Unless the security situation changes, European venture capital funds will not invest in Israeli venture capital funds or in local startups, a leading European venture capitalist told
Max Burger-Calderon, the chairman-elect of the European Private Equity and Venture Capital Association, says Israel has lost its allure as Europe's Silicon Valley.
EVCA is the most important agency in the European private investment sector. The association represents about 900 venture capital funds from 24 countries, with total available funds of €45 billion.
In his first interview, four days after being election, Burger-Calderon said that until 18 months ago Israel was seen as Europe's Silicon Valley. Burger-Calderon still believes Israel is better at developing and commercializing technology, but since the
began it has lost its allure. Now European investors are waiting to see what happens.
Even the tax exemption for foreign investors in Israeli venture capital funds, which was approved in September 2001 after a difficult campaign by the local funds, will not substantially increase European investments, Burger-Calderon said.
Europe's reservations regarding Israel are unrelated to the global crisis. The venture capital industry is designed to support long-term investments and is not fazed by economic ups and downs, Burger-Calderon said. The impact of the Nasdaq on European investments in Israel was therefore not extensive.
European VCs are concerned by the recent accounting scandals on the Nasdaq, including Enron, WorldCom and Xerox. A major worry is that the next scandal that erupts might be in the VC industry itself, Burger-Calderon said. Consequently, EVCA has decided to formulate new accounting standards and turn the VC industry into a regulated profession that requires training and licensing.