Vintage year funding remains high in Israel despite economic gloom worldwide.Israeli venture capital funds expect to raise more than $800 million in 2008 for investment in high technology over the next few years, according to the Israel Venture Capital (IVC) Research Center.
The IVC reports that Israeli venture capital funds currently have $2 billion in capital available for investment, of which $1.2 billion is intended for first investments in high-tech companies, with the remainder reserved for follow-on investments.
In 2007, Israelis VCs raised a total of $1.1 billion by vintage year, a 21% increase as compared with $903 million for 2006, but down as compared with $1.64 billion in vintage year funding for 2005. Vintage year refers to first capital call or first investments.
The year 2000 was the all-time high for Israeli vintage year funding, when $2.7 billion was raised; the all-time post-bubble low was in 2003 with a paltry $6 million in first investment funding.
Vintage 2007 funds included Pitango Venture Capital’s fifth fund, which closed at $330 million; Eli Hurvitz’s Pontifax II, which raised $85 million; 7Health Ventures, a new $70 million life sciences fund; and Wanaka Capital Partners, a $45 million fund.
Six Israeli venture capital funds announced first closings in 2007. These included DFJ Tamir Fishman and Aviv Venture’s second fund, new cleantech funds AquAgro and Israel Cleantech, and medtech funds SCP Vitalife and Agate Investments.
IVC noted that both the DFJ Tamir Fishman and SCP Vitalife funds were established by Israeli firms in partnership with foreign investors.
Upon release of the 2007 data in the upcoming IVC 2008 Yearbook, IVC CEO Guy Holtzman commented: “The current economic climate is affecting both VC funds and high-tech companies. Still, the level of foreign institutional investor interest and activity continues high, and Israeli institutional investors are increasing their allocations to Israeli VC and private equity funds.
“Concurrently, uncertainty in the capital markets and the weakness of the dollar are causing Israeli high-tech companies to seek more funds in order to meet their financial needs,” he added.
Over the past decade, Israeli VCs have raised a total of $10.6 billion.