Israeli Venture Capital Has Its Best Year Since 2008 Global Crisis

Funds raise $914 million, with four veteran funds raising more than $100 million each.

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Reuters

Israeli venture capital funds raised $914 million (3.6 billion shekels) in 2014, the highest amount since the 2008 global economic crisis, the high-tech sector research firm IVC and accounting firm KPMG Somekh Chaikin reported on Wednesday.

The financing data is based on the vintage year of the capital, meaning the year the venture capital fund actually received the funding. As of the beginning of 2015, Israeli venture capital funds had $1.8 billion to invest, IVC reported. A quarter of the sum, $462 million, is dedicated to initial financing, with the remainder available for subsequent investment in companies already in the portfolios of the funds.

Four veteran funds raised more than $100 million each, together accounting for 64% of the total raised last year. Carmel Ventures’ fourth fund topped the list at $194 million. Magma raised $150 million for its fourth fund and Jerusalem Venture Partners made a first closing of $160 million, IVP reported, while Vintage’s seventh fund, attracted $144 million, half of which is being directed to Israeli investments.

“The record number of Israeli portfolio companies with valuations of hundreds of millions of dollars, together with positive investor sentiment in NASDAQ, has made it easier for VC firms to show good returns and raise capital,” said Ofer Sela, partner in KPMG Somekh Chaikin’s technology group. “In the past 24 months, global and Israeli VC returns have been among their highest ever. This has encouraged new limited partners from China and Israeli institutional investors to join the more traditional investors in Israeli VCs, such as university endowment and U.S. public pension funds.”

“The growth of Israel’s venture capital industry is traced to six cycles of fundraising that peaked in 2000, when $2.9 billion was raised, and declined until 2003, when only $64 million was raised. The industry’s sixth cycle, which started in 2011, began a recovery and raised a total of $3 billion over the four years through the conclusion of the cycle in December 2014. A seventh cycle, underway now in 2015, already looks promising,” the report added.