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Insights into Israeli
Investment Vehicles
Israel has long been well known for attracting foreign venture capital investments into
its ever growing high-tech industry. Supported by an innovative and entrepreneurial
spirit across the country, Israel continues to showcase a vibrant high-tech sector
producing remarkable success stories. Recent data suggests that the Israeli venture
capital market is ever stronger, not only growing but also supporting more late-
stage investments. A recent report published by the IVC Research Center indicates a
record-breaking amount of US$1.7 billion was invested in Israeli start-up companies
during Q2 2016, a 55% increase on the previous quarter. More specifically, the report
shows that during Q2 2016, Israeli start-ups have attracted greater capital for late-
stage investments, with a quarter on quarter growth of over 23% in the number of
investments of more than US$20 million. These recent trends may suggest that the
Israeli high-tech market is beginning to align itself with other more evolved markets,
producing scalable companies which are looking to grow into unicorns, start-ups
valued at more than US$1 billion, and not settle for early “exits.”
As the Israeli venture capital market continues to evolve, we have seen an increasing
varietyof investment entities involved in investments in Israel - fromearly-stageangels,
accelerators and incubators, to traditional VC funds backed by private individuals,
corporate entities and, most recently, institutional investors, to the more innovative
crowdfunding platforms - all of which are supported by a variety of governmental
backed initiatives aimed to promote innovation in Israel.
Recent Trends in VC Funds’ Investments
In addition to the general growth in the high-tech market, we have also seen recent
changes in the distribution of activity between foreign and local VC funds, both in
the size of investments and the growth phase at which investments are made. Based
on the Most Active Venture Capital Fund Report issued by the IVC Research Center
in cooperation with APM & Co., Israeli venture capital funds accounted for 48% of
initial investments made during 2015 in Israeli start-ups – a 6% increase from 2014.
While Israeli VC funds accounted for only 31% of the VC funds active in Israel, this
trend shows that Israeli VC funds are highly active in the market. However, data
These recent trends may suggest that the Israeli high-tech market is beginning
to align itself with other more evolved markets, producing scalable companies
which are looking to grow into unicorns, start-ups valued at more than US$1
billion, and not settle for early “exits.”