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VC investment in Israel falls by 63 per cent

The bubble has burst on ten years of venture capital growth in Israel.

The IVC Research Center, a leading venture capital research organization in Israel, has reported that venture capital investment in 2001 fell to $1.4bn, a fall of 63 per cent on the amount raised in 2000 and 25 per cent below the 1999 figure.

According to IVC estimates, of the $10bn that Israeli VCs raised in the years 1992-2001, $4.1bn remains available for investment. The report also found that Apax Partners has retained its status as the largest Israeli VC fund by capital allocated to Israel. In the years 1998-2001, Apax designated $700m to Isreali investments. Pitango VC and JVP were the second and third largest investors respectively.

M&A activity involving Israeli companies decreased dramatically in 2001 and totaled less than $1bn. This compares unfavourably with MA transactions in 2000, which were valued at more than $10.5bn and the $3bn of deals recorded in 1999.

The most noteworthy deals during 2001 were the acquisition of TopTier by SAP for $400m, and the merger of Floware and BreezeCOM (both Nasdaq-traded) to form Alvarion, in a deal worth $145m.