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Israeli high-tech companies raised $1.5bn in 2004

Israeli venture capital investment activity recovered strongly in 2004 from the previous year, according to the latest quarterly survey conducted by the IVC Research Center. Some 428 high-tech companies raised $1.46bn from local and foreign venture investors, a 45 per cent increase from the $1.01bn in 2003.

Zeev Holtzman, chairman of IVC Research Center and Giza Venture Capital, said, '2004 was characterised by a return to full-scale activity in Israel's high-tech sector, from depressed 2001-2003 levels. Israel is a global technology and innovation centre that keeps attracting international investors, foreign VCs and multinational corporations. We anticipate 2004's $1.5bn investment pace to continue in 2005.'

In 2004, VC investments by Israeli firms totalled $665m, compared to the $421m invested in 2003. The Israeli VCs' share of the total amount invested in Israeli high-tech companies was 45 per cent, moderately above the 42 percent average of the previous five years.

First investments made by Israeli VCs were 46 per cent of total dollars invested by Israeli VCs in 2004, slightly above the 43 per cent of 2003.

The communications sector attracted the highest sums in 2004. Some 117 communications companies raised $430m, 29 per cent of the total amount raised, compared to $332m (33 per cent) in 2003. The software and life sciences sectors followed communications companies, each with a 22 per cent share of the total.

Seed companies were relatively successful in 2004, as 54 seed companies attracted $108m, eight per cent of the total capital raised. The 2003 amount was $58m.

'We are experiencing a significant rise in seed investing,' said Holtzman. 'The amount and relative share of investments directed to seed companies reached their highest level of four years. As more serial entrepreneurs get back in the industry, seed investments are predicted to grow, consequentially in 2005.'

Mid-stage companies attracted the most funding in 2004, with 196 companies raising $819m compared with 177 companies raising $493m in 2003.

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