New 2016 Report Reveals Record Breaking $4.8 Billion Raised By Israeli Tech
Israeli Tech business are having their heyday as software development seemingly appears to lead the way as Israeli tech companies look to be striking an average deal of an astonishing $7,200,000 per round. Unfortunately, though, evidence seems to reveal that there has been a serious drop encountered by life science and internet businesses.
A newly released report came out to the public at the beginning of January this year entitled the “IVC-ZAG Summary of High-tech in Israel Capital Raising – Q4/2016”.
This survey was put together by the IVC Research Center in conjunction with attorneys at Zag-S&W, and it astonishingly reveals that during 2016 high-tech Israeli businesses amassed an unprecedented yearly elevation of $4,800,000,0000, – 11 % more than the $4,300,000,000 procured in 2015.
Continuously escalating throughout the five years previous, the median financing round, which astoundingly was able to rake in a phenomenal 19% more than the usual $5,100,000 five-annual-cycles median, eventually equated with a sum total earnings of an incredible $7,200,000 during the past year, 2016.
During 2016s final quarter, nonetheless, there was potentially an alarming 8% drop in financial investments.
Contrasted with the equivalent phase a year prior, adjacent to a plunge in the quantity of financial transactions.
Through out the entire high-tech Q4 of 2016, businesses managed to do 151 transactions amassing for themselves $1,020,000,000, contrasted with the 202 transactions they amassed during the 2015 penultimate quarter which ultimately acquired for them a hefty $1,100,000,000.
The standard financing cycle remained at $6,700,000 throughout the Q4 during 2016, comparable to the previous quarterly two-annual-cycles median that had resulted in $6,600,000.
Whilst wealth acquisition reached some fresh, high and unparalleled peaks throughout 2016.
Of course there had been scarcer financing rounds when all statistics and totals were compared to what the results were revealed to be during 2015.
There remained, nevertheless, 659 financing transactions that concluded during the past year of 2016. Slightly exceeding a five-annual-cycles median of 657 transactions but ultimately still 7% beneath the previous 2015 record that was shown to be 706 transactions.
The bulk amount of investment transactions in 2016 appear from the data to have been all made into advanced stage businesses. Subsequent investment round – those at C phase or above — when keen investors infuse capital into what they perceive as having been a previously quantifiable profitable business — became solely accountable for the beyond amazing 60 percent of a sum total of funds invested during the past year of 2016.
Primary stage transactions — A round and also seed subsidizing — expanded by a decent 5%, whereas the amount of B funding rounds — monetary infusions made into businesses that are already beyond the development phase and focusing on bringing their companies up to the following higher level — surprisingly plummeted to a worrying low of 30%.
The CEO of the IVC Research Center, Koby Simana did however remark to the media about this that:
“As expected, 2016 ended as a record year in High-tech in Israel capital raising. The fall in B round financing, nonetheless, might be a disconcerting trend for VC businesses.”
There Has However Been A Disconcerting B Crunch
Simana went on to continue his explanation about how they discovered what they termed a “B Crunch”, which is defined as a 30 percent decline in the amount of second time rounds that were closed throughout 2016 – especially when they were compared to the results of 2015.
They felt it was a disconcerting trend for the funnel belonging to VC in Israel, as most funds is supposed to show up in rounds much later on. Companies should be preferably be cued up for investments down the track in order to avoid future problems arising.
The Survey likewise did however disclose a much more promising increase in what can be described as the larger sized transactions.
During the past year of 2016 the ones above $20,000,000, together in the terms of the amount, 76, and funds procured – $2,680,000,000. This indeed clearly signifies a massive 22% surge from the previous $2,190,000,000 earned in just 68 transactions during the year of 2015.
A legal partner at Zag-S&W who co-authored the aforementioned survey, Oded Har-Even stated to the media that the surge of fund raising during the middle to end phases possibly means that funding by means of mezzanine are being utilized in already established companies. He asserted that I was actually a good thing.
All in all, Israeli VC monies invested an overall tremendous amount of $634,000,000 specifically into high-tech in Israel businesses during the year of 2016.
Ever so slightly exceeding a $627,000,000 that had been invested during the year before, 2015. However, it was during the the preceding five annual cycles, VC financial investments by Israeli investors showed startling evidence that they had in fact progressively improved. Starting at $482,000,000 during 2012 up to their present record breaking level.
Simultaneously, their stake of over-all capital invested into these businesses has been worryingly declining progressively. From a general 26% during the year of 2012, reduced to a meagre 13% share during the past year of 2016, the nethermost thus far.
Ultimately, software businesses headed all business types when it came to the sum total of all of the capital-raising that occurred during the past year of 2016, including $1,700,000,000 which is elevated from the year prior to that, which was 2015. At what time the sector was recorded to have acquired a tremendous $1,400,000,000, in other words, astoundingly this put them at a forefront lead when they took a share of 32% of the entire total.
However, it is being revealed from the survey in an equally worrying revelation, that capital procurement by internet businesses worryingly diminished during 2016.
Considering that this particular sector only attracted a meager 16% of a total capital which altogether totaled a mere $744,000,000. Contrasted with 2015, – while internet positioned itself at a marvelous second achieving 26% of the share, or an altogether $1,120,000,000 raised.
The IVC-Zag survey also revealed that in 2016 Life science businesses experienced a 14% decline in funding.