Bloomberg News

Israel Venture-Capital Technology Disposals Jump to Decade High

January 06, 2014

Israel’s technology industry showed signs of maturity as the value of disposals by venture capital firms in 2013 soared to the highest in a decade as the proportion of smaller deals declined, IVC Research Center said.

Sales of technology companies backed by venture-capital investors totaled 35 transactions worth a combined $4.2 billion, the Tel Aviv-based industry-research group said in a report published today. The average $120 million value was more than double the $55 million 10-year mean, amid a “dramatic decline” in deals of less than $10 million.

Growth in exits by Israel’s venture-capital industry contrasts with U.S. venture-backed disposals that according to the National Venture Capital Association were at the lowest since 2009. Larger Israeli tech-industry transactions in 2013 included BlueRun Ventures’ sale of map software producer Waze Inc. to Google Inc. (GOOG:US) in June for $966 million, and Cisco Systems Inc. (CSCO:US)’s acquisition of software maker Intucell Ltd. from Bessemer Venture Partners for $475 million.

“This is a good sign for the Israeli industry,” IVC Chief Executive Officer Koby Simana said in a text-message response to questions. “The findings indicate both entrepreneurs and investors wish to build bigger companies and seem to be more patient to wait for them to reach higher valuations.”

Sale Values

Sales by venture-capital firms accounted for 63 percent of the $6.64 billion transaction value of the 80 deals involving Israeli and Israel-related high-tech companies last year, IVC said. The report follows research by the Israeli affiliate of PricewaterhouseCoopers consulting company that found that the average value of all Israeli technology-company disposals last year, including those backed by venture capital, was the highest in a decade at $170 million.

“The most important factor is that the local industry has an abundance of companies that reached sufficient maturity,” Rubi Suliman, a partner at PwC Israel, said in the report published on Dec. 29. “Most buyers have a taste for more mature companies, hence more expensive ones, as opposed to buying cheap companies with unproven technologies.”

To contact the reporter on this story: Gwen Ackerman in Jerusalem at gackerman@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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