Ivc q3 13-full_survey-final

THE IVC-KPMG SURVEY
Summary of Israeli Venture Capital Investments – Q3 2013
Marianna Shapira, Research Manager, IVC

October 2013

IVC-KPMG Survey

Summary of Israeli Venture Capital Investments – Q3/2013
Table of Contents
Methodology ........................................................................................................ 3
About the Authors............................................................................................... 3
Summary of Israeli Venture Capital Investments – Q3/2013 ......................... 4
Chart 1: Distribution of Israeli Venture Capital Investments by Type of Investor
Q1/2011 – Q3/2013 ($m) ......................................................................................... 4
Israeli VC-Backed Transactions .................................................................................. 5
Chart 2: Israeli VC-Backed Deals Q1/2011 – Q3/2013 ($m) .................................. 5
Israeli VC Fund Investment Activity ........................................................................... 6
Chart 3: Distribution of First and Follow-on Israeli VC Fund Investments (%) ..... 6
Investment Rounds Excluding Israeli VC Fund Participation ..................................... 7
Chart 4: Israeli VC Funds vs. Other Investors (%) Q1-Q3/2012 vs. Q1-Q3/2013 .. 7

Capital Raised by Sector .................................................................................... 8
Chart 5: Capital Raised by Israeli Internet Companies ($m) ................................... 8
Chart 6: Share of Capital Raised by Israeli High-Tech Companies by Sector
Q1/2011 – Q3/2013 ................................................................................................. 9

Capital Raised by Stage .................................................................................... 11
Chart 7: Share of Capital Raised by Israeli High-Tech Companies by Stage
Q1/2011 – Q3/2013 ............................................................................................... 11

Legal Disclaimer and Copyright...................................................................... 13

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IVC Research Center Ltd. 99 HaHashmonaim St., 2nd Floor, Tel Aviv 67133, Israel  www.ivc-online.com
Tel. +972-73-212-2333 Fax. +972-73-212-2323 E-mail: info@ivc-online.com

IVC-KPMG Survey

Methodology
This Survey reviews capital raised by Israeli high-tech companies from Israeli and
foreign venture capital funds as well as other investors, such as investment companies,
corporate investors, incubators and angels. The Survey is based on reports from 129
investors of which 34 were Israeli VC management companies and 95 were other entities.
The survey covers total investments in the Israeli venture capital sector, including both
VC-backed rounds – where at least one investor participating in the round is a VC fund –
as well as deals not backed by venture capital funds. For more on our methodology
please click here.
For additional information, please visit: www.ivc-online.com
Marianna Shapira, Research Manager, IVC +972-73-212-2339 marianna@ivc-online.com
***
About the Authors
IVC Research Center is

Israel’s leading research center providing business leaders with an
unmatched wealth of data on Israel's high-tech, venture capital and private equity
industries. IVC products and services are used regularly by high-tech companies, venture
capital funds, private investors, financial investors and institutions, as well as public
entities such as the Central Bureau of Statistics, the Bank of Israel and the Office of the
Chief Scientist at the Economy Ministry.
IVC owns and operates the IVC Online Database (www.ivc-online.com) containing over
10,000 Israeli high-tech companies, venture capital funds, investment companies, angels
and technology incubators, as well as news updates and lots more. Among IVC products
and publications are the IVC Quarterly Survey, which for over 15 years has been
analyzing capital raising trends by Israeli high-tech companies, as well as the most
comprehensive guide to Israeli high technology and venture capital – the IVC High-Tech
Yearbook. The 2014 edition will be published in April 2014.
KPMG Somekh Chaikin’s

technology professionals offer insights and experience
accumulated from a long history of work with technology and life science companies.
Through a global network of highly qualified professionals in Israel, the Americas,
Europe, the Middle East, Africa and Asia-Pacific, KPMG helps clients address the
opportunities and challenges driven by new business models such as cloud computing,
mobile services and others. KPMG is a global network of professional firms providing
Audit, Tax and Advisory services. KPMG operates in 146 countries and has 140,000
people working in member firms throughout the world.

