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Q2 venture investments in Israeli high tech down 23 per cent from Q1

Venture investments in Israeli high tech companies totalled $291m in the second quarter, down 23 per cent from $376m in the first quarter and 43 per cent lower than in the same period last year, according to Israel Venture Capital (IVC).

There were 91 financings in the second quarter, up from 80 in the first but down from 135 in the same period last year. The average financing round fell 32 per cent to $3.2m from $4.7m in the first quarter.

Zeev Holtzman, CEO and chairman of Giza Venture Capital, said the survey results showed that ‘in the long run, the situation in Israel is very encouraging considering the global crisis of the industry and the local political climate…Investment of about $300m in the second quarter reflects an annual rate of $1.2bn a year. This annualised rate is higher than total investments made in 1999'.

Although the total amount invested by Israeli venture firms dropped by eight per cent in the latest quarter, their share of total investment increased to 51 per cent from 40 per cent in the two preceding quarters.

The overall findings confirmed the well-established downtrend in venture investing in Israel, a product both of the local environment and the much weaker global conditions. But there were some glimmers of hope in the increase in first investments. They constituted 51 per cent of the total, up 67 per cent from the first quarter.

The strongest performing sector was the biotech industry, which reported a jump in venture funding to $16m in the second quarter from just $2m in the first. There were also significant increases in funding for software companies and medical device firms. There were steep falls in the internet and communications sectors, and by semiconductor companies.

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