(Reuters) – Israel-based venture capital funds will raise $800 million in 2012, similar to 2011 and up significantly from 2009 and 2010, according to a forecast from the Israel Venture Capital (IVC) Research Center.
VCs raised $796 million in 2011 but no money in 2010 and just $256 million in 2009, IVC said on Tuesday in a report issued with consultancy KPMG.
Ofer Sela, a partner in KPMG’s Israel affiliate, said the VC industry is shrinking in terms of number of entities raising new funds, both globally and in Israel.
“Limited partners investing in venture capital firms are more selective in their investments and prefer investing in the most prominent VCs,” Sela said.
“The rest of the industry is reinventing itself and trying to come up with an investment model that will attract limited partners with a lower burden of management fees and overhead costs, and a less binding capital commitment for the limited partners.”
Israel’s high-tech sector is one of the world’s largest.
The ability of Israeli VC funds to raise money in 2012 and 2013 will have a strong impact on the future of Israel’s high-tech sector, especially startups, said Koby Simana, IVC’s CEO.
More than 20 funds — a combination of veteran venture capitalists and new players, mostly micro funds — are currently raising capital, he added.
According to IVC, capital available for investment by Israeli VC funds at the start of 2012 was almost $1.66 billion. Of this, less than $300 million is earmarked for first investments.
“Over the last few years, the Israeli high-tech industry has become more global in terms of investments, with significant capital being attracted from non-Israeli venture capital firms,” Sela said.
(Reporting by Tova Cohen, Reuters; Editing by David Hulmes, Reuters)
Image credit: Photo of Tel Aviv, Israel, courtesy of Shutterstock