After three consecutive years of declines, U.S. venture-capital
investment increased by 8% in 2004, to $20.4 billion from $18.9
billion in 2003, according to a report from Ernst & Young LLP and
VentureOne.
The number of deals declined slightly, to 2067 from 2092. VentureOne
said that larger deal sizes partially compensated for the drop in the
number of deals: median deal size in 2004 was $7 million versus $6.3
million in 2003.
Investors also refocused on company formation as seed and first round
deals accounted for 33% of deals in 2004, up from 31% in 2003 and the
highest level since 2001.
Zeev Holtzman, Chairman of IVC Research Center and Giza Venture
Capital, noted that ". We anticipate that 2004's $1.5 billion
investment pace will continue in 2005".
In the fourth quarter of 2004, 113 Israeli high-tech companies raised
$366 million, a 16 percent decline from the $438 million raised by
113 companies in the third quarter. Although lower than the previous
quarter, Q4 was the second highest quarter in capital raising, since
Q1 2002.
Seventy-three companies attracted more than $1 million each in Q4. Of
these, 18 companies raised between $5 million and $10 million each,
and 10 companies raised more than $10 million each. The average
company financing round was $3.2 million, compared with $3.9 million
in the previous quarter and $2.6 million in the fourth quarter of
2003.
In 2004, Israeli VC investments were $665 million, an increase of 58
percent from the $421 million invested in 2003. The Israeli VCs'
share of the total amount invested in Israeli high-tech companies was
45 percent, moderately above the 42 percent average of the previous
five years.
First investments made by Israeli VCs were 46 percent of total
dollars invested by Israeli VCs in 2004, slightly above the 43
percent of 2003. The average First and Follow-on investments were
$2.2 million and $1.1 million, respectively, compared to $1.6 million
and $0.7 million in 2003 (respectively).
In the fourth quarter, Israeli VCs invested $157 million, 43 percent
of the total amount invested in Israeli high-tech companies. This
amount reflects decrease of 19 percent from the capital invested by
local VCs in the third quarter and 51 percent increase from Q4 2003
figures. Israeli VCs First investments accounted for 46 percent of
their total dollar investments in Q4, compared with 54 percent in Q3
2004, and 42 percent in the fourth quarter of 2003.
The picture in Israel was similar but the growth, from year to year,
was greater.
In 2004, 428 high-tech Israeli companies raised $1.46 billion from
local and foreign venture investors, reflecting a 45 percent increase
from the $1.01 billion raised in 2003.