Israeli startup companies raised $994 million in capital in the first quarter, just a $100 million short of the 10-year record they set in the final quarter of 2014 as investors poured money into mature Internet companies like Taboola and Quixey, IVC Research Center said on Tuesday.
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The first-quarter figures came as two Israeli startups announced they had raised a combined $20.8 million, confirming that the surge in tech investing continued into the second quarter.
Windward, a maritime data and analytics company, said it raised $10.8 million led by Hong Kong magnate Li Ka-shing’s Horizons Ventures, while the sleep apnea startup Ninox Medical said the Israeli venture capital fund Pitango led a $10 million round.
IVC said 166 Israeli startups raised an average of $6 million in the first quarter. The $994 million raised in the quarter represented a 48% increase from the same time a year ago, it said.
Taboola, a content-recommendation engine, led the pack with a $117 million round led by Fidelity Management, followed by app search engine Quixey that raised $60 million from investors led by the Chinese e-commerce group Alibaba.
“Up to a year ago we were accustomed to seeing average financing rounds of $3 million to $4 million in the Internet sector. In recent quarters though, we’ve been observing a distinct rise in the average Internet financing round. This trend is even more evident among growth-stage Internet companies for which the average deal jumped from $6 million about a year ago to $16.3 million in the first quarter of 2015,” said IVC CEO Koby Simana.
In spite of the surge in startup investment, Ofer Sela, a partner in accounting firm KPMG Somekh Chaikin and a cosponsor of the report, rued the fact that Israel investors were mostly sidelined. Israeli venture funds accounted for only 18% of all first-quarter investments, while Israeli institutional investors don’t invest in venture capital.
“The returns from the appreciation in value of VC-backed Israeli companies are mostly enjoyed by foreign investors,” said Sela.
IVC said Internet startups enjoyed their best fundraising quarter ever, raising $343 million, or 35% of the total. Life science accounted for 22% and software for 19%, it said.
Windward said other investors in the round included the Israeli VC fund Alpeh and Tom Glocer, the former CEO of Thomson Reuters, who will also be joining Windward’s advisory board. The Wall Street Journal reported that the investment valued Windward at $100 million.
Founded by two former officers of the Israel Navy, the company monitors global maritime traffic and uses historical data to predict trends and alert customers to unusual activity. Proceeds will be used to develop a product for the financial community.
The $10 million Ninox round is unusual because the company is so young that is still based at the technology accelerator VLX Ventures. Other investors in the round include the French VC fund Merieux Developpement and the publicly traded Israeli VC Xenia Venture Capital.
Ninox said the proceeds would be used to expand its staff of 10 and develop its a wearable device called the keePAP for treating sleep apnea, fund clinical trials and win regulatory approvals in the United States and Europe.