Zeev Holtzman, Chairman of IVC Research, said "Capital raised in Q1 was the highest in eight quarters. The increase is a very positive sign, indicating the strength of Israel's high-tech industry. Figures are encouraging, especially when compared to the less positive trends in the US and Europe."
Israeli VCs boost investments
First investments in Israeli companies accounted for 44 percent of total Israeli VC investments, compared with 42 percent in the previous quarter. The average First investment by Israeli VCs was $2.0 million, and the average Follow-on investment was $0.8 million.
Efrat Zakai, Director of Research at IVC, said "More investments, greater activity in the capital markets and a pickup in exits of Israeli companies during the first quarter, indicate an improved environment which is likely to continue over the near to intermediate term."
Israeli VCs invested $22 million in 10 foreign companies.
Capital Raised by Stage
Capital Raised by Sector
Israeli high-tech companies raise $323 million in Q1 2004
In the first quarter of 2004, 111 Israeli high-tech companies raised $323 million from venture investors - both local and foreign (Chart 1). The amount was up 31 percent from the $246 million raised by 96 companies in the previous quarter and 53% higher than the $211 million raised by 86 companies in the first quarter of 2003. The average company financing round increased by 13 percent from the previous quarter and 18 percent from the first quarter of 2003 to $2.9 million. Sixty-seven companies attracted more than $1 million. Of these, 11 companies each raised between $5 million and $10 million and ten companies each raised more than $10 million.
In the first quarter, Israeli VCs invested $158 million in Israeli companies, an increase of 52 percent from the previous quarter and 68 percent above Q1 2003 levels. The Israeli VC share of the total amount invested in Israeli high-tech companies rose to 49 percent, compared with 42 percent in the previous quarter.
This compares to $33 million invested in foreign companies in the previous quarter and $18 million in the first quarter of 2003. Five of the 10 investments were First investments.
Late Stage companies attracted $64 million in the first quarter, compared with $44 million raised in the corresponding quarter of 2003. However, Mid-Stage companies continued to dominate capital raising as they had for the last six quarters. Forty-four Mid-Stage firms raised $169 million, 52 percent of total capital raised. Thirteen Seed Stage companies raised $13 million, four percent of the total, the same share as in the previous quarter.
The Communications sector led in fund raising. Twenty-seven communications companies attracted $108 million, 33 percent of the total amount raised, compared with 23 percent in the previous quarter and 37 percent in the first quarter of 2003. Software followed with $89 million raised by 27 companies, an increase of 65 percent from the amount raised in the previous quarter and 134 percent from the first quarter of 2003. The life sciences and the Internet sector attracted $60 and $19 million, respectively, similar to the amounts raised by these sectors in the previous quarter.