Israeli venture funds raised just $607 million in new capital in 2012, 30% less than in 2011, according to data published on Monday from a survey by IVC Research Center and the KPMG Somekh Chaikin accounting firm. IVC had predicted a year ago that the figure would reach about $800 million.
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Sequoia Capital, Pitango Venture Capital and Magma Venture Partners were responsible for 74% of the total, or $450 million. Sequoia, a U.S. firm, raised $200 million to an Israel fund that was financed entirely by foreign investors.
Six micro venture capital funds, including Lool Ventures, Glilot Capital Partners and Inimiti, raised $83 million. Four new investment groups succeeded in raising capital in 2012, half the number of new players that came onto the Israeli investment scene in 2011. Israeli VC funds are expected to raise about $600 million again in 2013 according to IVC.
Israeli venture capital funds have $2.1 billion available for investing, but only $484 million, or 23% of the total, is allocated for early stage investment in new start-ups, while the rest is dedicated for continued financing of portfolio companies.
"Venture capital funds face a real challenge these days throughout the world, not just in Israel," said Koby Simana, CEO of IVC.
"Institutional investors continue to cut allocations dedicated to venture capital investments, and Israeli venture capital funds meanwhile also need to compete with the venture capital industry around the world, especially in Asia," he said.