The latest Kesselman and Kesselman PricewaterhouseCoopers MoneyTree Report shows that, during the course of the first quarter of 2008, venture capital-backed high-tech companies raised approximately $427 million in Israel, the highest quarterly investment since the first quarter of 2001. In monetary terms, this is an increase of approximately 93% in comparison with the previous quarter, in which approximately $221 million was raised, and an increase of approximately 39% in comparison with the corresponding quarter of last year, in which approximately $307 million was raised.
The report also reveals that 92 Israeli high-tech companies raised capital in the first quarter of 2008, compared with 69 such companies that raised capital in the previous quarter and 81 companies that raised capital in the corresponding quarter of last year. The average investment per company was $3.2 million this quarter, compared with $3.8 million in the previous quarter and $3.8 million in the corresponding quarter last year.
The data point to a shift towards investment in companies currently in the intermediate and later stages of their development. 74 such companies raised approximately $382 million, the highest amount of capital raised in a single quarter since 2000. This amount represents approximately 90% of the total investment for the present quarter. For the overwhelming majority of funds investing in these companies, the investments for this quarter constitute follow-on investments.
In the analysis by sector, the software sector takes first place in the first quarter of 2008, with 25 companies raising approximately $115 million, the highest amount raised by this sector in a single quarter for seven years. communications and networking takes second place, with 22 companies in this field raising approximately $104 million in the present quarter. This compares with 14 companies that raised approximately $58 million in the previous quarter and with 26 companies that raised approximately $111 million in the corresponding quarter of last year.
Investment in the semiconductor sector shows an increase in the present quarter, with 10 companies raising $63 million. This compares with 5 companies that raised approximately $51 million in the previous quarter and with 5 companies that raised $54 million in the corresponding quarter of last year. The present quarter saw two large transactions (investment in amounts exceeding $10 million per company) in this sector in a total amount of approximately $34 million, this representing 54% of the total investment in the sector.
Twelve companies operating in the life sciences sector, which also covers medical devices and biotechnology, raised approximately $50 million in the present quarter. This compares with 15 companies that raised approximately $32 million in the previous quarter and 10 companies that raised approximately $50 million in the corresponding quarter of last year. The average investment per company for the present quarter was $4.1 million, as compared to $2.1 million in the previous quarter and $5 million in the corresponding quarter of last year.
The domestic venture capital funds invested approximately $204 million, this sum representing approximately 48% of total investment for the first quarter of 2008. This compares with approximately $118 million in the previous quarter representing 53% of total investment for that quarter, and $164 million in the corresponding quarter last year also representing 53% of total investment for that quarter.
In addition to investment in high-tech companies with operations in Israel, local venture capital funds also invested $21 million in 10 overseas high-tech companies that are not engaged in operations in Israel. This compares with approximately $15 million invested in 10 non-Israeli companies in the previous quarter and with approximately $16 million invested in 16 non-Israeli companies in the corresponding quarter of last year.