Israeli venture capital funds raise $1.2bn in 2005

Six new Israeli venture capital funds completed their fundraising in the course of 2005. Benchmark Israel II closed a $250m fund, Carmel closed its second fund on $200m, and Israel Healthcare Ventures closed its second fund on $140m. Sequoia Israel and Genesis both closed third funds on $200m and $160m, respectively, while Giza closed its fourth fund after adding $30m to the $120m raised in 2004.

First closings were carried out by four Israeli venture capital funds, including Vertex Israel III, which held a first closing on $120m, and the life science-focused Medica-Poalim, which held a first closing on $80m in 2005.

Several firms, including Concord, Israel Seed and Tamar Ventures suspended their plans to raise new funds in 2005.

During the past 18 months foreign pension funds, including CalSTRS, CalPERS, NY State Retirement System, Oregon Public Employees Retirement Fund and TIAA-CREF, increased their involvement in the Israeli VC market, IVC Research Center found.

Zeev Holtzman, chairman of IVC Research Center and Giza Venture Capital, said, '2005 capital raising set a four-year record, confirming the pullout from the year 2000 crises. Investments came mostly from foreign sources, while local investors were generally on the sidelines. Local inactivity raises concern that Israeli institutions will miss out on the new wave of promising investment opportunities.'

According to IVC estimates, $2.3bn in capital is currently available for investment by Israeli VCs, of which $1.4bn is intended for first investments in high tech companies and the remainder is reserved for follow-on investments.

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