Good news, bad news for Israeli venture scene

Turns out that last year, 483 Israeli tech companies raised $2.08 billion from local and foreign venture investors, 18% above the $1.76 billion raised in 2007 and 28% above 2006 levels., according to the IVC Research Center.

That’s the good news for Israeli entrepreneurs.

The bad news is that the sharp slowdown in investments made by U.S. VCs was mirrored elsewhere, including in Israel.

In the fourth quarter, 109 Israeli tech companies raised $394 million, which was 22% less than the $503 million raised in the fourth quarter of 2007, and 34% below the $600 million raised in the third quarter, the highest third quarter reported in the last eight years.

The downturn will come as no surprise to Danny Cohen, a general partner at Gemini Israel Funds, who previously was in Tel Aviv, but now manages the firm’s U.S. office from Menlo Park, Calif.

Last week, Cohen was asked to what extent the Israel market had been rocked by economic events in the United State.

“Right now, news travels fast. I think it’s pretty much the same there as here. People are laying off. They’re getting ready for the so-called nuclear winter,” he said.

“I think Israeli venture funds are even more cautious than their U.S. counterparts,” Cohen said, adding that they took Sequoia Capital’s much-publicized R.I.P. presentation last October “very seriously. It was a global thing.” —Constance Loizos