from the February 2013 issue

Israeli high-tech companies raised $1.92 billion in 2012

In 2012, 575 Israeli high-tech companies raised $1.92 billion from local and foreign investors, a 10 percent decrease from $2.14 billion raised by 545 companies in 2011.

VC-backed deals in which at least one venture capital fund participated, accounted for $1.37 billion from a total of $1.92 billion raised in 2012.

These venture-backed deals were down 22 percent from $1.76 billion in 2011. Israeli VC fund investments amounted to $516 million in 2012, 19 percent below the $638 million invested in 2011.

Ofer Sela, partner in KPMG Somekh Chaikin's Technology group, commented: "The year 2012 was a record one in terms of the number of companies raising capital over the past decade. In early stage investments, micro-VCs and angel investors succeeded in filling the void left by Israeli VCs.

The Internet sector proved, by far, to be the most attractive sector as more than twice as many early stage Internet companies were funded in 2012 than in 2011. Technology developments in recent years in both cloud-based infrastructure and content delivery platforms have enabled Internet companies to mature and develop their intended technology with greater capital efficiency than any other sector."

In the fourth quarter of 2012, 163 Israeli high-tech companies raised $494 million, up 5 percent from $468 million raised in Q3 2012, but down 14 percent from $571 million raised by 124 companies in Q4 2011.

"Despite a decrease in capital raising, the figures in fact demonstrate the strength of Israel's high-tech industry. In 2012, we saw investors shifting back into early stage and seed investments with a five-year record $146 million raised by 157 seed companies," said Koby Simana, IVC CEO. "While investment by Israeli VC funds is shrinking, foreign VCs as well as corporate and private investors are gradually increasing their activity. As a result, I'm optimistic about the high-tech industry's chances of maintaining the current level of capital raising in the coming year."

Reprinted from the Israel High-Tech & Investment Report February 2013

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