Hi-tech investment up 21% in second quarter

Venture capital-backed hi-tech companies raised $206m., up from $170m. in previous quarter.

Breaking news (photo credit: JPOST STAFF)
Breaking news
(photo credit: JPOST STAFF)
Venture-capital investment in local hi-tech companies was up 21 percent to $206 million during the second quarter, according the MoneyTree Report by Kesselman & Kesselman Pricewaterhouse–Coopers released Monday.
“The growth in the level of VC investments in Israel during the second quarter is modest relative to the 34% growth in the US over the first quarter and a 50% rise over the first half of 2009,” the report said. “Still, these results represent a great promise for the Israeli hi-tech industry, as changes in investment levels in Israel tend to follow those in the US over time.”
“It is evident that VC investors feel more comfortable in the current market and are more confident with the maturity of their existing portfolios and, as a result, in the ability to cash in on their investments,” the report said. “As a direct upshot, funds make larger investments in companies outside their portfolios.”
VC-backed hi-tech companies raised $206m., up from $170m. in the previous quarter, and up 27% compared with the same quarter last year, when $162m. was raised. Total investment in the first half of 2010 was $376m., compared to $356m. in the first half of 2009.
In the second quarter, 60 local hi-tech companies raised capital, compared to 72 in the previous quarter and 61 in the same quarter last year. The average investment per company was $3.4m., compared with $2.4m. in the previous quarter and $2.7m. in the same quarter last year.
Investment in life sciences, which includes medical devices and biotechnology, was the highest since 2004. Nineteen companies raised $67m., compared to $36m. by 18 companies in the first quarter and $32m. by 13 companies in the second quarter last year.
The average investment per company was $3.5m., up from $2m. in the first quarter and $2.5m. in the second quarter last year.
The Internet sector returned to the investment level of previous years. Seven companies raised $27m., compared to four companies that raised $4m. in the first quarter and three companies that raised $9m. in the second quarter last year. The average investment per company in this sector was $3.9m., up from $1m. in the first quarter and $3m. in the second quarter last year.
Investment in the communications and networking sector surged 111% as 16 companies raised $62m., compared with 12 companies that raised $29m. in the first quarter and 14 companies that raised $29m. in the second quarter last year. The average investment per company was $3.8m., up from $2.4m. in the first quarter and to $2m. in the second quarter last year.
In the semiconductors sector, two companies raised $11m., compared to eight companies that raised $38 m. in the first quarter and one company that raised $1m. in the second quarter last year. The average investment per company was $5.5m., up from $4.7m. in the first quarter and $1m. in the second quarter last year.
Investments in seed-stage companies dropped, while investments in late-stage development more than doubled.
Six companies at the start-up stage raised $13m., or 6% of total investment, compared to 12 companies that raised $17m. in the first quarter and six companies that raised $7m. in the second quarter last year.
Six companies at late-stage of development raised $37m., compared to five companies that raised $14m. in the first quarter and five companies that raised $14m. in the second quarter last year. The average investment was $6.2m., up from $2.9m. in the previous quarter and $2.7m. in the second quarter last year.