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Israeli venture capital investment rises 31 per cent in first quarter of 2004

In the first quarter of 2004, 111 Israeli high-tech companies raised $323m from venture investors. This represents a 31 per cent increase from the $246m raised by 96 companies in the previous quarter and a 53 per cent increase from the $211m raised by 86 companies in the first quarter of 2003, according to a survey conducted by the Israel Venture Capital Research Centre.

The average company financing round increased by 13 per cent from the previous quarter and 18 per cent from the first quarter of 2003 to $2.9m. A total of 67 companies attracted more than $1m. Of these, 11 companies raised between $5m and $10m and ten companies raised more than $10m.

'Capital raised in Q1 was the highest in eight quarters,' said Zeev Holtzman, chairman of IVC Research. 'The increase is a very positive sign, indicating the strength of Israel's high-tech industry. Figures are encouraging, especially when compared to the less positive trends in the US and Europe.'

The communications sector received the highest proportion of venture investments in the first quarter. A total of 27 communications companies attracted $108m, 33 per cent of the total amount raised. Software followed with $89m raised by 27 companies, an increase of 65 per cent from the amount raised in the previous quarter and 134 per cent from the first quarter of last year. The life sciences and the Internet sector attracted $60m and $19m respectively.

'More investments, greater activity in the capital markets and a pickup in exits of Israeli companies during the fourth quarter indicate an improved environment which is likely to continue over the near to immediate term,' concluded Efrat Zakai, director of research at IVC.

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