CalPERS Commits to Pitango

Israel’s Pitango Venture Capital closed its fourth fund with $300 million after less than a year of fund-raising.

Its close of the fund marks the end of a two-year fund-raising drought in Israel. After a banner year in 2001, when Israeli firms raised $1.3 billion, fund-raising came to an abrupt halt in 2002, when firms gave back more than they raised.

Last year, Israeli venture capital firms raised only $118 million. But at least 12 Israeli funds are making up for lost time and are currently on the market. They’re expected to raise $1.5 billion by the end of 2005, according to the Tel Aviv-based Israel Venture Capital Research Center.

Pitango’s fund was capitalized largely by investors in the firm’s earlier funds, although there were a handful of new limited partners. The California Public Employees’ Retirement System made a $20 million commitment, while another $20 million came from HarbourVest Partners. Not a single Israeli investor got in on the fund.

Pitango’s latest fund will invest in early-stage Israeli companies in communications, information technology and health care industries – all traditional sectors for the Herzilya-based firm. The firm also plans to scout new opportunities in nanotechnology and in technologies surrounding homeland security issues.

Pitango Fund IV brings the firm’s capital under management to $1 billion. The firm has invested in 85 companies since its founding in 1993.

Outside of Israel, the firm maintains offices in San Mateo, Calif., New York and London.