Wednesday, December 21, 2005

Venture Capital investments in Israel in 2005


Israel is a powerhouse of ingenuity and innovation, boasting the largest number of startups in the world per capita.
The abundance of startup companies in Israel is an outgrowth of the country's high concentration of engineers in its workforce and government encouragement of entrepreneurship. Israeli high-tech has been made famous for startup innovations such as Internet security, instant messaging, and ingestible video cameras. Here are some stats from 2005 VC investments in Israels.


The average first investment made by Israeli VCs in the third quarter of 2005 was $2.75 million, with follow-on investments averaging at $0.92 million, according to a quarterly survey conducted by the IVC Research Center.

Thirteen seed companies attracted $34 million, a significant jump from the $22 million raised in the previous quarter and a slight drop from the $36 million enlisted in the third quarter of 2004, the survey said.

The survey, conducted in cooperation with the Israel Venture Association (IVA), was based on reports from 92 venture investors, including both Israeli and foreign entities.

Ninety Israeli high-tech companies raised $336 million from venture investors in the third quarter of 2005, according to the report.

In the third quarter, Israeli VCs invested $188 million in Israeli companies, compared with $163 million invested in the previous quarter and $194 million in the third quarter of 2004.

The report found that Israeli VCs are putting more of their money into Israel and less abroad. The Israeli VC share of the total amount invested in Israeli high-tech companies rose to 56 percent, from an average of 42 percent over the past five years. At the same time, Israeli VCs investment in foreign companies in the quarter dropped sharply to $20 million compared with the previous quarter and $23 million in the third quarter of 2004.

The communications sector led capital-raising in both the third quarter and the first three quarters of 2005, the report said. Thirty-one communications companies attracted $112 million, or 33 percent of the total amount raised. The software sector followed with 16 companies raising $55 million.

Life science capital-raising slowed in the third quarter to $53 million, accounting for 16 percent of total capital raised, compared with 24 percent in the second quarter. The sector did, however, succeed in keeping its position as the second most attractive Israeli sector in the first three quarters of the year, attracting 22 percent of the capital raised, according to the report.

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