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Summary of Israeli high-tech company capital raising - Q1 2005 22/06/2005. Source: IVC Research Center.
 In the first quarter of 2005, 102 Israeli high-tech companies raised $350 million from venture investors - both local and foreign, says the IVC Research Center. This Survey, conducted with the cooperation of the Israel Venture Association, reviews capital raised by private Israeli high-tech companies from Israeli venture capital funds and from other investors.
The following are the findings of the Quarterly Survey conducted by the IVC Research Center, which for more than eight years has been at the forefront of venture capital and private equity research in Israel. This Survey, conducted with the cooperation of the Israel Venture Association (IVA), reviews capital raised by private Israeli high-tech companies from Israeli venture capital funds and from other investors. The Survey is based on reports from 105 venture investors of which 58 are Israeli management companies and 47 are other - mostly foreign - investment entities.
In the first quarter of 2005, 102 Israeli high-tech companies raised $350 million from venture investors - both local and foreign (Chart 1). The amount was down four percent from the $366 million raised by 113 companies in the previous quarter and was eight percent higher than the $323 million raised by 111 companies in the first quarter of 2004.
"Israeli companies raised an average of more than $350 million per quarter since the start of 2004," said Efrat Zakai, Director of Research at IVC. "We are projecting that $1.5 billion will be raised by Israeli high-tech firms in 2005."
The average company financing round increased by six percent from the previous quarter and 18 percent from the first quarter of 2004 to $3.4 million. Sixty-eight companies attracted more than $1 million. Of these, 16 companies raised between $5 million and $10 million each and five companies raised more than $10 million each.
Israeli VC Investment Activity
In the first quarter, Israeli VCs invested $173 million in Israeli companies, an increase of 10 percent from both the previous quarter and Q1 2004 levels. The Israeli VC share of the total amount invested in Israeli high-tech was 49 percent. The remainder of capital invested was mainly from foreign sources and also from other Israeli investors.
First investments accounted for 50 percent of total dollar investments by Israeli VCs in Q4, compared with 46 percent in Q4 2004, and 44 percent in Q1 2004. The average First investment by Israeli VCs was $2.7 million, while the average Follow-on investment was $0.7 million.
Israeli VC Activity in Foreign Companies
In Q1, Israeli VCs invested $37 million in 11 foreign companies in addition to their investments in Israeli high-tech companies. This compares to $24 million invested in foreign companies in the previous quarter and $28 million in the first quarter of 2004. Five of the 11 investments were First investments.
Capital Raised by Sector
Communications attracted more capital than any other sector in Q1 as capital raised by 31 Communications companies reached $120 million or 34 percent of the total amount raised. This compares with 21 percent in Q4 2004 and 33 percent in Q1 2004. The Software sector followed with a 30 percent share of the total investment. Life Science companies attracted $87 million, compared with $130 million or 35 percent in the previous quarter and $60 million or 19 percent in Q1 2004. Although capital raised in Q1 declined 33 percent from Q4 2004 levels, the Life Sciences still attracted an impressive 25 percent of the capital, aided by a standout round of more than $30 million.
Capital Raised by Stage
Mid-Stage companies continued to dominate capital raising as they have been for the past eleven quarters. Fifty Mid-Stage companies (up to $10 million in revenues) raised $178 million, 51 percent of total capital raised in Q1. Fourteen Seed companies captured nine percent of the total capital raised, or $32 million, 24 percent below the $42 million (12 percent) raised in Q4 2004, but sharply above $13 million (four percent) in Q1 2004.
The IVC Research Centre is Israel's leading research centre specialising in analysis and monitoring of Israel's high-tech and venture capital industries. IVC's publications are used by major financial entities and government organizations in Israel and abroad. A comprehensive quarterly report based on survey results is available to IVC clients. For more details about VCs & High-Tech industry in Israel, please visit our website www.ivc-online.com or contact Koby Simana Tel: 972-3-640-2306. koby@ivc-online.com
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