from the January 2016 issue

2015's crop of Israeli high-tech exits worth $9b

VC-backed exits were the highest in ten years. IVC's Koby Simana: VC funds are becoming more patient.

There were 104 exits by Israeli high-tech companies in 2015, and these generated $9.02 billion in proceeds, according to figures released today from a survey by IVC Research Center in conjunction with the Meitar Liquornik Geva Leshem Tal law firm.

The number of exits was 10% down in comparison with 2014, but proceeds were up 16% to the highest level in the last three years. The number of exits in 2015 is in line with the 10-year average of 100 deals. The average exit deal was $87 million in 2015, up from the $62 million 10-year average.

The top three exits in 2015, each above $500 million, jointly accounted for 30% of the total exit proceeds. The $1.25 billion acquisition of Fundtech by D+H, an international fintech company, alone accounted for almost 14% of the total exit proceeds in 2015. The acquisition of Valtech by HeartWare followed, with $929 million, and Ex Libris's acquisition by ProQuest accounted for $500 million. VC-backed exit deals broke records in 2015, when 52 VC-backed deals brought in a total of $4.98 billion - the highest in 10 years, bypassing even 2013's $4.04 billion, which included Waze's $1.2 billion acquisition by Google. The record is a result of the combination of a large number of deals and the size of the average VC-backed exit. At 52 exits, the number is second only to the 57 VC-backed deals performed in 2006, and is 24% above the 10-year average of 42 VC-backed exits per year. The size of the average VC-backed deal reached nearly $96 million, 47% above the 10-year average and second only to the record set in 2013 - of $106 million.

IVC Research Center CEO Koby Simana said by way of explanation of the exceptional achievement, "The increase in the size of the average VC-backed exit has a lot to do with the patience and perseverance with which VC funds have been managing their Israeli portfolios lately. The VCs, many of whom have been successfully raising new funds in the past two years, have enough breathing room to patiently wait for portfolio companies to realize their full potential. "One of the things our analysis revealed was that the average time to exit in VC-backed deals keeps climbing, reaching 9.5 years in 2015 - narrowly within the VC model timeline. The funds' willingness to sit and wait for a portfolio company to mature enough for a substantial exit, seems to pay off, as the average deal and return on equity are climbing as well."

Reprinted from the Israel High-Tech & Investment Report January 2016

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