MoneyTree Q 1 - PwC · Cleantech sector Number of Companies and Total Quarterly investments 2011-...

PwC Israel I www.pwc.co.il Q1 2014 MoneyTreeTM Report

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Increased average investments in seed stageSome $232 million invested in VC-backed hi-tech companies in the first quarter of 2014 up from $196 million in corresponding quarter last year

Tel Aviv, Israel -- May 7th, 2014 -- Venture capital-backed hi-tech companies (in which at least one investor in a funding round is a venture capital fund) raised $232 million in Israel during the first quarter of 2014, down with 23% from $300 million in the fourth quarter of 2013 and a 18% increase from $196 million in the corresponding quarter last year, according the latest PwC Israel MoneyTree™ Report.

The report also indicates that 38 Israeli high-tech companies raised VC funding in the first quarter of 2014, compared to 44 in the preceding quarter and 51 in the corresponding quarter of last year. The average investment per company in the quarter under review was $6.1 million, down from $6.8 million in the preceding quarter and up from $3.8 million in the corresponding quarter of last year.

During the current quarter, $121 million, 52% of the total quarterly investment, was invested in 7 deals of over $10M, compared with $196 million (65%) invested in 10 deals in the previous quarter and $128 million (65%) in 9 deals in the first quarter of 2013.

Rubi Suliman, Partner, co-leader of PwC Israel's high-tech practice, Much has been said about the present period in the Israeli hi-tech industry, with its unprecedented exit and IPO success stories, and the resulting significant improvement in VC fund returns. Yet, as this report shows, we still don't see VC investment side picking up with full force. Some stability in investment flux is indeed evident, with a mild upward trend over the last few quarters. VCs and other hi-tech investors do have now significantly more capital in their disposal for making investments. For that, it is reasonable to expect, as hi-tech successes continue, that the amounts invested will follow suit. In the last two quarters, we have witness a new high in the average investment per company. This is another piece of evidence for the maturity of many Israeli hi-tech companies with need for larger investments, as well as the availability of money for making such investments.

In addition, we see yet another rise in investments channeled to seed-phase companies, mainly thanks to the abundance of companies in early stages, and, again, combined with the availability of financial resources from new or follow-up funds of long-standing VCs.

Rubi Suliman, PwC Israel's high-tech practice leader

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The PwC Israel MoneyTree™ Report for the first quarter of 2014

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PwC Israel I www.pwc.com/il Q1 2014 MoneyTreeTM Report

Total annual investment 2008 - 2014 (in millions $)

Average investment per company (in millions $)

427

291

393

287

194162 178

201170

206

253 256

342364

198

324

165

255

171

277

196174

225

300

232

9269 78 81

49 61 5577 72 60 68 74 83 76

44 58 48 59 52 52 51 43 42 44 38

Q1-08

Q2-08

Q3-08

Q4-08

Q1-09

Q2-09

Q3-09

Q4-09

Q1-10

Q2-10

Q3-10

Q4-10

Q1-11

Q2-11

Q3-11

Q4-11

Q1-12

Q2-12

Q3-12

Q4-12

Q1-13

Q2-13

Q3-13

Q4-13

Q1-14

4.64.2

5

3.54

2.73.2

2.6 2.4

3.4 3.7 3.54.1

4.8 4.5

5.6

3.4 4.3

3.3

5.3

3.8 4.0

5.4

6.8 6.1

Q1-08

Q2-08

Q3-08

Q4-08

Q1-09

Q2-09

Q3-09

Q4-09

Q1-10

Q2-10

Q3-10

Q4-10

Q1-11

Q2-11

Q3-11

Q4-11

Q1-12

Q2-12

Q3-12

Q4-12

Q1-13

Q2-13

Q3-13

Q4-13

Q1-14

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% of funds making no investment

24%

35%

26%30% 30% 29%

34% 32%36%

42%46% 46% 43%

39%34%

41%

52%

32%

46% 45%51%

42%38%

32%36%

Q1-08

Q2-08

Q3-08

Q4-08

Q1-09

Q2-09

Q3-09

Q4-09

Q1-10

Q2-10

Q3-10

Q4-10

Q1-11

Q2-11

Q3-11

Q4-11

Q1-12

Q2-12

Q3-12

Q4-12

Q1-13

Q2-13

Q3-13

Q4-13

Q1-14

Analysis by Geographic Location of Company Registration

In addition to investment in high-tech companies with operations in Israel, local venture capital funds also invested approximately $114 million in 4 overseas high-tech companies that are not engaged in operations in Israel.

