Investments in Israeli venture capital funds fell by 63 per cent in 2001, compared to the previous year, according to a survey conducted by the Israel Venture Capital (IVC) Research Centre.
Despite tax reforms exempting foreign investments in Israeli funds from tax, commitments to venture capital funds fell from $3.7 billion in 2000 to $1.4 billion in 2001. This ends a ten-year period of growth in the country’s VC industry.
However, of the $10 billion raised between 1992 and 2001, the IVC Research Centre estimates that $4.1 billion is still available for investment. Of this, $1.1 billion is free for new investments while the rest is destined for follow-on rounds, management fees and other expenses.
The amount of money raised by IPOs has also dropped away to almost nothing, with only two venture-backed Israeli companies raising a total of $83 million through NASDAQ floatations last year, compared to the $1.5 billion raised by 20 companies in 2000. Only one Israeli venture-backed company listed in Europe, raising $118 million compared to the $353 million raised by seven listing on European exchanges in 2000. M&A activity also decreased dramatically in 2001, totalling just $631 million compared to $10.6 billion in 2000.