Israel’s high-tech venture capital funding reaches seven-year high in Israel

The survey is based on reports from 86 venture investors of which 47 are Israeli management companies and 39 are mostly overseas investment entities.

The money, which went to 135 Israeli high-tech companies, was 52 per cent more than that raised by 121 companies in the first quarter of 2007, and 23 per cent above amount raised by 115 companies in the last quarter of 2008.

“2008 started exceptionally well, demonstrating the strength of the local high-tech industry,” said Zeev Holtzman, Chairman of IVC Research Center and Giza Venture Capital. “A relatively high number of high-tech companies took advantage of the momentum built up in 2007 and raised significant capital based to the premise that one should raise money when one can and not when it’s needed.”

Holtzman believes capital raising activity will probably moderate in upcoming quarters, but added, “We expect that the $1.6 billion average investment level of the last few years will be maintained in 2008.”

Ninety-six companies attracted more than $1 million each. Of these, 29 companies raised between $5 million and $10 million each, 14 companies raised between $10 million and $20 million each, two companies raised between $20 million and $30 million each, and two companies raised more than $30 million.

Israeli VCs invested $262 million of the money, 53 per cent more than in the first quarter of 2007 and 84 per cent above investments in Q4 2007. “We haven’t seen such high figures since the first quarter of 2001,” said Efrat Zakai, Director of Research at IVC, adding that, “six funds each invested more than $15 million.”

The average first investment by Israeli VCs was $2.6 million, while the average follow-on investment was $1.2 million.