Israeli VC investments in technology soar

Venture investments worth $600m were made in Israeli technology companies in the third quarter of 2008, the highest quarterly figure in eight years. But such high rates of investment are not expected to continue given the global financial crisis.

The amount invested in Israeli high technology companies in the third quarter of 2008 stood at $600 million, 45 percent more than in the corresponding period last year.

Of this sum, Israeli venture capital funds invested $206 million or 34 percent, with the rest being invested by foreign investors and Israeli investors, according to the IVC Research Centre, an Israel-focused venture capital and private equity research provider. In the corresponding period last year, Israeli venture capital firms invested a total of $172 million in technology companies.

“Capital raising reached a record eight-year high, exceeding all projections for the quarter,” said Efrat Zakai, director of research at IVC.

Within the technology and technology-related space, the communications sectors saw the most investment in the third quarter of 2008, receiving $134 million or 22 percent of all investments. The internet sector was second with 21 percent of the investments.
 
In the first nine months of 2008, a total of $1.68 billion was invested in Israeli high technology companies, as compared with $1.25 billion invested in the corresponding period last year. In the whole of 2007, a total of $1.76 billion was invested.
 
In the first three quarters of 2008, Israeli high-tech companies received $1.68 billion, 34 percent above the $1.25 billion raised in the corresponding period of 2007.

“Israeli high-tech companies, responding to early signs of market changes and the falling dollar-shekel rate, have been raising follow-on capital to help them navigate through the long-anticipated global crisis,” said Zeev Holtzman, chairman of IVC Research Centre and Giza Venture Capital, an Israeli venture firm.

However, he added that now that the crisis is here, such high rates of investment are unlikely to be maintained.