ISRAEL 
HIGH-TECH & INVESTMENT REPORT

from the January 2001 issue


Israeli Startups raised over $3b in 2000 from venture capital funds


Israeli startups raised more than $3.2 billion from venture capital funds in 2000 - three times the amount invested in 1999. According to the Zinook group in the last quarter of 2000 Israeli startups will have raised more than $800 million. The figure was reached notwithstanding the sharp drop in Nasdaq, the drought in the Initial Public Offerings market and the security situation in the country. It also represents a decrease of less than 20 percent from the preceding quarter, when investments in Israeli startups exceeded $1 billion.

The increase in investments stemmed from the rise in the amount raised by Israeli venture capital funds themselves. Zinook estimates that they raised some $2.5 billion in 2000, compared to $1.6 billion in 1999. Over the last decade, Israeli venture capital funds have raised a total of $6.5 billion, some $3 billion of which is still available for new investments, according to Zinook.

Zinook's CEO, Zeev Holtzman, estimates that since follow-up investments represent nearly half of the total amount managed by the funds, leaving $1.5 billion is available for first-time investments in new startups.

In 2001 he expects a slowdown both in venture capital investments and in raising new money for venture capital funds. He also believes that amounts raised by the companies themselves will also drop since a large part of the venture capital funds' activities will focus on follow-up investments for existing portfolio companies, not on new companies.


Reprinted from the Israel High-Tech & Investment Report January 2001

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