Startups Raised More Than $700m in 2014's Third Quarter Despite Gaza War

IVC Online survey finds that high-tech companies had one of their best third-quarter totals over the summer.

Inbal Orpaz
Inbal Orpaz
Send in e-mailSend in e-mail
Benny Landa. His Landa Digital Printing raised $135 million in June from the German chemicals company Altana Group.
Benny Landa. His Landa Digital Printing raised $135 million in June from the German chemicals company Altana Group.Credit: Nir Keidar
Inbal Orpaz
Inbal Orpaz

Rockets were coming down and sirens were blaring most of the summer as Israel fought a 50-day war with Hamas. But for Startup Nation, Operation Protective Edge had no discernible impact, with high-tech companies raising just over $700 million in the third quarter of the year.

IVC Research Center said fundraising by startup companies was up 6% from a year earlier in the July-September quarter, to $701 million. It was down 24% from what it called an “exceptionally strong” second quarter, but CEO Koby Simana said this was a seasonal drop, and not related to the war.

“The Gaza conflict barely impacted high-tech capital raising,” he said in a statement. “Traditionally, the third quarter tends to be the weakest for capital-raising in any given year, but third-quarter 2014 ranked as the third best quarter ever, and one of the top three quarters in the past decade.”

The third-quarter figure brought total fundraising by Israel high-tech companies in the first nine months of the year to $2.3 billion, just 1% less than companies raised in all of 2013 and 50% more than the $1.5 billion they attracted in the first nine months of last year, IVC said.

“This increase is mostly explained by an upsurge in the number of large financing rounds above $20 million and the accumulated capital generated by such deals,” Simana explained, noting that some $868 million was raised in deals above $20 million in the first nine months, three times more than a year ago

Among the biggest fundraising of the quarter was Benny Landa’s Landa Digital Printing, which won a $130 million investment from the German specialty chemicals group Altana.

Israeli companies have been riding a boom in startup valuation globally, helped by a flood of money from non-conventional investors and a buoyant market on Wall Street for initial public offerings. Israeli companies have been helped by a series of big, high-profile exits, most notably last year’s acquisition of the navigation app Waze by Google for close to $1 billion.

Israeli venture capital funds, however, remain sidelined by other investors, most notably foreign VCs investing in Israel. In the third quarter, they accounted for just $130 million of all the money invested in Israeli tech companies, down 14% from the second quarter and down 19% from a year ago, said IVC Online, which conducts the survey with KPMG Somekh Chaikin.

IVC Online said the Internet sector accounted for the biggest share of investment, with 40 companies drawing $213 million. Seed companies – the youngest startups – raised $60 million, or 9% of all capital raised and a big increase from the 3%-4% they accounted for in the first half of the year.

Click the alert icon to follow topics:

Comments

SUBSCRIBERS JOIN THE CONVERSATION FASTER

Automatic approval of subscriber comments.
From $1 for the first month

Already signed up? LOG IN

ICYMI

The Orion nebula, photographed in 2009 by the Spitzer Telescope.

What if the Big Bang Never Actually Happened?

Relatives mourn during the funeral of four teenage Palestinians from the Nijm family killed by an errant rocket in Jabalya in the northern Gaza Strip, August 7.

Why Palestinian Islamic Jihad Rockets Kill So Many Palestinians

בן גוריון

'Strangers in My House': Letters Expelled Palestinian Sent Ben-Gurion in 1948, Revealed

AIPAC

AIPAC vs. American Jews: The Toxic Victories of the 'pro-Israel' Lobby

Bosnian Foreign Minister Bisera Turkovic speaks during a press conference in Sarajevo, Bosnia in May.

‘This Is Crazy’: Israeli Embassy Memo Stirs Political Storm in the Balkans

Hamas militants take part in a military parade in Gaza.

Israel Rewards Hamas for Its Restraint During Gaza Op