Israeli venture capital funds returned to the game: USD 796 million raised in 2011

After two years of drought, Israeli venture capital funds raised capital again. In 2011 the Israeli venture capital funds raised were totaling 796 million capital dollars, according to the data published by research firm this morning IVC Research Center in conjunction with the accounting firm KPMG Somekh Chaikin. That was significant considering the fact that in 2010 they did not recruit even one dollar to Israeli funds. In 2009, influenced by the global crisis that erupted in 2008, the volume of funding was $ 256 million. However, IVC emphasize that despite the recovery in 2011, the scope of issues which was still far peripheral issues in 2007-2008, then raised over a billion dollars each year.

Despite the improvement in 2011, IVC warn that Israeli venture capital funds have been missing now over a billion dollars. According to them, considering the needs of industry and the fact that the funds held by local funds were expected to last at least the next four years, there is a significant gap between supply and demand for financing to be possible. Kobi appointed, CEO of IVC Research, predicts that Israeli funds will raise in 2012 approximately $ 800 million, similar issues as in 2011. “More than twenty funds are currently in the process of raising money, most of which are managed by their oldest domestic venture capital industry is now hiring Funds. Several new players are expected to join; especially micro new funds are expected to succeed in recruitment efforts, “says Kobi. Between funds that are now in the process of raising further funds are magma and Pitango. Yesterday Lenovo PC maker announced that it will invest at Vertex who is also in the process of raising a new fund.

“Around the world, as well as Israel, the venture capital industry is shrinking in the number of agencies who recruit new funds,” says Ofer Sela, a partner in the technology division of KPMG Somekh Chaikin. “The venture capital investors have become more selective, preferring to spend most prominent funds. The rest of the industry is re-inventing itself through new models thereof divine investment limited partners through management fees and overhead are reduced, and more flexibility in capital commitments.”

Also, the IVC estimates that the early 2012’s disposable capital investment in the Israeli venture capital funds stands at 1.66 billion. However, from this amount, IVC estimates that less than – $ 300 million of investment will be allocated first, while others maintain investments continue, so start – ups to be constructed will find it difficult to obtain new raising capital that will allow them to rise.

One of the features of 2011 was the emergence of micro-funds, i.e. funds that manage relatively small amounts, in the array of $ 30 million. 7 of the funds mobilized in 2011 meet the definition of this and raised a total of 87 million, or approximately 11% of funding of Israeli funds in 2011. 6 micro funds raised through new bodies local venture capital market. Micro funds invest in small amounts and usually focus on companies that are in early stages. Between the micro-foundations that operate in the districts are included Capital Partners and Ventures coop.

Much of the funds mobilized in 2011 were no longer from funds already in activity, but from new players who appeared in the local venture capital. Out of 14 funds that raised money in 2011, eight new entities are managed by local venture capital market, or organizations that raised the first Israeli venture capital fund. Emergence of new bodies in some cases was accompanied by government involvement. For example, Israel Orbimd Foundation, which raised about $ 200 million, established as part of a tender for the establishment of life sciences investment fund initiated by the Ministry of Finance, covered $ 40 million investment fund. Although the global Orbimd foundation previously invested in Israel, it is the fund’s first entry into Israel through local representatives and a dedicated fund for investment in Israel. Another fund raising completed in 2011 is the Jerusalem JVP which raised $ 80 million in its sixth fund.