Israel tech firms raise $660 mln in Q3 from VCs – Reuters

Reuters – Israeli high-tech firms raised $660 million in venture capital in the third quarter, the highest quarterly amount since 2000, the IVC Research Center said on Tuesday.

The amount raised in the period was 34 percent higher than the second quarter and 35 percent above the third quarter of 2012, IVC, in cooperation with the Israeli office of consultancy KPMG, said in a report.

“There has been a continuing rise in the number of seed and first round financing transactions in recent years, resulting in a dramatic increase in the overall number of VC-backed high-tech companies in Israel. We see this trend continuing, leading to (a) record number of deals in 2013 at both stages,” said Ofer Sela, a partner in KPMG’s technology group.

Another encouraging trend has been the growing number of mature companies that are already generating substantial revenue and are focusing their efforts on global expansion through building sales and marketing infrastructure.

“This trend is going to continue to increase the size and volume of M&A in the Israeli market, as we have recently seen. We are likewise hopeful that some of these firms will continue to expand independently, raising capital through the IPO route,” Sela added.

Israeli high-tech companies are key drivers of the economy, helping to spur growth of 3.4 percent in 2012. IVC expects a similar level of capital raising in 2013 as in 2012.

Israeli VC fund investments accounted for $151 million in the third quarter. The 23 percent share was the lowest quarterly amount in a decade.

In the third quarter, Internet companies attracted the largest share of funds at 27 percent, followed by the life sciences sector at 20 percent.

“In the first three quarters of 2013, the number of financing deals was substantially larger than the same period in 2012, as a direct result of the increase in mid-stage deals in the software, Internet and communications sectors,” noted Koby Simana, IVC Research Center’s chief executive.

“Most of the increased activity stemmed from the stepped-up involvement of foreign venture capital funds.” (Reporting by Steven Scheer)