Capital raised by Israeli high tech companies showed a sharp decline in the third quarter of 2001, according to the Israel Venture Capital Research Center. The $371 million raised from local and foreign venture capital investors was 28 per cent below second quarter levels and 66 per cent less than in the third quarter in 2000.
The number of companies raising capital declined from 137 in the second quarter to 117 in the third quarter with average financing per round slipping 14 per cent to $3.2 million, compared to the previous quarter’s $3.7 million.
By sector, Internet and the life sciences put in the best performance. Funds raised by Internet companies grew 231 per cent to $43 million from a low of $13 million in the previous quarter. While in the life sciences, funds raised totaled $81 million, up 23 per cent this quarter. Software and communications companies didn’t fare so well in attracting funds, down 75 per cent and 63 per cent, respectively, compared to the same period the previous year.
Israeli venture capital funds have recently benefited from the government’s decision to scrap taxation of foreign investments in local funds until January 1, 2004 see evcj October, page 10.