Money Shekels bills 58.
(photo credit: Courtesy)
Israeli venture-capital funds raised no capital in 2010, according to the Israel
Venture Capital Association (IVC) and KPMG Somekh Chaikin.
joins 2009 and 2003 as the other dry years of the decade for the industry, they
IVC is cautiously optimistic for 2011, based on the positive
outlook for the Israeli economy and government incentives for investment,
including the Finance Ministry’s program for Israeli institutions to invest in
Israeli VC funds. The ministry expects the plan to boost investment by $220
million in 2011-2012.
IVC estimates that Israeli VC funds currently have
$1.4 billion available for investment, of which $230m. will be allotted for
first investments and the rest for follow-on investments. It predicts that
Israeli funds will raise $800m. in 2011 for investment in Israel’s hi-tech
IVC says the global financial crisis that erupted in late 2008,
which severely affected institutional investors, was the main impediment to
raising new funds. It noted that Israeli VC funds raised only $234m. in 2009, of
which $200m. was raised by Sequoia Capital Israel. The improved macroeconomic
conditions of 2010 did not help Israeli VC funds to attract new capital. Trends
in the Israeli VC fund industry generally correlate with trends in the US, where
funds raised only half the amount in 2010 compared with 2009, IVC
said. IVC CEO Koby Simana said the situation is critical.
improvement, it threatens the survival of numerous Israeli hitech companies that
cannot raise needed capital,” he said. “Moreover, venture-capital funds will not
be able to finance new companies or, in some cases, support their existing
“The government’s program for encouraging investment
by Israeli institutional investors in local venture- capital funds will likely
result in an increase both in Israeli venturecapital fund raising and in
“Most of the impact of the government plan will
be felt in 2012, since local venture-capital funds must first raise substantial
amounts – 60 percent of the total capital of each fund – from foreign
investors,” Simana said. “It’s a real challenge for Israeli venture-capital