PWC MoneyTree Report Q3 2012: Israeli VC Investments Down 33%

Last week PWC released its quarterly moneytree report on the state of the venture capital industry in Israel. The top line figures indicate a 33% decline in VC investments in Q3, reaching $171 million compared to $255 million in the previous year. The main reason stated is the decline in availability of local VC funding. Overall in the first 3 quarters of 2012, Israeli companies raised $591 million, compared to $904 million in the equivalent period in 2011.

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Percentage of funds making no investment in Israel — roughly 50% average[/caption]

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Israeli VC: Annual investment levels of Venture Capital Funds (in millions of dollars)[/caption]

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Average investment per company (in millions of dollars)[/caption]

The major concern is the ability of the Israeli startup industry to continue producing roughly 600 new startups created a year, since Seed rounds are almost disappearing. Only 3 (!) companies in seed stage raised VC money in Q3 2013. To quote Rubi Suliman, Partner at PWC:

“The most disturbing piece of information is
the miniscule investment in seed companies (less than 2%) and the
decline in early stage investments. While Israeli hi-tech is proud of
its numerous mature companies, the next generation of companies is
finding it increasingly harder to raise the money it needs.”

The Moneytree report covers in detail the VC investments by sector, stage and investment round, raising the question that Sarah Lacy asked back in July “Can we admit there is a problem?”. The full PDF report can be downloaded on the PWC Moneytree page.