Q1 Israeli VC investment falls

PWC has published its Q1 report on Israeli VC deals showing a 27 per cent drop in deal value in the troubled region.

Venture capital investment in Israel fell to $344m in the first three months of 2002, a year-on-year drop of 27 per cent, according to a report published by accountancy firm PriceWaterhouseCoopers.

The PWC Money Tree survey, which covers Israel’s 74 domestic venture funds, also highlighted a major drop in seed and start-up financing, with only six companies managing to attract a collective $7m.

Three large deals attracted over $210m of the $344m total raised in Q1 comprising $80m by Chiaro Networks, $75m by Atrica and $56m by Mellanox Technologies. The number of companies raising money fell to 76 from 106 in the previous quarter and 132 a year ago.

The ongoing Israeli-Palestinian conflict is believed to have had a negative impact on venture capital investments in Israel. Earlier this month, it was reported that Japan’s Nomura Holdings had refused to meet a $3m commitment to Israeli fund Delta Ventures, citing political problems in the region.

US-based Investment Dealer’s Digest reports that many U.S. venture firms that recently expanded into Israel are now reconsidering their positions. As a result, Israeli venture capitalists are now looking to attract investments from local pension funds to make up for the shortfall.