In 2014, 12 Israeli venture capital funds brought in $914 million, the most raised by Israeli venture capital funds in six years. The year’s fund raising was up 68% from the $544 million raised by 11 VC funds in 2013, and was 18% above the 10-year average of $777 million, according to a report issued by IVC and KPMG.
Four veteran Israeli VC funds managed to raise more than $100 million each and accounted for 64 percent of total capital raised in 2014. Carmel Ventures’ fourth fund attracted the largest amount – $194 million, while Magma raised $150 million for its fourth fund, less than two years after closing its previous $110 million fund. JVP made a first closing of $160 million of a targeted $180 million for its seventh fund. In addition, Vintage’s seventh fund, a fund of funds, attracted $144 million, 50 percent of which is being allocated to Israeli investments.
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The average fund size in 2014 reached $76 million, 55 percent above 2013’s $49 million average, and up 46 percent from the $52 million of 2012. The increase reflects the raising of more medium sized funds and fewer micro VC funds than in each of the previous two years.
During the 2011-2014 period, micro venture capital funds –managing capital below $50 million – accounted for 14 percent or $439 million of the total amount raised by venture capital funds. However, the micro VC trend seems to have abated, as only three new funds were established in 2014, compared to an average of nine over the previous three years.
Koby Simana, IVC CEO, said, “A favorable window of opportunity for fund raising, has enabled a number of management companies to progress from a micro VC model to mid-size range, which offers more investment flexibility.”
The growth of Israel’s venture capital industry is traced to six cycles of fundraising that peaked in 2000 when $2.9 billion was raised, and declined until 2003 when only $64 million was raised. The industry’s sixth cycle, which started in 2011, began a recovery and raised a total of $3 billion over the four years through the conclusion of the cycle in December 2014. A seventh cycle, underway now in 2015, already looks promising.
At the beginning of 2015, some $1.8 billion was available for investment by Israeli venture capital funds. Of this amount, $462 million is earmarked for first investments. The remainder is reserved for follow-on investments.
