Hi-tech investment up 21% in second quarter

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

By SHARON WROBEL
July 27, 2010 11:39
3 minute read.
Money

Money. (photo credit: AP)

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.”

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“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.


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