Summary of Israeli High-Tech Company Capital in 2006

IVC Research Center

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Israeli High-Tech Capital Raising in 2006 Reaches $1.62 Billion
Highest in Five Years
Q4/06: 80% higher than Q4/05 - with $477 million raised

Tel Aviv, Israel, January 22, 2007. The following are the findings of the Quarterly Survey conducted by the IVC Research Center, which for more than eight years has been at the forefront of venture capital and private equity research in Israel. This Survey, conducted with the cooperation of the Israel Venture Association (IVA), reviews capital raised by private Israeli high-tech companies from Israeli venture capital funds and from other investors. The Survey is based on reports from 80 venture investors of which 45 are Israeli management companies and 35 are other - mostly foreign - investment entities. The complete survey will be published in the IVC 2007 Yearbook.

In 2006, 402 Israeli high-tech companies raised $1.62 billion from local and foreign venture investors, 21 percent above the $1.34 billion raised in 2005 and 11 percent above 2004 levels.

In the fourth quarter, 105 Israeli high-tech companies raised $477 million, a 25 percent increase from the $381 million raised by 87 companies in the third quarter and an 80 percent jump from the $264 million raised in Q4 2005.

Seventy-three companies attracted more than $1 million each in Q4. Of these, 11 companies raised between $5 million and $10 million each, 8 companies raised between $10 million and $20 million each, and 5 companies raised more than $20 million each. The average company financing round was $4.5 million, compared with $4.4 million in the previous quarter and $3.0 million in the fourth quarter of 2005.

Israeli VC Investment Activity

In 2006, Israeli VCs invested $651 million in Israeli high-tech companies, about equal to investments made in 2005 ($655 million) and 2004 ($665 million).The Israeli VC share of the total amount invested in Israeli high-tech companies was 40 percent, compared to an average of 43 percent in the previous seven years and 49 percent in 2005. The remainder came from other investment entities, mostly foreign.

"Capital raised by Israeli high-tech companies in 2006 was the highest in five years," said Zeev Holtzman, Chairman of IVC Research Center and Giza Venture Capital. "Foreign participation in investments in Israeli companies increased in 2006, since Israeli high-tech is regarded as a material part of the global technology sector, prominent even against the growing activity in China and India. We therefore expect foreign investment in 2007 to remain similarly high."

First investments made by Israeli VCs were 43 percent of the total amount invested by Israeli VCs in 2006, equal to 2005 levels.The average First and Follow-on investments were $2.32 million and $0.87 million, respectively.

In the fourth quarter, Israeli VCs invested $178 million, 37 percent of the total amount invested in Israeli high-tech companies. This was 25 percent above the capital invested by local VCs in the third quarter and 36 percent above the capital invested in Q4 2005. First investments by Israeli VC funds were 55 percent of their total investments in Q4, versus 44 percent in the corresponding period in 2005.

Israeli VC Activity in Foreign Companies

Israeli VCs invested $60 million in foreign companies during 2006 (in addition to their investments in Israeli high-tech companies), compared to $95 million in 2005 and $107 million in 2004. Two (totaling $10 million) of the 33 investments were First investments, and the remainder were Follow-ons.

Capital Raised by Sector

In the three major sectors, capital raising was nearly even in 2006 as 24 percent was raised by the Communications sector, 23 percent by the Life Sciences and 22 percent by Software companies. Semiconductor firms accounted for 10 percent of capital raised, the Internet for 5 percent and other sectors for 16 percent.

One hundred and seven Communications companies attracted $393 million, compared to $469 million (35 percent of the total) raised in 2005 and $430 million (29 percent) raised in 2004. While the Communications sector attracted the highest sums, as in the past seven years, its 24 percent share of total capital raised was at its lowest level, well below its seven-year average of 35 percent. In Q4, 25 Communications companies attracted $106 million (22 percent) with 4 companies attracting over $10 million.

Life Science companies, with $369 million raised, accounted for 23 percent of the total raised in 2006. This compared to 21 percent in 2005 and 22 percent in 2004. "The Life Sciences sector played a key role in helping Israeli high-tech to reach new heights in capital raising post-2000/2001 bubble period," said Efrat Zakai, Director of Research at IVC. "In 2006, Life Science companies raised the largest amount recorded since the IVC Survey started publishing in 1999, partly reflecting two especially large financing deals of approximately $40 million each."

In the fourth quarter, 24 Life Sciences companies attracted $117 million, 25 percent of the total capital raised.

Capital Raised by Stage

In 2006, 68 Seed companies attracted $138 million. Seed companies raised the highest amount since 2001. The Seed sector captured 8.5 percent of the total capital raised in 2006 - near the 8 percent attracted by seed companies both in 2005 and 2004. Early Stage companies attracted 30.5 percent, Mid-Stage companies attracted 42 percent and Late Stage companies captured 19 percent of the capital raised in 2006.

