TEL AVIV (Reuters) - Israeli private high-tech firms are expected to raise about the same amount of capital in 2014 as in 2013, which was a very strong year as foreign investors increased their activity.
The Israel Venture Capital (IVC) Research Center said on Wednesday high-tech companies raised $2.3 billion in 2013 from local and foreign investors, the highest amount in a decade and up 22 percent from 2012. The life sciences sector attracted the largest share of investments at $522 million, followed by the software sector.
Firms raised $751 million in the fourth quarter, the highest quarterly amount since 2000, IVC, in cooperation with the Israeli office of consultancy KPMG, said in a report. This was up 14 percent from the third quarter and up 52 percent from the fourth quarter of 2012.
“We expect levels to remain stable in 2014 in light of anticipated VC fund raising,” said Ofer Sela, a partner in KPMG’s technology group. “Most of the increase in investments has come from foreign investors, which, in addition to their traditional late-stage focus, have begun dedicating substantial capital to a wide cross-section of Israeli investments.”
He said Israeli institutional investors accounted for a very small share of venture capital investments in 2013.
“Therefore, the Israeli economy will not enjoy the returns and tax payments flowing from these investments,” he said.
Israeli VC fund investments totaled $546 million in 2013, slightly above 2012 levels and accounting for only 24 percent of total capital invested - an all-time low.
Sela said the growth in the software sector reflects the data and cyber security segment, which reached peak investment levels, as well as cloud infrastructure and big data.
Koby Simana, chief executive of IVC, said capital raised in 2013 reached such high levels in part due to the increasing number of advanced round investments.
“This reinforces our observation that entrepreneurs and investors are aiming to build larger companies and reach higher valuations than in the past, before considering exit options,” he said.
Reporting by Tova Cohen