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Venture capital financing in Israel's life sciences sector more than doubled in the first quarter, surpassing the traditionally strongest area of communications technology.
According to Leap Capital's Israel Tech and VC Review for the quarter, VC financing in life sciences reached $133 million from January through March, compared with $62m. during the average quarter of 2005. The traditionally strong sectors all also saw increased levels of VC financing activity, but nowhere near the levels seen by biotechnology: communications grew by 20 percent to $98m., while software rose 99% to $63m. and semiconductors by 3% to $28m.
Israel's life sciences sector accounted for more than 40% of VC private financing of Israeli tech companies, led by a $90m. investment by TA Associates in Alma Lasers, an aesthetic medical lasers company. Total VC investment activity, involving 38 transactions was $331m., representing an increase of 64% over the first quarter of 2005, the report said.
Israeli companies raised a total of $1.7 billion on the capital markets during the first quarter, of which $1.5b. were from life sciences public financings.
M&A activity totaled $705m., down from the $3b. average per quarter due to the lack of big volume transactions. Out of the 11 transactions in M&A, 44% were in life sciences.
The quarter also saw continued increased participation of foreign VC and tech finance firms in Israel.
New Israel initiatives launched during the first quarter included venture lending firm Lighthouse Capital Partners, investment banks Goldman Sachs and WR Hambrecht, and VC Lightspeed Venture Partners forming a joint Internet Lab project with local VC Gemini Israel Funds. Foreign buying of Israeli tech companies during the same quarter included Sun Microsystems acquiring Aduva; BMC Software buying Identify Software; Johnson & Johnson purchasing ColBar; and VeriSign buying Snapcentric.
The most active VCs in Israel during the first quarter of 2006 were Carmel Ventures and Intel Capital with four investments each, while Lightspeed Venture Partners, Ofer Hi-Tech, Pitango, Star Ventures and Vertex each made three investments during the quarter, Leap said.
IPO activity was weak in the first quarter with two reported offerings between Nasdaq and London's Aim market. Strong IPO activity is expected in the second quarter with six public offerings waiting in the registration pipeline - five on Nasdaq and one on Aim.