Israeli high-tech companies raised $ 1.6 billion In Q3 of 2018

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by Ifi Reporter Category:Capital Market Oct 30, 2018

In Q3 / 2018, Israeli high-tech companies raised $ 1.6 billion in 131 deals. While the amount invested was comparably high, there were fewer transactions compared with the last quarters. Only one mega-deal was recorded in Q3 / 2018 - Trax Solutions raised $ 125 million, equal to 8% of the total amount raised in the third quarter.
In Q1-Q3 / 2018, Israeli high-tech companies raised $ 4.5 billion. The number of deals matched 68% of the total number of deals in 2017. Yet, in the first nine months of 2018, Israeli high-tech capital raising equaled 82% of the total raised in 2017.
Following an uplift of seed capital raising in H1 / 2018, only 21 seed deals were recorded in Q3 / 2018, the lowest number since 2013 and below the ranges of the last five years. The number of mid and late financing rounds (B and Later rounds) was in the range of the previous years, while A rounds decreased in Q1-Q3 / 2018. According to IVC analysis, median numbers at all stages continued to increase.
In Q3 / 2018, deals above $ 20 million reached a record level of $ 1.1 billion. While the number of deals under $ 5 million decreased, the number of deals larger than $ 10 million continued to rise.
Marianna Shapira, research director at IVC Research Center points out: "Investors preference for mature companies has negatively affected the levels of seed financing, which continues to shrink similar to US patterns." Shapira added, "Neverheless, we expect capital raising in 2018 to achieve the levels of 2017. According to the investment patterns in Israeli high-tech from the last years, it looks like the third quarter marked a bottom for the last period."
In Q3 / 2018, VC-backed capital raising deals totaled $ 1.3 billion in 67 deals. The number of VC-backed deals dropped 34% compared with Q3 / 2017. Non-VC-backed deals accounted for $ 285 million, at the lower end of the last three years.
In Q3 / 2018, mature-stage companies raised almost six times more capital compared with early-stage companies. In terms of number of deals, IVC found that, through 2016, investors favored seed and R & D stages. Since 2017 and even more in 2018, the trend shifted, as investors turned to more mature companies (initial growth + revenue growth stages).
In Q3 / 2018, software companies raised $ 760 million mainly due to 12 deals, each larger than $ 20 million. Artificial Intelligence (AI) companies were the main attraction for financing deals in the last quarter. The number of deals magnitude 15% in Q3 / 2018, compared with the corresponding quarter last year. The number of AI deals in Q1-Q3 / 2018 rose steadily - 17 companies attracted more than $ 20 million each.
Investor's Activity
In Q3 / 2018, IVC analysis found that the share of corporate VCs grew to 14% of total capital invested. An increase was noted in VC funds' investments, following a slowdown that started in Q1 / 2017. In Q3 / 2018, VC funds' investments accounted for 42% of total capital invested.
In Q3 / 2018, IVC analysis found that the share of corporate VCs grew to 14% of total capital invested. An increase was noted in VC funds' investments, following a slowdown that started in Q1 / 2017. In Q3 / 2018, VC funds' investments accounted for 42% of total capital invested.
"Despite the vacations in the third quarter, Israeli high-tech was able to withstand this period," said Shmulik Zysman, managing partner at Zysman, Aharoni, Gayer & Co. (ZAG-S & W): "More importantly, the total amount raised was comparable to the total amount raised in the corresponding quarter of last year, one of the highest in the past six years, indicating the stability of the market."
Zysman notes that, "Although the number of companies that raised capital this quarter declined, the amount of capital required. the Israeli high-tech. "

According to Zysman, the volume of capital raised from foreign investors continues to be particularly high: "This is in spite of the fact that Israeli companies that have benefited from Chinese investors are now encountering much more sophisticated and selective Chinese investors. be credited to European venture capital funds that start investing in Israel ".
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 437 investors of which 43 were Israeli VC management companies and 394 were other entities. The term "R & D companies" refers to high-tech companies in the process of development and not yet offering products to the market.
The survey covered total capital raised in Israeli high-tech sector, including VC-backed rounds, where at least one VC fund participated in the round, as well as deals not backed by venture capital funds. The survey includes amounts received by each company directly and does not count direct

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