Israeli tech startup companies raised $1.76 billion in 2007, the highest amount in six years. The survey released on January 13 by the Israel Venture Capital Research Center noted that this represented an 8.5 percent increase over the previous year.
But industry officials believe that prospects for 2008 are not as rosy.
“This year will be dependent on the economic situation in the U.S. due to the dependence of the local high-tech industry on investments by American investors,” said Zeev Holtzman, chairman of the IVC Research Center. He predicted investments in startups would be around the $1.6 billion level and not continue to rise as has been the case in the past few years.
The latest survey found that Israeli venture capital firms accounted for 39 percent of the total investment in local startups. This represents a drop from 40 percent in 2006 and 49 percent in 2005. The Israeli venture firms did however account for a much larger percentage of first round investments.
Telecommunications remained the largest single sector, accounting for $371 million, or 21 percent of total investments in startups. This was closely followed by life sciences which include both biotechnology and medical devices with $351 million, or 20 percent of total investment. There was also a sharp rise in investments in the semiconductor and Internet sectors in the past year. They accounted for 19 percent and 15 percent respectively.
The survey also found the highest level of investment in seed companies since 2001. Seventy eight seed stage companies raised $151 million in 2007.
In the fourth quarter 115 Israeli tech companies raised $503 million. This included a $100 million investment in Jerusalem based MobilEye, a developer of camera based systems for automatic driver assistance. The fourth quarter represents a 21 percent increase over the previous quarter and a 5 percent rise over the corresponding period in 2006. The share of Israeli-based venture firms out of the total investment in the fourth quarter dropped to 28 percent.