Hi-tech fundraising up 4% in first half

Fundraising by Israeli hitech companies grew 4 percent in the first half of the year to $764 million, according to the Israel Venture Capital Research Center, which said it expects the market to continue to follow the global trend and remain untouched by the violence that has hit the country in the last weeks. "If you look at the last few years, venture capital investments was exactly the same as in the US and Europe when the situation in Israel was a lot worse," said Efrat Zakai, director of research at the IVC Research Center. "So I don't think that things will change for the rest of this year." The second quarter of 2006 saw 109 Israeli hi-tech companies raise $404m. from local and foreign venture investors, compared to $387m. raised by 98 companies in the parallel quarter of 2005. Making a comeback for attracting investments, Internet companies took 8% of the capital after experiencing a general downward spiral from 40% of the total capital raised in the second half of 2000 to just 3% in the second half of last year. For the quarter, Internet companies raised $36m., or 9% of the total, up from 4% of the pie in the second quarter of 2005. Also increasing its stake year-over-year, the software sector rose from 8% to 15% in 2006 but communications companies' share dropped from 35% to 32%, while life sciences decreased from 24% to 17% and semiconductors from 15% to 8%. Other sectors accounted for the remaining 19% of investments. Seed stage companies had a relatively slow quarter, raising 3% of the total investments, or $12.12m., down from $23.22m. in the parallel quarter in 2005. In the first quarter of the year seed stage companies raised 14% of the total. Research and development stage companies raised $101m., up from $96.75m. last year, while initial revenue stage companies attracted $173.7m., down from $197.4m. Investors nearly doubled their investments in revenue growth stage companies which raised $117.2m., compared to $69.7m. in the second quarter 2005. The average financing round for the hi-tech sector in the quarter dropped 6% to $3.7m.