There is little good news for high-tech entrepreneurs in 2010, even if talk about the economic crisis is now mostly in the past tense. Venture capital investment in high-tech start-ups continued to fall in the first quarter, and the hopes for improvement later this year probably won't materialize. Consequently, 2010 is shaping up as another lost year for Israeli high tech.
The PricewaterhouseCooper Israel MoneyTree Report for the first quarter provides particularly poignant figures. 72 high-tech start-ups raised just $170 million in the first quarter, 15% less than the $201 million raised in the fourth quarter of 2009, and 12% less than the $194 million raised in the corresponding quarter. Average investment was $2.4 million, the lowest figure since 2002.
The only glimmer of good cheer was investment in semiconductor companies, which was higher in the first quarter than in 2009 as a whole.
A breakdown by industry shows that software attracted the bulk of investment in first quarter, with 22 start-ups raising $46 million. The amount is 37% less than in the preceding quarter, but 147% more than in the corresponding quarter.
Eight semiconductor start-ups raised $38 million in the first quarter, up from the $14 million raised by six start-ups in the preceding quarter, and the $12 million raised by three start-ups in the corresponding quarter.
Investment increased in the life sciences, rising to $36 million in the first quarter from $18 million in the preceding quarter and $11 million in the corresponding quarter. The decline in investment in cleantech continued.
The drop in investment in Internet start-ups was especially great. Only four Internet start-ups raised $4 million in the first quarter, 88% less than the amount raised in the preceding quarter and 73% less than in the corresponding quarter.
Published by Globes [online], Israel business news - www.globes-online.com - on May 16, 2010
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