Lot’s of Israeli VCs talk up the importance of early stage investing but how many first investments do they actually make in seed stage startups and which VCs lead the walk rather than the talk? The IVC Research Center has released the results (membership required) of their 2009 VC survey and we’ve got some good and bad news to share. What do you want to hear first?
Ok, the bad; 2009 saw an overall 50% drop in dollars raised by Israeli hi-tech companies and a 35% drop in the number first investments by Israeli VCs. Israeli VCs made 77 first investments in 2009 compared to 119 in 2008.
Now the good; 38% (the majority) of those 77 first investments where made in seed stage startups compared to 28% in 2008. Internet, Software and Life Sciences sectors took in the most checks. Each took 22% of the overall annual first investment pie. Internet? Nice.
Most Active Israeli VC Funds in 2009
So which VCs made the most new investments? Surprisingly Terra Venture Partners, a tiny $25M cleantech fund, leads the pack with 6 first investments. Tied for 2nd with 5 first time investments are Carmel, Giza, JVP, Magma, Pitango, Sequoia and TriVentures. Gemini and Genesis made 4 first investments. Check out who they invested in and the stage and sector breakdown below.
Early-stage startups should keep these numbers in mind when pitching Israeli VCs. The most active of the bunch make 2 to 3 early-stage investments per year after seeing hundreds pitch. We hope to see these numbers increase in 2010 and that more Israeli Angels and micro-funds will step up to fill the seed gap but rather than just hoping investors take more risk, let’s get out there and build more sustainable Israeli businesses that merit the early financial support.