Israeli high-tech hit a record: $3.2B capital raising in 9 months
21 October, 2015
"We expect the fourth quarter trend to go up again, and believe 2015 may end with approximately $4.4 billion capital raising by high-tech companies"
“We expect the fourth quarter trend to go up again, and believe 2015 may end with approximately $4.4 billion capital raising by high-tech companies”
During the third quarter of 2015, about 165 Israeli high tech companies have raised $1.1 billion from venture capitalist funds and investors. The amount is extremely high at 55% above the $703 million attracted by 170 companies in the third quarter of 2014.
In the first three quarters of 2015, a total of 506 Israeli high-tech companies raised a phenomenal $3.2 billion, reaching nearly 95% of the entire 2014’s record capital raising, according to a new research from IVC-KPMG. Koby Simana, CEO of IVC Research Center’ said that the third quarter of the is traditionally weak. “So we expected to see a slight drop from the previous quarter’s records, yet capital raising is still going exceptionally strong.
“We expect the fourth quarter trend to go up again, and believe 2015 may end with as much as $4.4 billion in total capital raising by high-tech companies.” The average VC-backed deal in the third quarter was $9.1 million, much higher than $4.9 million average VC-backed deals in Q3/2014.
One of the continuing trends the IVC-KPMG Survey points to is the ever-increasing prominence of large deals of $20 million or more, with 20 deals reaching a staggering total of $703 million, making up 64 percent of the total capital raised in the third quarter. Koby Simana: “We are far from Silicon Valley’s $0.5 billion financing rounds, but in general large deals in Israel reflect real, rather than speculative, valuations.”
Life science companies raised a total of $327 million (30% of total capital). Internet companies followed with 26% of total investments, while the software sector fell back to the average 24%, from an exceptionally high 44% in Q2/2015. Ofer Sela, partner at KPMG Somekh Chaikin’s Technology Group, commented: “While 2015 is in the process of becoming a record year, the proportion of investments made in software companies out of the overall VC investments is a reason for concern.
“The unavailability of sufficient private equity for this segment in Israel is one of the main causes for the shortage of Israeli software companies gearing up to get listed on NASDAQ, resulting in a local ‘glass ceiling’ in terms of the size of companies established locally.”