Israeli VCs Returned More Than They Invested Last Year

The venture climate in Israel is downright cold. According to IVC Research Center, an Israeli venture capital research firm, VCs returned more capital than they raised in 2002. The result is a -$128 million balance, which will most likely have a negative impact on startup companies in 2003.

IVC estimates that available capital in Israel’s venture capital industry stands at $1.5 billion, half of which is intended for startups. Israeli venture capital funds raised a measly $65 million in 2002. Back in the heyday of 2000 the country brought in $3.14 billion.

Doron Rosenbaum, information manager of IVC, says the war certainly hasn’t helped activity. “The lack of available capital coupled with the sensitive geopolitical situation may decrease investments in 2003,” he said.

Other than being a poor fund-raising year, in 2002 five Israel investors returned capital to their LPs. Israeli funds returned a total of $191 million in 2002. Funds that returned money includes AIG, BRM Capital, Runway Telecom and Botticelli Venture Funds, which later shuttered. Additionally, Jerusalem Global Fund has indicated that it would not call down $32 million in commitments. The fund had expected to raise $188 million.

There may be some light at the end of the tunnel. Although Benchmark Capital is in not an Israel-based VC, it is working against the trend. The firm raised another $40 million to fund Israeli-based startups. The money, raised in October 2002, increases the size of the Benchmark Israeli VCs Returned More Than They Invested Last Year

The venture climate in Israel is downright cold. According to IVC Research Center, an Israeli venture capital research firm, VCs returned more capital than they raised in 2002. The result is a -$128 million balance, which will most likely have a negative impact on startup companies in 2003.

IVC estimates that available capital in Israel’s venture capital industry stands at $1.5 billion, half of which is intended for startups. Israeli venture capital funds raised a measly $65 million in 2002. Back in the heyday of 2000 the country brought in $3.14 billion.

Doron Rosenbaum, information manager of IVC, says the war certainly hasn’t helped activity. “The lack of available capital coupled with the sensitive geopolitical situation may decrease investments in 2003,” he said.

Other than being a poor fund-raising year, in 2002 five Israel investors returned capital to their LPs. Israeli funds returned a total of $191 million in 2002. Funds that returned money includes AIG, BRM Capital, Runway Telecom and Botticelli Venture Funds, which later shuttered. Additionally, Jerusalem Global Fund has indicated that it would not call down $32 million in commitments. The fund had expected to raise $188 million.

There may be some light at the end of the tunnel. Although Benchmark Capital is in not an Israel-based VC, it is working against the trend. The firm raised another $40 million to fund Israeli-based startups. The money, raised in October 2002, increases the size of the Benchmark Israel fund by 18% to $260 million. Since it was raised in 2001, Benchmark Israel has invested more than $20 million in seven startups, according to market researcher Venture Economics (publisher of PE Week). While Benchmark put more money to work in Israel, Benchmark Europe I slimmed down to $500 million from $750 million.

Email Danielle Fugazy