Latest News Israel

PwC MoneyTree: Israeli VC investment up sharply

Share |
Friday, August 12th, 2011

Second quarter investment was 77% higher than in the corresponding quarter in 2010.

Israeli venture capital-backed companies raised $364 million in the second quarter of 2011, according to the quarterly PwC Israel MoneyTree Report, 6% more than the first quarter of 2011, and 77% more than the corresponding quarter in 2010.76 Israeli venture capital-backed companies raised funds in the second quarter, up from 60 in the corresponding quarter and down from 83 in the preceding quarter. The average investment in a company rose to $4.8 million in the second quarter from $3.4 million in the corresponding quarter and $4.1 million in the preceding quarter.

The largest amount of capital – $109 million – was invested in Internet start-ups in the second quarter, with an average investment of $8.4 million. This is the largest quarterly investment since 2001. This is 298% more than the corresponding quarter, and 46% more than the first quarter of 2011.

PwC Israel partner, High-Tech Assurance Practice, Rubi Suliman said, “The Israeli Internet sector was until recently a significant stronghold for angel investors, and it seems that the funds, which in the past doubted Israeli Internet companies’ ability to provide large exits, are now changing their minds in the face of the turbulent global Internet market.”

$35 million was invested in the communications and network sectors, 43% less than in the corresponding quarter, and 60% less than the previous quarter. $63.8 million was invested in the life sciences sector, which includes medical devices and biotechnology, down 5% from the corresponding quarter and up 43% from the previous quarter. Investment in the software sector rose to $46.5 million. $10.8 million was invested in cleantech in five transactions in the second quarter, down from $26 million in eight transactions the previous quarter.

Suliman said, “At a time when most funds are still having a hard time raising funds, it will be a complex challenge to maintain the current high level of investments. The funds are growing and increasing their investments, but without new significant funds, it will not be possible to maintain this level of investment.”