Israeli high-tech is celebrating a very successful third quarter as companies raised a total of $1.19 billion between July and September 2016, the second highest quarterly amount in 10 years, according to the IVC-KPMG Quarterly Survey.
Some of the highlights in the report show that financing in Q3/2016 was up 12 percent from a three-year average; VC-backed deal making stood at $662 million; and investments by Israeli VC funds totaled $130 million.
The biggest deal of the quarter was the $204 million geothermal company Ormat Technologies transaction. According to the survey, when excluding the Ormat deal, the quarterly results stand at $982 million, similar to the $1 billion quarterly average raised in the past three years.
IVC-KPMG Survey findings also showed 142 funding deals closed in the third quarter of 2016, a 26% drop from Q2/2016 numbers (193 deals).
Since the beginning of 2016,
blue-and-white high-tech companies raised $4 billion in 510 deals.
“While we observe a decline in the number of investments, we don’t believe that the local ecosystem is going to be dramatically impacted by the global downtrend in the long run, since the flow of quality deals continues to be strong and new growth investors are investing in these deals, providing a wider horizon to such companies, both in terms of the type of potential exit and valuation,” said Ofer Sela, Partner at KPMG Somekh Chaikin’s Technology group.
Since the beginning of 2016, Israeli high-tech companies raised a total of $4 billion in 510 deals, 27% above the $3.15 billion raised in 491 deals in the first nine months of 2015.
Koby Simana, CEO of IVC Research Center, says that IVC noticed a drop in foreign investor participation in Israeli technology capital raising, particularly by foreign VC funds, in rounds closed during the third quarter.
“This is a reflection of the global downtrend in VC investment that has been going on for over a year. Venture capital investors have put on the brakes in nearly every country, with US capital raising, for example, declining for the fifth quarter in a row,” said Simana.
“In Israel, we have so far been going against this trend, exceeding former capital raising records. Thus, this drop in the number of deals involving foreign VC funds is not entirely unforeseen. However, we need to wait for the fourth quarter results in order to determine that Israeli market is indeed following the global tendency. In any case, we expect 2016 to close as a record year in terms of capital raising, so short of a dramatic surprise in the coming months, we are still far from declaring that the global VC crisis has hit Israel,” Simana said.