Companies Receiving Grants from the Office of the Israel Chief Scientist

5 companies, representing 13% of all companies raising VC capital in the first quarter of 2014, are supported by the Office of the Israel Chief Scientist. Some $45 million (19%) of total investment funds went to these companies.

Companies Receiving Grants from the office of the Israel Chief Scientist 2011-2014 (in millions $)

146

75

53

3526 24

66 65

21

5043

26

45

36

2113 13 11 15 16

10 14 11 134 5

Q1-11

Q2-11

Q3-11

Q4-11

Q1-12

Q2-12

Q3-12

Q4-12

Q1-13

Q2-13

Q3-13

Q4-13

Q1-14

Total quarterly investment(in million $):

Number of investments

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Comparison of Initial and Follow-on investment rates: ($ investments)

Investments made during corresponding quarters:

6131

44

138

2138

19

11079

5197

150

52

281 333

154 186 144217

152 167117 123 128 150 180

18%9%

22%43%

13% 15% 11%

40% 40%29%

43% 50%

22%

Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14

Initial

Follow-up

% initial $ of total investment

Q1-08 Q1-09 Q1-10 Q1-11 Q1-12 Q1-13 Q1-14Total quarterly investment

(in million $): 427 194 170 342 165 196 232

Number of investments 92 49 72 83 48 51 38

427

194170

342

165196

232

9249

72 8348

51380

50

100

150

200

250

300

350

400

450

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Software sector

Number of Companies and Total Quarterly investments 2011- 2014 (in millions $)

Communications and Networking sector


Total annual Investment by sector 2011 - 2014 (% of total $ invested)

Analysis by Leading Technological Sector

19%

41%

16%14%

6%4%

0%

8%

27%

31%

6%

11%13%

4%

31%

18%21%

9% 9%

3%

9%

21%

12%

23%

12%

18%

6%8%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Communications andNetworking

Software Internet Semiconductors Life Sciences Cleantech Miscellaneous

Q1 2014 2013 2012 2011

Q1-14

Q4-13

Q3-13

Q2-13

Q1-13

Q4-12

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Q2-11

Q1-11

Total Investments 451411251812371166267663588Number of Companies 95336161161212111215

-

20

40

60

80

100

120

140

Q1-14

Q4-13

Q3-13

Q2-13

Q1-13

Q4-12

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Q2-11

Q1-11


-

20

40

60

80

100

120

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Internet Sector


Semiconductors Sector


Life Sciences Sector


Miscellaneous Sector



Q1-14

Q4-13

Q3-13

Q2-13

Q1-13

Q4-12

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Q2-11

Q1-11


-

20

40

60

80

100

120

Q1-14

Q4-13

Q3-13

Q2-13

Q1-13

Q4-12

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Q2-11

Q1-11


-

10

20

30

40

50

60

70

Q1-14

Q4-13

Q3-13

Q2-13

Q1-13

Q4-12

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Q2-11

Q1-11


-

10

20

30

40

50

60

70

Q1-14

Q4-13

Q3-13

Q2-13

Q1-13

Q4-12

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Q2-11

Q1-11

Total Investments -19139175421819154723Number of Companies -112422104134126

- 5 10 15 20 25 30 35 40 45 50

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Cleantech sector


Total Investment by sector

Communications and Networking ,

19%

Software, 41%

Internet, 16%

Semiconductors, 14%

Life Sciences, 6% Cleantech, 4%


Q1-14

Q4-13

Q3-13

Q2-13

Q1-13

Q4-12

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Q2-11

Q1-11

Total Investments 1025626221682-22101126Number of Companies 24326443-2358

-

10

20

30

40

50

60

70

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Early round

Analysis by Investment Round

Number of Companies and total quarterly investments 2011- 2014 (in millions $)

