Study: VC investments in Israel slump to 5-year low

Venture capital firms invested just $234m in Israel in the first three months of 2010.

Israeli high-tech companies raised $234 million from venture capital firms in the first quarter of 2010, marking the lowest quarterly amount invested in the last five years and 12 percent decline on the amount invested by firms in 93 transactions in the corresponding period a year ago.

The amount invested also reflected a 15 percent decline on the amount invested in Israeli companies in the last quarter of 2009, according to a report from Israel-focused venture capital and private equity research provider IVC Research Centre.

Of the $234 million invested by venture capital firms in Israel in the first quarter of 2010, just 33 percent or $78 million was invested by domestic firms, the lowest quarterly amount invested by them in the last 10 years. 
“Figures for the first quarter of 2010 emphasise that Israel’s high tech industry is still experiencing substantial difficulty,” Koby Simana, chief executive officer of IVC Research Centre, said in a statement. She cited a decrease in the number of active Israeli VC funds and reduced capital available as main reasons for the decline in the total value of investments. “Unfortunately, we don’t expect any dramatic improvement in the next few quarters,” she added.
Thirty seven percent of the total amount invested was directed at the life sciences sector, making it the most popular sector for investments. This was followed by software with 14 percent and semiconductors with 13 percent. 
In 2009, the total value of venture investments in Israel stood at $1.12 billion, a 46 percent decrease from 2008 and the lowest number recorded since 2003.