011 and Q3/2010, respectively. The average first investment by Israeli VC funds in the third quarter was $1.93 million, while the average follow-on investment was $0.85 million.

First investments in the first three quarters of 2011 accounted for 26% of Israeli VC fund investments, compared to 30% in the corresponding period of 2010. The average first investment in Q1-Q3 was $1.94 million, while the average follow-on investment was $1.09 million.