The IVA commissioned a study to determine the
contribution of the venture capital funds to the
Israeli economy. A key finding in the study
prepared by economist Yacov Sheinin reveals that
startup companies supported by venture capital
contributed about 35% of the growth in the
electronics and software field in Israel in the
past decade.
The current rate of $1.5b. per year in VC funding
is required for a sustained growth of at least 6%
in the Israeli economy in its current business
structure. The report suggests that continuation
of investments at current levels will help to
advance Israel's economy from 22nd place in the
global ranking of GNP to 15th place or higher
within 20 years.
Other findings include:
During the past decade, VC investors have
invested over $12 billion in Israel. This is the
world's highest rate of VC investment relative to
GDP.
6% of the country's labor force is employed by its high-tech industries.
The annual high-tech conference if the Israel
Venture Association (IVA) held in Tel-Aviv, last
month, was a standing room only event. Sprinkled
throughout the audience were young entrepreneurs,
hoping to land a venture capitalist investor. The
conference attracted top drawer speakers in
including the Prime Minister and the Minister of
Finance.
Venture capital investments directly contribute over 1% of Israel's GDP.
Over 90% of VC investments are directed to
startup companies and represent the dominant
source of funding for these companies.
About 90% of the Israeli startup that are
supported by VC funds continue to operate in
Israel rather than moving overseas.
The percentage of high-tech production in the
overall GDP is the highest in the world.
An increase in grants from the Chief Scientists
for new ventures, including incubators, is a
necessary condition for increasing investment
opportunities for the venture capital funds for
further development of high-tech industries.