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IVC-KPMG Survey

In Q3/2013, 162 companies raised $660 million from local and foreign investors, the
highest quarterly amount since 2000. This is an increase of 34 percent from $493 million
raised by 143 companies in Q2/2013, and 35 percent from $488 million attracted by 143
companies in Q3/2012. (Chart 1)
Chart 1: Distribution of Israeli Venture Capital Investments by Type of Investor
Q1/2011 – Q3/2013 ($m)

Five companies attracted more than $20 million each, accounting for 25 percent of the
total amount raised in Q3/2013. Nine companies attracted between $10 million and $20
million each, accounting for 16 percent of the total quarterly amount. Fifteen companies
raised from $5 million to $10 million each and 70 companies attracted more than $1
million each.
The average company financing round in Q3/2013 was $4.07 million, compared to $3.45
million in Q2/2013 and $3.41 million in Q3/2012.
In the first three quarters of 2013, 474 Israeli high-tech companies raised $1.63 billion, a
12 percent increase from $1.45 billion attracted by 413 companies in Q1-Q3/2012, and 4
percent above $1.56 billion invested in 422 companies in Q1-Q3/2011.
The average company financing round was $3.43 million, while average financing rounds
in Q1-Q3/2012 and Q1-Q3/2011 were $3.51 million and $3.7 million, respectively.

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IVC-KPMG Survey

Israeli VC-Backed Transactions
One hundred and one VC-backed deals attracted $462 million or 70 percent of the total
amount raised in Q3/2013. This compares to 86 deals totaling $399 million (81 percent)
in Q2/2013 and 98 deals totaling $376 million (77 percent) in Q3/2012. Remaining
capital raising rounds were completed by other investors – foreign and Israeli – without
the participation of VC funds. (Chart 2)
Chart 2: Israeli VC-Backed Deals Q1/2011 – Q3/2013 ($m)

The average financing round of VC-backed deals was $4.57 million, compared with
$4.64 million in Q2/2013 and $3.84 million in Q3/2012.
In Q1-Q3/2013, 288 VC-backed deals attracted $1.23 billion or 75 percent of the total
invested, an increase of 21 percent from the $1.01 billion (70 percent) raised in 257 VCbacked deals in Q1-Q3/2012, but a three percent decrease from $1.27 million (81 percent)
invested in 297 transactions in Q1-Q3/2011.
The average financing round for VC-backed deals was $4.26 million in Q1-Q3/2013,
compared with $3.95 million and $4.27 million in the corresponding periods in 2012 and
2011, respectively.

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IVC-KPMG Survey

Israeli VC Fund Investment Activity
In Q3/2013, $151 million was invested by Israeli VC funds, accounting for just 23
percent of total investments – the lowest quarterly share in a decade. This compares with
$123 million (25 percent) invested in Q2/2013 and $130 million (27 percent) invested in
Q3/2012. Remaining investments came from foreign and other Israeli investors.
First investments in Q3/2013 were $52 million (34 percent of total investments), a 49
percent increase from the $35 million (28 percent) of Q2, but 9 percent below the $57
million (44 percent) of Q3/2012. Follow-on investments by Israeli VC funds accounted
for 66 percent. (Chart 3)
Chart 3: Distribution of First and Follow-on Israeli VC Fund Investments (%)

Q3/2013’s average first investment was $2.74 million, while the average follow-on
investment was $1.24 million.
In Q1-Q3/2013, Israeli VC fund investments accounted for $418 million or 26 percent of
the total amount invested. This compares with $388 million (27 percent) in Q1-Q3/2012
and $488 million (31 percent) in Q1-Q3/2011.
First investments in Q1-Q3/2013 accounted for $145 million or 35 percent of total
investments, compared with 34 percent and 26 percent in Q1-Q3/2012 and Q1-Q3/2011,
respectively. Follow-on investments by Israeli VC funds made up the remaining 65
percent.

