By Oded Hermesh

Some of the investors who committed to investing in the

eXseed Technology Investments

venture capital fund are reneging, preferring to pay fines.

Ziv Dascalu, the fund's managing director, confirmed the news.

He said that private investors slammed by the crisis in the financial markets prefer to pay fines rather than be further strapped by putting their money into the fund.

The fund is considered one of Israel's best. Dascalu, its founder, is responsible for several successful investments, including in Abir-Net, which was purchased by Memco, which was sold to Platinum, which was in turn sold to

Computer Associates


eXseed also put money into Peach Networks, which was founded by Elbit Ltd (Nasdaq:ELBTF) and sold two years ago to


(Nasdaq:MSFT) for $76 million.

Other funds are hurting too

The Israeli venture capital sector has recently been gripped by fear that investors will fail to meet their commitments.

At least two other local venture capital funds, including Eretz, one of the country's largest, have been forced to make similar announcements.

When funds announce financing rounds, what they mean is that they have received signed commitments from investors. They do not get the whole amount up front. The money is streamed in as needed, in accordance with the fund's actual investment, in "capital calls."

Market analysts estimate that close to $2 billion of the capital raised by Israeli venture funds in recent years is waiting for the capital call phase, in which the investors' commitments are carried out.