Venture Capital Investing Stayed Slow in 2013

Only two funds managed to raise more than $100 million

Israel’s venture capital industry raised only $526 million last year, 28% less than in 2012, even though 2013 was a record year for exits – the best since the dot-com boom.

Israel’s 13 venture capital funds seem to be still feeling the financial crisis of 2009: money's coming in much more slowly than in 2004-2008. It bears mention that not all Israeli startups are affected - many manage to raise money from foreign sources.

The phenomenon of micro-funds expanded last year. These funds tend to raise relatively small sums and focus on early-stage startups. Israel’s micro funds raised $124 million last year, or 24% of all money raised by the local VC industry.

Most of the new funds created in 2013 were micro, said Kobi Shimana, CEO of the research firm IVC.

Only two funds managed to raise more than $100 million apiece last year, said IVC: Vintage Ventures’ sixth fund, which raised $161 million, and the Alef Fund, which raised $151 million. These two funds accounted for 59% of all VC raised last year. In 2012, three funds raised more than $100 million.

It's likely that local funds are hard pressed to raise money of late because of the reputation acquired over the past decade when many proved unable to produce decent returns for their investors.

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Reuters