from the December 2008 issue

2008 capital raising expected to reach an eight year record high

One hundred and twenty-four Israeli high-tech companies raised $600 million in the third quarter of 2008 from venture investors - both local and foreign. The quarterly amount was the highest reported in the last eight years - 45 percent above the $414 million raised in the third quarter of 2007, and up 29 percent from the $465 million raised in the previous quarter.

"Q3 capital raising reached a record eight-year high, exceeding all projections for the quarter," said Efrat Zakai, Director of Research at IVC. "We don't expect the same rate of investment in the coming quarters. However, 2008 will be logged as a record year, even if the fourth quarter comes in considerably below average", Zakai stated.

The average financing round was $4.84 million, compared to $3.83 million in the third quarter of 2007 and $4.04 million in the second quarter of 2008. Eighty companies attracted more than $1 million each. Of these, 14 companies raised $5 million to $10 million each, 12 companies raised $10 million to $20 million, four companies raised $20 million to $40 million and two companies raised more than $40 million each.

In the three first quarters of 2008, Israeli high-tech companies raised $1.68 billion, 34 percent above the $1.25 billion raised in the corresponding period of 2007.

Israeli VC Investment ActivityIn Q3, Israeli VCs invested $206 million in Israeli companies, compared with $172 million invested in Q3/2007 and $161 million invested in the previous quarter.

The Israeli VC share of the total amount invested in Israeli high-tech was 34 percent, with the remainder of capital coming from foreign investors as well as non-VC Israeli investors.

First investments by Israeli VC funds were 28 percent of their total investments in the third quarter, compared to 51 percent and 22 percent in Q3/07 and Q2/08, respectively. The average First investment by Israeli VCs was $2.76 million, while the average Follow-on investment was $1.22 million. In the first three quarters of 2008, the Israeli VC fund share of investments in Israeli high-tech companies was 37 percent, compared to 43 percent in the corresponding period in 2007.

Reprinted from the Israel High-Tech & Investment Report December 2008

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