NETANYA, Israel — During the first quarter of 2007, 121 Israeli high-tech companies raised $406 million from venture investors — both local and foreign.
The amount was up 13 percent from the $360 million raised by 101 companies in the first quarter of 2006, but 15 percent below the previous quarter's $477 million (highest in five years) raised by 105 companies.
In all, 83 companies attracted more than $1 million each. Of these, 17 companies raised between $5 million and $10 million each, seven companies raised between $10 million and $20 million each, and 2 companies raised more than $20 million each. The average company financing round was $3.4 million, compared with $3.6 million in the first quarter of 2006 and $4.5 million in the previous quarter.
The figures come from a survey conducted by the IVC Research Center, which used reports from 80 venture investors, of which 50 are Israeli management companies and 30 are other — mostly foreign — investment entities.
During the period, 33 companies involved in communications technologies attracted $124 million, or 30 percent of the total raised, followed by 20 companies in the life sciences sector with $68 million or 16 percent. 17 internet companies raised $64 million or 16 percent of the capital, which compared with $21 million or just 6 percent in the first quarter of 2006 and $22 million or 4 percent in the previous quarter.
"The Internet sector is gaining momentum just as in the US," said Efrat Zakai, Director of Research at IVC. "First quarter Internet figures %#151; the highest in five years — surged due to an increase in the number of deals and one particularly large financing round of over $20 million," he added.
"Q1 results show the continuation of the strong investment level that we saw last year — around $1.5- to 1.6 billion," said Zeev Holtzman, Chairman of IVC Research Center and Giza Venture Capital.
"The Israeli VC fund investment level is almost the same as in previous quarters, but the relative Israel VC share is less. This indicates a shortage of capital and a very cautious pace of investments by the Israeli VC funds. Other investors " mostly foreign VC funds " have increased their investments.
"Interestingly, many of these investments were made without the involvement of the Israeli VCs, effectively increasing competition for good deals."