Research by IVC Online reveals that, in Q4 2001, 120 privately-held Israeli hi-tech firms raised $464 million from local and foreign investors, a sum 23% higher than that raised by 117 companies in the third quarter.
IVC's research further reveals that in all of 2001 hi-tech firms raised a total of $2 billion, 36% less than the $3.1 billion raised in 2000. In the entire year 2001 526 companies raised capital, as opposed to 513 companies that did so in the year 2000. In 2001 an average round shrank by 37% to $3.8 million, down from $6 million in 2000.
Israeli investors took part in 106 of the 120 financing rounds in Q4, when the average amount raised per company grew by 22% from Q3 to $3.9 million.
According to IVC, Israeli funds were less active than foreign ones in the fourth quarter. In 2001 Israeli funds invested a total of $812 million, 36% less than they had done in 2000. Israeli investments shrank on a quarter to quarter to basis in 2001, contrary to the trend in 2000.
Israeli VC funds invested $168 million in the fourth quarter, 7% less than in Q3.
In 2001 42% of the rounds were of communication sector companies, up from 39% in 2000. Software companies constituted 20% of the total investments in 2001 as opposed to 61% in the previous year. Only 9% of the investments were made in Internet companies, as opposed to 30% in the year 2000 and 33% in 1999.
In 2001 the share of life sciences companies in the investment pie doubled from 2000 and totaled 16% of the total rounds. 103 companies in the sector raised $310 companies, compared with 75 companies that raised $238 million in 2000.
"Fourth quarter results show the decline in Israeli hi-tech investment has been halted, and that the sector continues to attract foreign investments," said Yigal Ehrlich, the chairman of the Israeli Venture Association (IVA).