Israeli venture investments drop by 57%

Venture capital investments in Israeli high-tech companies fell from $617 million in the first quarter of 2008 to $265 million in the first three months of 2009, making it the slowest quarter in the last three years.

In the first three months of 2009, venture capital firms invested a total of $265 million in 93 Israeli companies, compared to the $617 million invested in 135 companies in the corresponding period last year, a study noted.

The amount invested also reflected a 33 percent decline as compared to the last quarter of 2008, according to results from a quarterly survey conducted by the IVC Research Centre, an Israel-focused venture capital and private equity research provider.

Forty percent of the $265 million provided in the first three months of 2009 was invested by Israeli venture capital firms and the remaining 60 percent by foreign venture capital firms.

Thirty four percent of the total amount was invested in the communications sector, followed by 21 percent in software and 19 percent in life sciences.

The first quarter of 2009 was the worst quarter in terms of the total value of venture investments recorded in Israel in the last three years. “The ramifications of the economic slowdown are being felt in Israel as we anticipated,” said Koby Simana, the chief executive officer of IVC Research Centre.

“The decrease is similar to that being experienced in the rest of the world, and, as a result, we believe that Israeli high-tech companies’ capital raising will not exceed $1 billion in 2009,” Simana added.

In all of 2008, venture capital firms invested a total of $2.1 billion in 483 Israeli companies, the highest numbers recorded in eight years.