Even as venture capitalists take confidence from the recent spurt of mergers and acquisitions involving Israeli hi-tech companies, most believe start-ups should rather aim to list on stock exchanges in order to grow into large independent enterprises. In its quarterly VC indicator survey, consulting company Deloitte Brightman Almagor said that though 69 percent of VC managers believe Israeli companies should opt for a share issue, 94% said M&As will continue to be the leading exit method in the short-term. "The aim of fund managers to see Israeli companies list, along with new leniencies in the Sarbanes- Oxley provisions expected for small companies, is likely to bring an increase in the number of initial public offerings (IPOs) of Israeli companies on the Nasdaq in the future," said Asher Machlovitz, head of the hi-tech sector at Deloitte. The results of the survey showed that fund managers intend to advance seed-stage funding in the first half of the year and 53% of managers said the VC market would continue the same pace of investments in hi-tech companies as in 2006. Some 36% foresaw a rise in the amount of VC investments in hi-tech while 11% predicted a downturn. While many believe the Internet sector to be the 'hot' industry for 2007, VC professionals on the whole dismissed speculation that the market has reached a bubble stage reminiscent of 2000. The survey reported that 43% of managers didn't believe there was an Internet bubble, while 23% said it was indeed a new bubble and 34% claimed it was still too early to tell. Deloitte said the question arose from search engine giant Google's acquisition of video content provider YouTube for $1.65 billion last year and the increase of new Internet companies being established. It noted, however, that current market conditions were markedly different to 2000. "Development and marketing costs of Internet start-ups are much lower than during the bubble," Machlovitz said. "Market feedback also comes in much quicker as an indicator of the success of business models." He added that the Sarbanes-Oxley reforms had prevented large share issues of companies that didn't have the financial justification, which was characteristic of the bubble years. Following the Internet market, Deloitte said investors are also looking at the cleantech industry to dominate their interests in 2007. Some 73% of fund managers said they expect a rise in investments in cleantech in the first half of 2007, while 79% also said the number of opportunities in cleantech was low but was on a strengthening trend.