Israeli high-tech companies raised an all-time annual high of $4.8 billion in 2016, 11 percent above the $4.3 billion raised in 2015, according to a new report by IVC Research Center.

The IVC-ZAG Israeli High-Tech Capital Raising Survey shows the average financing round last year reached $7.2 million, 19% above the $5.1 million five-year average.

“As expected, 2016 ended as a record year in Israeli high-tech capital raising,” says Koby Simana, CEO of IVC Research Center.

The IVC-ZAG Survey showed that while capital-raising reached new heights in 2016, the number of financing rounds were fewer than expected, with 659 deals closed in 2016, marginally above the five-year average of 657 deals, and 7% below 2015’s record 706 deals.

“When we looked into the numbers to try and explain the trend, we found what I would call a ‘B Crunch’ – a 30% drop in the number of second rounds closed in 2016 compared to 2015, while the number of earlier rounds slightly increased. This is a troubling trend for the Israeli VC funnel, since the majority of capital goes into later rounds – if there are no companies lined up for later investments, there could be a more serious issue later on,” said Simana.

Software companies led capital-raising in 2016 with $1.7 billion, up from 2015 when the sector attracted $1.4 billion. Internet capital raising decreased in 2016, when the sector attracted only $744 million compared to $1.12 billion raised in 2015. There was also a 14% decrease in life science capital raising in 2016.

“Despite the decrease in life science capital raising in 2016, we remain optimistic with regards to the industry’s potential in Israel, due to three major reasons: the continuous interest shown by Chinese investors, good chances for the return of European and US investors to Israeli life science investments, and Donald Trump’s imminent presidency. According to his campaign, Trump is expected to ease price control on drugs and medical services, bringing an optimistic note to the industry, which may increase the appetite for investments, Israel included,” said ZAG-S&W’s Shmulik Zysman.

The IVC-ZAG Survey – which is based on reports from 193 investors of which 42 were Israeli VC management companies and 151 were other entities —  also shows an upsurge in large deals (above $20 million) in 2016, both in terms of deal number and capital raised – with 76 deals and $2.68 billion, respectively – a 22% increase from the $2.19 billion raised in 68 deals in 2015.

“We expect the uptrend in capital raising activity to continue in 2017, though possibly at slower rates,” said Oded Har-Even, ZAG-S&W partner.

Meanwhile, the Israeli high-tech arena posted $10 billion in exits in 2016 –  topping 2015’s $9.02 billion.