from the February 2015 issue

Israeli venture capital fund investment activity

In the fourth quarter of 2014, Israeli venture capital funds invested $192 million in Israeli high-tech companies, 48% higher than $130 million invested in the preceding quarter and 37% higher than the $140 million invested in the corresponding quarter. Israeli venture capital funds accounted for 17% of all investments, equal to their average throughout 2014, but slightly under the 19% share of the preceding quarter and 18% of the corresponding quarter.

First investments by Israeli venture capital funds in Q4/2014 slipped to 20% from 43% in the preceding quarter, but rose slightly from 19% in the corresponding quarter of 2013. First investments, however, remained well below the 30% quarterly average of the last six years.

Israeli VC raises $855m in new funds in 6 months In 2014, Israeli venture capital funds invested $574 million (17%) in Israeli high-tech companies, just 2% more than the $561 million (24%) invested in 2013, but up 11% from $515 million (29%) invested in 2012. First investments in 2014 accounted for 33% of total Israeli venture capital investments, slightly above the 31% of 2013, but lower than the 37% of 2012.

Capital Raised by Sector and Stage
In the fourth quarter of 2014, 36 Internet companies led capital raising, as in the previous quarter, with $320 million or 29% of total capital raised. This was the largest amount ever raised by the sector in one quarter and compared to $212 million (30%) attracted by 39 companies in the third quarter of 2014 and $178 million (22%) invested in 61 Internet companies in the fourth quarter of 2013. The life sciences followed with $250 million (23%) and software with $230 million (21%).

The Internet, the life sciences and software were the leading sectors in 2014, attracting 28, 24 and 22% of capital raised, respectively. The previous year differed only slightly as both the life sciences and the Internet attracted 22%, followed by software with 21%.

In the fourth quarter of 2014, 22 late stage companies continued to lead all investments - as they did throughout 2014 - with $381 million (34%). Fifty-seven early stage companies raised $366 million (33%), while seed investments attracted 4%, in contrast to the unusually strong previous quarter when seed accounted for a 9% share of total capital raised.

The share accounted for by firms in the initial revenue stage in 2014 dropped to 26% from 47% in 2013, when the stage led all investments. At the same time, capital raised from late stage companies accounted for 39%, compared with just 20% in 2013. Seed companies maintained their 5% share over the two last years.

Reprinted from the Israel High-Tech & Investment Report February 2015

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