Israeli Venture Capital Report - Start-Ups Still Starting
The international accounting firm Price-Waterhouse-Coopers releases a venture capital investment report every quarter. The report for the Israel venture capital report for the fourth quarter of 2008 is interesting. Essentially investment in the start-up sector is flat. It has been this way since mid 2004. The other interesting fact is the contribution of the state to start ups through the chief scientists office. The report says:
"The domestic venture capital funds invested approximately $142 million, this sum representing approximately 49% of total investment for the final quarter of 2008."
- as far as the contribution from the state of Israel:
"20 companies, representing 25% of all companies raising capital in the final quarter of 2008, have received grants from the Office of the Chief Scientist. About $94 million of total investment funds has flowed into these companies. The data for 2008 reveal that 101 companies raising capital during the course of 2008 received grants from the Office of the Chief Scientist and that approximately $494 million of total investment funds flowed into these companies."
While most people consider Israel to have a free enterprise economic system, the support of Israeli start-ups with $94 million in the quarter makes it 34% of the total start-up investment. In any form of economic structure this would be a high component of government involvement. While venture capital investment is a risky business, the state sees this as a crucial factor in the economic strength of the state. Israel has been a technology start-up leader for many years. Both local entrepreneurs and foreign ones (mostly from USA) contributed to the Israeli technology sector with new companies which remained independent and many companies which were acquired by bigger companies (also mostly from the USA). This may account for the high level of Israel's government contribution to new companies. The other element here is the high level of innovation. No financial incentive would have lasted this long without the natural drive built into the Israeli personality. Engineers, scientists, business managers and tinkerers are driven by the desire to create something new. The drive to own your creation and to control the destiny of a company is what pushes many entrepreneurs. This is still true in the down economic times and after the second downturn in investment in the last decade. Actually, as some technology products heat up, more people come up with ideas for better products. Maybe this is the computer age version of what the Jewish pioneers did here 120 years ago. Let's see where the start-up investment goes in the next year and how much the technology market and the economic situation has over investors and creators. STAY TUNED...
Credit: נוסח הקרדיט: הארכיון לתולדות פתח תקוה ע"ש עודד ירקוני Jewish guard on horse (date unknown circa 1930 to 1948) Petach Tikva.see the report at:
http://www.pwc.com/extweb/ncsurvres.nsf/docid/98033724DA2E5C368025721E00314441
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