Venture Capital Investments Drop 33 Percent

Waze's market share among U.S. iPhone users jumps dramatically; Tel Aviv among three finalists in Wall Street Journal and Citibank sponsored competition for innovative city.

Venture capital dips: Israel saw a 33 percent drop from the previous quarter in venture risk capital investments, accounting firm PwC announced this week. According to the report, Israeli start-ups raised $171 million in the third quarter, which is a sharp drop from the $255 million raised in the second quarter of this year.

PwC's Money Tree report also revealed that 52 different Israeli companies raised capital from investors the third quarter compared to 59 in the preceding quarter and 44 companies in the third quarter last year. The average investment in a company in the current was $3.3 million as compared to $4.3 million in the second quarter and $4.5 million in the third quarter of 2011.

The scariest figure comes from the tiny investments in seed-stage companies that stand at just 2 percent of total investment in the quarter, and the drop in investment of companies that are in the early stages of their development.

The telecommunications sector had the most venture risk capital investment, at 41 percent, with the software sector just behind at 23 percent.

BI science raises capital: The Israeli startup BI Science completed its first round of raising capital this week, raking in $3.5 million dollars from investors. BI Science provides business intelligence to marketers who use digital media.

The fund-raising round was led by the funds CyHawk Ventures, which invests primarily in the field of media, ads and digital marketing, and Bright Capital, an investment fund based out of Moscow. The head of BI Science is Orey Gilliam, former CEO of ICQ and afterward the head of AOL's instant messaging division (AOL Instant Messenger), the company that acquired ICQ in 1998. The new funds will allow BI Science to expand its services into tracking cellular phone and video advertising.

Waze benefits from Apple blip: The Israeli crowdsource navigation company Waze is the main beneficiary from the problems affecting Apple's map app.  According to a report published by Onavo, a company that developed an app to for efficient use of cellular Internet bandwidth, Waze's market share has jumped from 7 percent to 10 percent among U.S. iPhone users following the problems with Apple's map app. At the same time, competing services like Bing and MapQuest experienced only negligible growth in their number of users.

WhiteSmoke announces reverse merger: The companies WhiteSmoke announced this week to the TASE their intention to execute a reverse merger with the TASE-listed shell-company Eldan Tech, which will make WhiteSmoke a wholly-owned subsidiary of Eldan Tech. According to the terms of the agreement, Itay Meroz will be named CEO of the merged company, and White Smoke shareholders will receive 84.49 percent of Eldan-Tech.

Tel Aviv on innovation shortlist: Tel Aviv was been declared one of three finalists in the most innovative city competition being held by the Wall Street Journal and CitiBank this week while it hosted an event called the Urban Trends Summit. At the event, different initiatives and digital solutions to the challenges posed by contemporary urban living were presented.

Jaffa can innovate, too: The innovation conference Digital Life Design was held last week at the Jaffa Port. Over the course of the conference, a memorandum of understanding was signed by the Italian banking group Intesa San Paolo and MATIMOP, the government-run Israeli Industry Centre for R&D.  The purpose of the agreement is to promote start-up activity, corporate institutional investors, universities, and technological incubators in Israel and Italy through joint R&D projects and organizing jointly-run events.

Also at the Jaffa Port this past Thursday was the start-up event, which is in its fourth year.  Six start-up companies in the Internet and cellular fields competed for first place.

The winner of the first event ever held was, which was sold to Facebook earlier this year. Another previous winner was Magisto, which went on to receive investment funding from the Hong Kong billionaire Li Ka-shing. The competitors this year included learni, which is developing a media software platform for e-books on tablet computers, the company me24 which is developing an app for managing household chores, and Geonuts, which has developed a smartphone game in which users play a Mossad agent in augmented reality.