JERUSALEM, Oct. 24 (Xinhua) -- Israeli high-tech companies raised a record amount of 3.8 billion U.S. dollars in the first nine months of 2017, according to a report Tuesday.
The average financing round has grown steadily from 3.3 million dollars during Q1-Q3 of 2013 to peak at 8.2 million dollars in the corresponding period of 2017, although the number of deals during the Jan-Sept period, 457 deals in total, declined to lowest number in the past five years, said the report by the IVC Research Center, the leading online provider of data and analyses on Israeli high tech, venture capital, and private equity.
In the third quarter alone, a remarkable 1.44 billion dollars were raised by 144 Israeli high-tech companies, an increase of 14 percent over the 1.27 billion dollars that were raised in Q2, and a 54 percent surge from 933 million dollars raised in Q3 of 2016, according to the report.
Five deals of over 50 million dollars each were made in the third quarter, accounting for 33 percent of the quarterly total.
The decline in the numbers of deals "stems from seed and early stage deals, 17 percent decline compared with the five-year average," said Marianna Shapira, research director of IVC Research Center.
"A reversal is needed in the fourth quarter for the sake of the new ventures and their success as part of the Israeli technology market," Shapira said.
In the third quarter, venture capital-backed deals accounted for the largest quarterly amount in the past five years, with 1.2 billion dollars raised in 89 deals.
The VC-backed share of total capital increased steadily throughout the first three quarters of 2017 to 84 percent in the third quarter, compared with 67 percent in the same period of 2016.
During the Jan-Sept period, a total of 2.9 billion dollars were raised in 278 VC-backed deals, the entire 77 percent of total capital raised in this period, compared with 2.6 billion dollars, or 68 percent attracted in 302 deals in the same period of 2016.
Deals above 20 million dollars attracted the biggest share of capital raised in VC-backed deals, with approximately 60 percent of total dollar amount in the first nine months of this year.
The report says that Israeli VC fund investments increased in the third quarter, with 277 million dollars invested and accounting for 16 percent of total capital, compared with 164 million dollars (13 percent) and 139 million dollars (15 percent) in the second quarter of this year and the same period of 2016, respectively.
Israeli VC funds preferred follow-on investments (66 percent) in the third quarter, with most of this capital (91 percent) going to mid and late-stage companies.
"During the third quarter, we noticed the dominant position of Israeli VC funds and the increased investment by foreign VCs compared with the corresponding quarter of 2016," said Shmulik Zysman, managing partner at Zysman Aharoni Gayer & Co., or ZAG/S&W, an international law firm.
"Israeli high tech continues to be the growth engine of the Israeli economy and its share of GDP is steadily increasing," said Zysman.
The report shows that 43 percent of the total capital raised in the third quarter was invested in late stage companies, reaching a record of 618 million dollars, compared with 425 million dollars in the second quarter and 294 million dollars in the same period of 2016.
"The trend of investing larger amounts in fewer companies indicates that investors have an appetite for greater risk," said Zysman.
"Early stage companies are attracting investors' attention and capital and it is clear that foreign investors see Israeli high tech as a source of innovation and investment opportunities," added Zysman.
While software continued to lead capital-raising in the third quarter, its share shrank to 25 percent of total capital, below the two-year average of 35 percent, followed closely by life sciences with 24 percent, according to the report.