Total annual Investment by Investment Round 2011 - 2014 (% of total $ invested)

51%

3%

33%

12%

49%

21% 19%

11%

31%

20%

34%

15%

31%

13%

47%

10%

0%

10%

20%

30%

40%

50%

60%

Early Round Third Round Later Round Bridge Loan

Q1 2014 2013 2012 2011

Third round


Q1-14

Q4-13

Q3-13

Q2-13

Q1-13

Q4-12

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Q2-11

Q1-11


-

50

100

150

200

250

Q1-14

Q4-13

Q3-13

Q2-13

Q1-13

Q4-12

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Q2-11

Q1-11


- 10 20 30 40 50 60 70 80 90 100

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Bridge Loan


Total Investment by Investment Round

Early Round,

51%

Third Round, 3%

Later Round,

33%

Bridge Loan, 12%

Later Round


Q1-14

Q4-13

Q3-13

Q2-13

Q1-13

Q4-12

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Q2-11

Q1-11


-

50

100

150

200

250

Q1-14

Q4-13

Q3-13

Q2-13

Q1-13

Q4-12

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Q2-11

Q1-11


-

10

20

30

40

50

60

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Analysis by Company Development Stage

Seed Stage


Intermediate stage


Total annual Investment by Development Stage 2011 - 2014 (% of total $ invested)

9%

51%

34%

5%6%

44% 44%

6%8%

45%

31%

16%

6%

33%36%

25%

0%

10%

20%

30%

40%

50%

60%

Seed/Startup Stage Early stage Expansion stage Later Stage

Q1 2014 2013 2012 2011

Q1-14

Q4-13

Q3-13

Q2-13

Q1-13

Q4-12

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Q2-11

Q1-11


-

5

10

15

20

25

30

35

Q1-14

Q4-13

Q3-13

Q2-13

Q1-13

Q4-12

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Q2-11

Q1-11


-

50

100

150

200

250

300

350

seed stage

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Analysis by Company Development Stage

Later Stage


Total Investment by company development stageSplit of the Intermediate stage between early and expansion stage

Seed/Startup

Stage, 9%

Early stage, 51%

Expansion stage, 34%

Later Stage, 5%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q1-14Q4-13Q3-13Q2-13Q1-13Q4-12Q3-12Q2-12Q1-12Q4-11Q3-11Q2-11Q1-11

Early stage Expansion stage

Q1-14

Q4-13

Q3-13

Q2-13

Q1-13

Q4-12

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Q2-11

Q1-11


-

20

40

60

80

100

120

140

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The MoneyTree™ Report is published quarterly by Kesselman & Kesselman PwC Israel, in conjunction with the reports published in the United States and Europe by the global accounting, tax and consulting firm, PricewaterhouseCoopers. This quarter, 33 venture capital firms participated in the production of the Report. The findings of the Report are widely used each quarter by Israeli and foreign venture capital funds, commercial banks, investment banks and other financial institutions both in Israel and abroad, high-tech companies, government departments, the Office of the Chief Scientist and others.The MoneyTree™ Report measures investments by the professional venture capital community in private emerging hi-tech companies in Israel. The information presented in the MoneyTree report includes investment rounds in Israeli hi-tech com-panies or Israeli related (companies that are incorporated outside of Israel, but were founded by Israeli founders with R&D subsidiary in Israel), with at least one VC participating in the financing round. The VC's that are included are all Israeli VC's or foreign VC's that have at least one partner in Israel. The information is mostly reported to us by the VC's and other reli-able sources and is verified prior to its inclusion in the report.

For further information

Karin Gattegno, Business Development Manager ,Hi-Tech department, PwC Israel [email protected]

Elazar Evers, Manager, Hi-Tech department , PwC Israel03-7954549 [email protected]

© 2014 Kesselman & Kesselman. All rights reserved.In this document, “PwC Israel” refers to Kesselman & Kesselman, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.

PwC Israel helps organisations and individuals create the value they’re looking for. We’re a member of the PwC network of firms in 157 countries with more than 184,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com/il.

This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, Kesselman & Kesselman, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

MoneyTree Q 1 - PwC · Cleantech sector Number of Companies and Total Quarterly investments 2011-...

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