VC firms invest $279m in Israel in Q2 2009

Venture investments in Israel declined 40% as compared to the second quarter of 2008, but showed a 5% increase over the first quarter of 2009.

In the second quarter of 2009, venture firms invested $279 million in Israeli companies. The amount invested was far lower than the $465 million invested in the same period last year, although the total number of companies that received funding increased from 115 to 122.

In the first half of 2009, the value of venture investments in Israel declined by more than 50 percent as compared to the corresponding period last year, to $544 million.

“The amount and rate of capital raised are in line with our earlier forecast of $1 billion for the full year,” Koby Simana, CEO of IVC Research Centre, said in a statement. However, the statement noted that the decline in investment activity will have an effect on the number of start-ups that can continue operations in Israel.

Of the $279 million invested in the country in Q2 of 2009, Israeli venture funds invested $113 million while the remainder was received from foreign investors including venture capital firms and other investors.

In the quarter gone by, the life sciences overtook communications as the most popular sector for investments, receiving investments worth $76 million. In the first quarter of 2009, communications was the most favoured sector receiving investments worth $126 million.

Elsewhere, India, too, saw a decline in venture capital investments in the first six months of 2009. Venture capital firms invested $117 million in India in the first half of 2009, a decline of 72 percent as compared to the $413 million invested in the same period last year. The number of deals too declined from 67 in H1 2008 to just 27 in the first six months of 2009.