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IVC-KPMG Survey

Investment Rounds Excluding Israeli VC Fund Participation
In Q3/2013, venture capital deals without Israeli VC participation attracted $317 million,
48 percent of total investments. This compares with $189 million (38 percent) raised
without involvement of Israeli VC funds in Q2/2013 and $176 million (36 percent) in
Q3/2012.
Eight corporate venture capital funds participated in 10 deals accounting for $135 million
in Q3/2013. Israeli VC funds took part in four of those deals.
In Q1-Q3/2013, Israeli venture capital deals without involvement of Israeli VC funds
amounted to $701 million, up 5 percent from $665 million in the year-earlier period, and
49 percent from $470 million in Q1-Q3/2011. (Chart 4)

Chart 4: Israeli VC Funds vs. Other Investors (%) Q1-Q3/2012 vs. Q1-Q3/2013

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IVC-KPMG Survey

Capital Raised by Sector
In Q3/2013, 47 Internet companies attracted $179 million (27 percent), the largest
quarterly amount for the sector since 2000. This is a 103 percent increase from $88
million (18 percent) raised by 33 companies in Q2/2013, and a 180 percent jump from the
$64 million (13 percent) raised by 33 companies in the year-earlier period. (Chart 5)
Chart 5: Capital Raised by Israeli Internet Companies ($m)

The life sciences sector followed with 37 companies attracting $128 million or 20 percent
of quarterly investments. This is a 6 percent increase from $121 million (25 percent)
raised by 33 companies in Q2/2013, but a 23 percent decline from $166 million (34
percent) raised by 34 companies in the year-earlier period. In both previous periods, the
life sciences sector led quarterly investments. Within the life sciences, the medical
devices subsector attracted $68 million or 53 percent of the amount raised by the entire
sector, followed by therapeutics with $57 million or 45 percent.
Thirty software companies raised $104 million or 16 percent of all quarterly investments,
as did seven semiconductor firms. In the previous quarter, 26 software companies
attracted $81 million (16 percent) while in Q3/2012, 26 companies raised $74 million (15
percent). Ten semiconductor companies raised $66 million (13 percent) in Q2/2013 and
nine raised $64 million (13 percent) in Q3/2012.
Twenty-four communications companies followed with $81 million (12 percent – lowest
share in two years), up 3 percent from $79 million (16 percent) attracted by 30 companies
in the previous quarter, but down 22 percent from $104 million (21 percent) raised by 19
companies in Q3/2012.
Eight cleantech companies raised $35 million or 5 percent of investments, compared with
$56 million or 11 percent raised by nine companies in the previous quarter and $25
million or 5 percent raised by 15 companies in Q3/2012. Within cleantech, the
agrotechnology subsector accounted for $29 million or 83 percent of the amount raised by
the entire sector.

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IVC-KPMG Survey

Nine miscellaneous sector companies raised $29 million or 4 percent of total capital
raised in Q3/2013, compared with two companies that raised only $2 million or one
percent in the previous quarter and seven companies that raised $12 million or 3 percent
in Q3/2012. (Chart 6)
Chart 6: Share of Capital Raised by Israeli High-Tech Companies by Sector
Q1/2011 – Q3/2013

In Q1-Q3/2013, 125 Internet companies led all investments with $371 million (23 percent
of the total), up 36 percent from the $271 million raised in Q1-Q3/2012 (19 percent) by
99 companies and 8 percent from the $345 million (22 percent) raised in Q1-Q3/2011 by
88 companies.
One hundred life sciences companies followed with $340 million or 21 percent, a 19
percent decrease from $418 million (29 percent) attracted by 104 companies in the yearearlier period, when the sector led all investments. Within the life sciences, the medical
devices subsector attracted $195 million or 57 percent of the amount raised by the entire
sector and 12 percent of capital raised by all sectors.
Ninety software companies attracted $321 million (20 percent of total capital raised),
compared with $221million (15 percent) invested in 65 software companies in Q1Q3/2012 and $278 million (18 percent) invested in 72 software companies in Q1Q3//2011.
The communications sector was next with 85 companies that raised $228 million (14
percent), compared with 64 companies that attracted $241 million (17 percent) in Q1Q3/2012.
Twenty-five semiconductor companies attracted $190 million (11 percent), an increase of
62 percent from $117 million (8 percent) raised by 23 companies in Q1-Q3/2012, and 28
percent up from $149 million (9 percent) invested in 43 companies in Q1-Q3/2011.

