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Summary:

Venture capital firms based in Israel have another dry year ahead of them. While deals between Israel’s VCs and cleantech startups picked up momentum in recent years, especially in the solar power and water-tech sectors, they’re in for a slowdown: Israeli venture capital funds are expected […]

Venture capital firms based in Israel have another dry year ahead of them. While deals between Israel’s VCs and cleantech startups picked up momentum in recent years, especially in the solar power and water-tech sectors, they’re in for a slowdown: Israeli venture capital funds are expected to draw only $300 million in 2009, down 62 percent from last year’s $793 million and just over a quarter of the $1.14 billion raised in 2007, according to a new report from the Israel Venture Capital Research Center. Funds have not turned up this low in Israel since 2003.

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This doesn’t mean cleantech startups in Israel are entirely out of luck. Over the past decade, Israel’s VCs have raised some $11 billion, and today they still have about $1 billion available to invest, according to the IVC report. Today’s release says $400 million of that is intended for first investments in high-tech companies — with the rest being reserved for follow-on investments.

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Startups also have options abroad. The UK’s venture capital heavyweight, Index Ventures, announced the close of a €350 million (about $440 million) fund last week for early stage and seed investments in cleantech, as well as the biotech and IT sectors in the U.S., Europe and Israel.

Graphics credit IVC Research Center

  1. It is important to point out that more than half of the VC investment in Israel has always been from foreign VCs. And there is a strong trend that those VCs are picking up momentum by sending a parter or 2 to Israel to invest out of the US / global fund. Like Canaan, Bessemer, Norwest, Battery, Venrock, Lightspeed, Opus, and others. All of these funds also do and have done cleantech.

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