Israeli venture capital fundraising down 72 per cent in 2009

The depressed figure is the third lowest annual amount raised in the past decade, according to recent data from the IVC Research Center.

Only three Israeli venture capital funds completed their fundraising efforts in 2009. Sequoia Capital Israel, an Israel-dedicated US fund, announced the final closing of Sequoia IV, a $200m vintage 2009 fund. Other 2009 vintage funds were TriVentures II, a $25m medical device fund with American medical technology company Medtronic Inc as its main investor, and Startvest 09, the Targetech Innovation Center’s new fund, which raised $3.7m.

IVC CEO Koby Simana said, “Foreign institutional investors - who before the crisis had been the lead source of capital invested in Israeli funds - have suffered serious losses due to the credit crunch. These losses have reduced capital available for investments. The decrease in capital raised by Israeli venture capital funds reflects a global trend. In 2009, for example, US venture capital funds suffered a 48 per cent decrease in their fundraising efforts, compared with capital raised in 2008.”

Within the 18 years between 1992 and 2009 Israeli venture capital funds raised approximately $13.3bn for investments in Israeli start-ups and high-tech companies. Of this amount, $9.4bn, or 70 per cent, was raised between 2000 and 2009.

According to IVC estimates, at the beginning of 2010, capital available for first and follow-on investments by Israeli venture capital funds is approximately $1.2bn, net of management fees and operational expenses. Of this amount, IVC estimates that $400m is earmarked for first investments, with the remainder reserved for follow-on investments. It is projected that $500m will be raised in 2010 by Israeli venture funds for investment in Israeli start-up and high-tech companies.

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