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IVC-KPMG Survey

Thirty-two cleantech companies followed with $127 million (8 percent), up 76 percent
from the $72 million (5 percent) raised by 35 companies in the year-earlier period and 8
percent above $118 million raised by 39 companies in Q1-Q3/2011. The agrotechnology
subsector attracted $58 million or 46 percent of capital raised by the sector in Q1Q3/2013.
Seventeen miscellaneous sector companies followed with $50 million (3 percent),
compared with 23 companies that attracted $110 million (7 percent) in Q1-Q3/2012.

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IVC-KPMG Survey

Capital Raised by Stage
High-tech companies in this survey were divided into four categories: seed, early stage
(R&D), mid-stage (annual revenues up to $10 million) and late stage (annual revenues
over $10 million). (Chart 7)
Twenty-five seed companies raised $17 million (3 percent) in Q3/2013, a decrease of 37
percent from $27 million (5 percent) raised by 32 companies in the previous quarter, and
60 percent below the $43 million (9 percent) attracted by 32 seed companies in Q3/2012.
Within seed investments, Internet companies attracted the largest share – 35 percent –
followed by software with 29 percent.
Fifty-five early stage companies attracted $149 million (23 percent), compared with
$149million (30 percent) raised by 52 companies in the previous quarter and with $189
million (39 percent) raised by 48 companies in Q3/2012. From among early stage
investments, life science companies attracted the largest share of capital – 40 percent –
followed by semiconductors with 18 percent.
In Q3/2013, 69 mid-stage companies led capital raising with $366 million or 55 percent,
the highest quarterly amount for mid-stage in a decade. This compares with $235 million
or 48 percent raised by 51 companies in Q2/2013 and $211 million (43 percent) raised by
54 companies in Q3/2012. Within mid-stage investments, Internet companies attracted the
largest share – 27 percent – followed by life sciences with 18 percent.
Thirteen late stage companies attracted $128 million (19 percent), compared to eight
companies that raised $82 million (17 percent) in Q2/2013 and nine companies that raised
$45 million (9 percent) in Q3/2012. Within late stage investments, Internet attracted the
largest share of capital – 39 percent – followed by semiconductors with 32 percent.

Chart 7: Share of Capital Raised by Israeli High-Tech Companies by Stage
Q1/2011 – Q3/2013

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IVC-KPMG Survey


In Q1-Q3/2013, 110 seed companies raised $75 million (5 percent of the total raised),
down 26 percent from $101 million (7 percent) attracted by 105 seed companies in Q1Q3/2012, but 7 percent up from the $70 million (5 percent) raised by 81 companies in
Q1-Q3/2011.
One hundred and forty-four early stage companies attracted $390 million (24 percent) in
Q1-Q3/2013, a 18 percent decrease from $473 million (33 percent) raised by 130
companies in the year-earlier period and a 6 percent decline from $414 million (26
percent) raised by 117 companies in Q1-Q3/2011.
One hundred and eighty-nine mid-stage companies led all investments with $897 million
(55 percent) in the nine-month period. The amount is up 48 percent from $606 million (42
percent) attracted by 148 companies in Q1-Q3/2012 and 29 percent above the $696
million (45 percent) raised by 181 companies in Q1-Q3/2011.
Thirty-one late stage companies attracted $265 million (16 percent), compared to 30 that
raised $270 million (18 percent) in Q1-Q3/2012 and 43 that raised $382 million (24
percent) in Q1-Q3/2011.

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IVC-KPMG Survey


Legal Disclaimer and Copyright
This report is based on information available at the time of its preparation. Subsequent
changes in variables and/or additional information may impact the data or conclusions of
this report. IVC reserves the right to make updates and revisions from time to time.

The information contained in this report is derived from the IVC-KPMG Quarterly
Survey and from the IVC Research Center Ltd. ("IVC") database. This report is
copyrighted. No part of the material in this report (including, but not limited to text,
content and images) may be reproduced, republished or utilized in any form or by any
means without the explicit and prior written consent of IVC Research Center.

© IVC Research Center Ltd. 2013
October 2013

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