In the fourth quarter, 105 Israeli high-tech companies raised $477
million, a 25 percent increase from the $381 million raised by 87
companies in the third quarter and an 80 percent jump from the $264
million raised in Q4 2005.
Seventy-three companies attracted more than $1 million each in Q4. Of
these, 11 companies raised between $5 million and $10 million each, 8
companies raised between $10 million and $20 million each, and 5
companies raised more than $20 million each. The average
company-financing round was $4.5 million, compared with $4.4 million
in the previous quarter and $3.0 million in the fourth quarter of
2005.
In 2006, Israeli VCs invested $651 million in Israeli high-tech
companies, about equal to investments made in 2005 ($655 million) and
2004 ($665 million). The Israeli VC share of the total amount
invested in Israeli high-tech companies was 40 percent, compared to
an average of 43 percent in the previous seven years and 49 percent
in 2005. The remainder came from other investment entities, mostly
foreign.
"Capital raised by Israeli high-tech companies in 2006 was the
highest in five years," said Zeev Holtzman, Chairman of IVC Research
Center and Giza Venture Capital. "Foreign participation in
investments in Israeli companies increased in 2006 and we expect
foreign investment in 2007 to remain similarly high."
First investments made by Israeli VCs were 43 percent of the total
amount invested by Israeli VCs in 2006, equal to 2005 levels. The
average First and Follow-on investments were $2.32 million and $0.87
million, respectively.
In the fourth quarter, Israeli VCs invested $178 million, 37 percent
of the total amount invested in Israeli high-tech companies. This was
25 percent above the capital invested by local VCs in the third
quarter and 36 percent above the capital invested in Q4 2005. First
investments by Israeli VC funds were 55 percent of their total
investments in Q4, versus 44 percent in the corresponding period in
2005.
Israeli VCs invested $60 million in foreign companies during 2006 (in
addition to their investments in Israeli high-tech companies),
compared to $95 million in 2005 and $107 million in 2004. Two
(totaling $10 million) of the 33 investments were first time
investments, and the remainder were follow-ons.
In the three major sectors, capital raising was nearly even in 2006
as 24 percent was raised by the Communications sector, 23 percent by
the Life Sciences and 22 percent by Software companies. Semiconductor
firms accounted for 10 percent of capital raised, the Internet for 5
percent and other sectors for 16 percent.
One hundred and seven Communications companies attracted $393
million, compared to $469 million (35 percent of the total) raised in
2005 and $430 million (29 percent) raised in 2004. While the
Communications sector attracted the highest sums, as in the past
seven years, its 24 percent share of total capital raised was at its
lowest level, well below its seven-year average of 35 percent. In Q4,
25 Communications companies attracted $106 million (22 percent) with
4 companies attracting over $10 million.
Life Science companies, with $369 million raised, accounted for 23
percent of the total raised in 2006. This compared to 21 percent in
2005 and 22 percent in 2004In the fourth quarter, 24 Life Sciences
companies attracted $117 million, 25 percent of the total capital
raised.
In the fourth quarter, 22 Seed companies attracted $54 million,
accounting for 11 percent of Q4 capital raising, compared to $20
million (5 percent) in Q3 and $22 million (9 percent) in Q4 2005.
The following are the findings of the Quarterly Survey conducted by
the IVC Research Center, provider of venture capital and private
equity research in Israel. This Survey reviews capital raised by
private Israeli high-tech companies from Israeli venture capital
funds and from other investors. The Survey is based on reports from
80 venture investors of which 45 are Israeli management companies and
35 are other - mostly foreign - investment entities
In 2006, 402 Israeli high-tech companies raised $1.62 billion from
local and foreign venture investors, 21 percent above the $1.34
billion raised in 2005 and 11 percent above 2004 levels.