In the fourth quarter, 22 Seed companies attracted $54 million, accounting for 11 percent of Q4 capital raising,compared to $20 million (5 percent) in Q3 and $22 million (9 percent) in Q4 2005.

Chart 1: Capital Raised by Israeli High-Tech Companies ($m)

Chart 2: Capital Raised by Israeli Life Science Companies ($m)

Number of First Investments by top 10 funds show stability

IVC: Pitango and Gemini Most Active Venture Capital Funds of 2006

Tel Aviv, , February 12, 2007. IVC Research Center has released its compilation of 2006's most active Israeli venture capital funds. The ranking was made by the number of First Investments in 2006. Data are based on the IVC Online Database and information received directly from the VC funds. The report relates to investments made in Israeli, Israel-related and foreign high-tech companies by Israeli management companies that had a minimum of $30 million under management.

Pitango topped the 2006 most active funds list with 10 First Investments. Gemini, ranked second with nine First Investments. Benchmark Israel and Carmel ranked third with eight First Investments, followed by Genesis with seven, Evergreen and Sequoia Israel with six and Cedar, Giza and Vertex with four each. All leading management companies on the list, except for Cedar, raised new funds in the past three years.

Pitango, Gemini and Giza were the most consistent seed investors, each with four. Benchmark was the most sector-focused fund of the ten, investing five of its eight First Investments in the Software sector.

Four of Gemini's nine First Investments focused on the Internet sector, while Carmel, Pitango and Vertex invested in three Communications companies each

According to IVC General Manager Guy Holtzman, "For 2007, we are forecasting stability in new early stage investment activity by Israeli VC funds. Competition among VC themselves, as well as with private investors, is pushing company valuations higher, especially in the Internet and new media sectors."

The top 10 funds made 65 First Investments, just above the 63 first investments made in 2005 and an increase of 23 percent from 53 investments in 2004. Twenty-one of the investments (32 percent) were in Seed stage companies, 33 (51 percent) were in R&D stage companies, and another 11 (17 percent) were in later stages companies.

Software sector attracted the highest number of First Investments by the most active funds in 2006 - 22 deals (34 percent), followed by the Communications sector with 18 investments (28 percent), Internet with 14 deals (21 percent), Other Technologies with eight and the Life Sciences with three.

Star, JVP, Pontifax and Infinity, that ranked in the top 10 most active funds in 2005, are missing from 2006's top ranked firms.

The complete ranking of the Most Active Venture Capital Funds for 2006 and previous years, including all portfolio investments, is available at

10 Most Active Israeli Venture Capital Funds in 2006

Ranked by number of First Investments

Management Company
No.of First Deals
3DV, Beta-O2, Contigo, D-Pharm, FringLand, Kilopass (non-Israeli), Neocraft, StarNet, Varonis, YCD
Arootz, bp Interactive, Contigo, eSnips, Novafora, Panaya, Prime Sense, SupportSpace, Wellsphere
Clarizen, DriveDiagnostics, Funtactix, GameStream, LucidEra (non-Israeli), Panaya, Seeking Alpha, Sentrigo
C-nario, Clarizen, DesignArt, Enure, MyThings, OverSi, TeraOp, Verix
Commex, Correlix, Oree, Prime Sense, PulsaCool, Serendipity, Valens
Crescendo, e-Glue, KnockaTV, NeuroSonix, Olista, WiNetworks
Dblur, Discretix, Pontis, SintecMedia, Stardoll (non-Israeli), Unisfair
Double Trump, Hiro, iamba, Media Layers
APProtect, Double Trump, Play Frontiers, YaData
APProtect, Commex, EthOS, Novafora
  • Data based on IVC-Online database and VC fund information (
  • Ranking is by First Investments
  • Investments include Israeli, Israel-related and foreign high-tech companies by Israeli management companies that had a minimum of $30 million under management.

For more information:

Efrat Zakai, Director of Research: IVC Research Center, 972 -3-640-2337

IVC Research Center is Israel's leading research center providing business leaders with an unmatched wealth of data on Israeli venture capital, private equity and high-tech industries. IVC products and services are used regularly by venture capital funds, private investors, high-tech companies, financial investors and institutions, as well as public entities such as the Office of the Prime Minister, the Central Bureau of Statistics, the Bank of and the Office of the Chief Scientist. IVC enjoys the cooperation of the Israel Venture Association (IVA) in publishing the most comprehensive guide to Israeli venture capital and high technology companies - the IVC Yearbook. Among IVC products and publications are the Quarterly Survey, which examines capital raising trends by Israeli high-tech companies; the quarterly Israel Venture Capital Journal (IVCJ), which reviews developments in the venture capital, private equity and high-tech industries; and a comprehensive online database ( containing over 5,000 Israeli high-tech companies, venture capital funds, investment companies and technology incubators, as well as news updates and lots more.