One hundred and eighty-four VC-backed deals attracted $763 million or 79% of the total raised in first half of 2013. This amount is 20% higher than the $638 million raised in VC-backed deals in first half of 2012.
The average company financing round was $3.1 million, while the average financing round for VC-backed deals was $4.2 million.
In the second quarter of 2013, 143 companies raised $493 million, up 4% from $474 million raised by 169 companies in the first quarter of 2013 and 3% from $477 million attracted by 129 companies in the second quarter of 2012.
Sixteen companies attracted more than $10 million each, accounting for 52% of the total amount raised in the quarter.
Eighty-five VC-backed deals attracted $399 million or 81% of the total amount raised in the second quarter of 2013. This compares with 77% in the first quarter of 2013 and 67% in the second quarter of 2012.
The average company financing round was $3.5 million, while the average financing round on VC-backed deals was $4.7 million.
"The second quarter of 2013 ended on a strong note for Israeli high-tech companies, which managed to raise nearly half a billion dollars in the first half of the year. It is interesting to note that more than 60% of financing rounds were with the participation of Israeli VC funds, despite the fact that the Israeli VC share in capital invested declined," says Koby Simana, IVC Research Center’s CEO.
"Analyzing the data beyond the direct investment perspective, shows that local funds play a major role in driving high-tech financing deals forward, even when the bulk of capital is sourced from foreign investors," Simana concludes.
Israeli VC fund investment activity
In the first half of 2013, Israeli VC fund investments accounted for $265 million or 27% of the total amount invested. The share is unchanged from the first half of 2012, but is well below the 35% of the first half of 2011.
First investments captured $94 million or 35% of total investments, compared with 29% and 24% in the first half of 2012 and the first half of 2011, respectively. Follow-on investments by Israeli VC funds in the period accounted for the remaining 65%.
In the second quarter of 2013, only $118 million (24%) was invested by Israeli VC funds, the lowest quarterly amount in three years. This compares with the $147 million (31%) invested in the first quarter of 2013 and $131 million (28%) invested in the second quarter of 2012.
First investments in the second quarter of 2013 were $32 million (27% of total investments), a 48% decline from the $62 million (42%of the first quarter of 2013, but about 2 ½ times the $13 million (10%) of the second quarter of 2012. Follow-on investments by Israeli VC funds accounted for 73%.
Capital raised by sector, stage
In the second quarter of 2013, the life sciences sector attracted the largest share of quarterly investments for the fourth time in three years. Thirty-three companies raised $121 million (25% of total investments), a 33% increase from $91 million (19%) raised in the first quarter of 2013, and a slight rise from $120 million (25%) raised in the year-earlier period. The Internet sector followed with $87 million or 18%.
According to Ofer Sela, partner in KPMG Somekh Chaikin's technology group, "The uptick in investments in the second quarter reflected in part relatively robust activity in the medical devices segment.
"Yet more than two years after the launch of the Israeli government initiative to promote investments in the life sciences, the sector as a whole is still not showing the expected results (although we believe new investors have been brought to the Israeli market and have provided some stimulation to the overall life sciences industry).
"Israel is clearly falling behind the US in the relative level of biotechnology investments. Few of the most remarkable success stories of technology transfer from Israeli research institutions have been in biotech. While the risk in this industry is obvious, overall returns are still considered very rewarding.
"The Israeli government needs to continue to intervene in order to create the right ecosystem for Israeli biotech companies to flourish and prosper, as it did with the venture capital industry in the early 1990s."
Thirty-two seed companies raised $27 million (5%) in the second quarter of 2013, a decrease of 13% from $31 million raised by 53 companies in the previous quarter, but 29% above the $21 million (5%) attracted by 31 seed companies in the second quarter of 2012.