Both funds made 11 new investments in 2018, IVC Research reports.
IVC Research, in cooperation with the Amit, Pollak, Matalon & Co. law firm (APM), today published a report rating the most active venture capital funds in Israel in 2018. Vertex Israel, which manages $960 million, and TLV Partners, which manages $267 million, are rated the most active in Israel, with 11 new investments each in 2018.
The two funds are investing money raised for the Vertex IV and TLV I funds in 2016 and raised for the Vertex V and TLV II funds in 2018. The high rating for 2018 is a result of the timing of these financing rounds, which usually produce many investments after the funds are raised. Vertex was also rated the top fund in 2017 with 12 new investments. TLV Partners, which was founded in 2015 by managing partners Rona Segev and Eitan Bek, former Pitango Venture Capital general partners, appears on the list for the first time.
Second place was shared by three venture capital funds with eight new investments each: CE Ventures from Hong Kong, which has been active in Israel since 2015; Israeli venture capital fund Next Gear, which invests in mobility companies in the early stages, and MizMaa, another fund located in Hong Kong. The prevalence of Chinese funds in Israel has increased in recent years, mainly in later-stage ventures.
Four funds, three of them Israeli, placed joint third on the list with eight first investments each: veteran Pitango, Brazilian venture capital fund ROI Ventures, Tel Aviv University micro-fund TAU, and Upwest Labs, another Israeli micro-fund. Of the nine funds in the first three places on the list, six are Israeli, two are from Hong Kong, and one is from Brazil.
"In continuation of the trend that has gained momentum in recent years, it appears that like 2018, 2019 will feature a transition from marketable to non-marketable investments. With the development of the market, it is clear that both areas of investment and the groups of managers are become more diversified and distinctive. New venture capital funds and private equity funds are being founded - both specialist funds and general funds for each investment stage," said Amit, Pollak, Matalon chairperson Adv. Yonatan Altman. According to Altman, high-tech activity is penetrating all industries, including conventional industry, and offering opportunities to all of the parties.
Venture capital funds slowed their activity in 2018, making 503 first investments in companies, compared with 533 in 2017, according to IVC's figures. The number of first investments made by Israeli venture capital funds dropped by 17% in comparison with the five-year high posted in 2017. The number of first investments made by foreign venture capital funds has been declining since 2015, and fell by a further 4% in 2018. The foreign venture capital funds maintained their share of the market, accounting for 60% of all first investments in 2018, compared with 40% by Israeli funds, the same proportion as in recent years.
The total number of investments by active funds has also declined in recent years. The most investments by a fund this year was 11, compared with 17 in 2013. The top-rated fund in 2015 was Samurai Incubate, a specialist Japanese fund for investments in companies in the early stages, which made 15 first investments. Samurai Incubate was the only non-Israeli fund to lead the list in the past five years.
356 new seed-stage investments, 33% of all investments, were made in 2018, the lowest number since 2014. According to IVC, first investments in seed-stage companies by foreign funds totaled 77 in 2018, lower than the 90-113 range prevailing in the preceding four years. In 2018, venture capital funds preferred investing in A rounds, which accounted for 38% of all first investments.
Together with the decline in investments in the early stages, IVC recorded a 5% rise in the number of first investments in companies in the intermediate stages (annual sales of up to $10 million), which accounted for 35% of all new investments in 2018.