89% of venture capital fund managers in Israel expect the economic climate to remain unchanged or worsen in the next six months, according to a survey published today by accounting firm Deloitte Touche Brightman Almagor. The data brings the VC community back to the same level of expectations it expressed in Q4 2001.

Local funds do not expect recovery in technology and telecommunications expenditures and expect that any such recovery will have little to no impact on the venture capital sector.

The source of the pessimistic outlook is the security situation: 72% of respondents noted that the security and political situation has material impact on the technology sector. Due to the situation, 100% of respondents expect foreign investments in Israeli companies to shrink, with 35% expecting nearly no investment whatsoever.

The quarterly survey, VC Indicator, was conducted for the third time. The results represent the responses of partners and managers in 48 venture capital funds, about 80% of the sector.