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Israel VC Indicator Survey18/07/2008. Source: Deloitte Brightman Almagor Zohar.
 Whilst an economic slowdown has not yet been fully reflected in the official economic indicators, according to nearly three quarters (72 per cent) of venture capitalists surveyed, Israel is already undergoing an economic slowdown. Some 55 per cent of venture capitalists surveyed expect that the overall economic climate will worsen over the next six months, according to the Israel VC Indicator Survey from Deloitte.
Whilst an economic slowdown has not yet been fully reflected in the official economical indicators, according to nearly three quarters (72%) of venture capitalists surveyed, Israel is already undergoing an economic slowdown. 55% of venture capitalists surveyed expect that the overall economic climate will worsen over the next six months.
"Israel is well placed to meet the economic global crisis after its economy has grown by 5% or more in each of the past four years and with high tech exports which not only rely on price but also on competitive edge and innovation", explains Asher Mechlovich, Israel TMT Leader at Deloitte Brightman Almagor Zohar. "slowdown is here and might yet strengthen but it will probably not be dramatic, just a relative lull compared to the past few years. There will be limited layoffs, exports will slightly shrink and growth will decrease, but not substantially" adds, Mr. Mechlovich.
Six months into 2008 and not even one Israeli company went public on NASDAQ and IPOs of American venture backed companies have been few and far between. The survey reveals that a mere 3% of Israeli venture capitalists expect the NASDAQ IPO market to re-open by the end of 2008. Nearly a third (35%) of venture capitalists think that the IPO market will re-open in early 2009. The majority (62%) of respondents believe that the NASDAQ IPO market will not re-open before late 2009. "Weak market conditions make the NASDAQ practically closed for IPOs and this has significant implications on late stage companies. No IPOs mean delayed exits, more M&As and potentially lower valuations. Companies waiting for the IPO market to re-open will need additional financing (mezzanine rounds) as it seems that it will take the IPO market at least one year to re-open", explained Mr. Mechlovich.
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