capital investments in Israel down 43% in Q2
By MATI WAGNER
July 24, 2002
In the second quarter of 2002 the amount of money raised by hi-tech
companies from venture-capital funds and investors dropped 43 percent
to $291 million from the same quarter in 2001, according to a report
by Israel Venture Capital (IVC) published Wednesday.
The figures are based on a survey of 99 venture-capital funds and
68 individuals or groups, mostly foreign.
In contrast, a report recently released by the accounting and consulting
firm Kesselman & Kesselman, showed a 48% decrease in VC investments
to $217m. for the quarter. Its results were based on 73 funds and
included only those fundings in which an Israeli fund was involved.
It also did not include private investors or entities that are not
In the first half of the year there was a fall of 42% in fundraising
after 171 Israeli hi-tech companies raised $667m. from local and
foreign investors compared to $1.1 billion raised by 289 companies
in the first half of 2001.
IVC said large financing of over $20m. at once was down to five
firms from 11.
Despite the general atmosphere of pessimism in the venture capital
field, IVC quoted Zeev Holtzman, CEO and chairman of Giza Venture
Capital and owner of IVC, as expressing optimism about the results
of the survey. It demonstrates that in the long run, the situation
in Israel is encouraging considering the global crisis of the industry
and the local political climate. He also noted that annualized
investments of $1.2 billion, based on the second quarter of 2002,
are better than 1999 levels. Israeli VC funds invested 37% less
during the quarter to $127m., while individuals and other groups
not defined as VC funds lowered investments 57% to $121m. There
was a 34% rise in fund-raising in which Israeli entities were not
involved to $4 m.
Holtzman commented that Israeli economic policy makers should be
aware that Israeli hi-tech remains attractive to foreigners. They
should take the steps necessary to make the Israeli avenue open
to them. It can be a key to economic growth, he said.
First investments made up 51% of the total for Israeli VC funds
or $65m., back to last years levels after three quarters in
which follow-up investments made up the majority. First investments
are those made for the first time by the fund in a company, usually
outside its portfolio. A rise in this figure shows that funds are
willing to venture out of their portfolio in search of additional