In the third quarter of 2006, 87 Israeli high-tech companies raised $381 million from venture investors - both local and foreign. The quarterly amount was down 6 percent from the $404 million raised in the previous quarter, but was 13 percent above the $336 million raised in the third quarter of 2005.
"The small decrease in investment in Q3 indicated that the war, which took place during the third quarter, had only a very minor impact on venture capital investments," said Zeev Holtzman, Chairman of both IVC Research Center and Giza Venture Capital. "It signifies that investors continue to see stability and credibility in Israeli high-tech, a fact which is also reflected in the slight increase in the share of foreign investment during the Q3 period."
The first nine months of 2006 showed a 7 percent increase in capital raising to $1.145 billion, compared to $1.073 billion in the corresponding period in 2005.
Israeli VC Investment Activity
First investments accounted for 44 percent of total dollar investments by Israeli VCs in the third quarter, compared with 35 percent in the previous quarter and 41 percent in the third quarter of 2005. The average First investment by Israeli VCs was $2.25 million, while the average Follow-on investment was $0.85 million.
In the first three quarters of 2006, the Israeli VC fund share of investments in Israeli high-tech companies was 41 percent, compared to 49 percent in the corresponding period in 2005. The share of foreign investors as well as non-VC Israeli investors increased, therefore, to 59 percent from 51 percent.
First investments by Israeli VC funds were 37 percent of their total investments, versus 44 percent in the corresponding period in 2005.
In Q3, Israeli VCs invested $142 million in Israeli companies, compared with $154 million invested in the previous quarter and $188 million in Q3 2005. The Israeli VC share of the total amount invested in Israeli high-tech was 38 percent, with the remainder of capital coming from foreign investors as well as non-VC Israeli investors.