Greed is summed up

"The Israeli venture capital funds are unlikely to restore the old rate of development up to 2012", - says head of research center of Israel Venture Capital (IVC) Kobe Simão. He was echoed by the founder of the largest fund Giza Venture Capital and former CEO Zeev Holtzman IVC. In a letter to Israeli Prime Minister Binyamin Netanyahu and Finance Minister Yuval Steinitz, he said: "The Israeli venture capital industry is on the verge of collapse ... industry, which, in fact, is one of the engines of economic growth, is in grave danger." Been warned. In spring 2010, a former top manager of three technology companies and one venture capital fund Jaffa Krindel complained Financial Times, that she wanted in 2009 to find funds for venture capital fund specializing in "clean technologies", but could not. In the end, she and her partner could not get even half of the planned $ 100 million and were forced to freeze the project. "Everybody liked our idea, we had experience, but nothing happened - no one wants uncertainty when money is invested somewhere for five or seven or even ten years", - says Jaffa Krindel. "The funds were to choose projects more critically, and entrepreneurs now have a better understanding that the money - a scarce resource, and use them with great intelligence" - the newspaper quoted Aaron Mankovski, managing partner at Pitango Venture Capital ($ 1,3 billion under management). The developer of child chat Vikido Yami Glick in early 2010 found two private investors for the project, but before that he unsuccessfully tried to negotiate with five venture funds. "Their demands are much higher. They are certainly not prepared to invest as much as before "- says Glick. And funds have reason to save. According to the joint report of IVC and the international auditing firm KPMG, in the IV quarter of 2010, Israeli venture capital funds have attracted only $ 93 million, or 27% of the total investment in Israeli hi-tech. This decline on all fronts: the $ 9 million less than in IV quarter 2009, and $ 16 million less than in the III quarter of 2010. Deprived of access to new money, the funds themselves have reduced activity. In 2010, Israeli venture capital funds invested $ 371 million - 30% of all investments in startups. The amount of investment funds decreased compared to the year 2009 to $ 39 million (the share was 37%), as compared to 2008 - to $ 409 million (38% share). This is not comparable to previous figures, from 2000 to 2006 on venture capital funds accounted for 40 to 45% of investments in high-tech, and in 2005 the figure reached at all and 49%. Continued decline as no surprise to analysts. Another report in the IVC in 2009 stated: "The decline in capital formation in 2009, called, of course, influenced by the economic crisis on the high-tech industry. We, unfortunately, we expect that this situation will continue for some time. In 2010, Israeli companies will probably be even harder to raise funds. " This is not Rio de Janeiro. Until recently, Israel's venture capital industry has evolved at an unprecedented pace, reaping the fruits of a long development. The industry has gone from R & D-center in the 1960s and the first IPO on NASDAQ in 1972 (it had Elscint - one of the world's leading manufacturers of equipment for radiography and tomography) to the base of the first venture capital fund Athena Venture Partners - in 1985 under its control was only $ 23 million In late 1992, launched a state program Yozma («Initiative"), founded and operated with experience in venture business financiers, who, however, obeyed the government representatives on the board. In the next three years the program was created 10 Yozma venture capital funds with a market capitalization of $ 20 million, started to invest directly in local startups. As a result, the 1990s proved to be a brilliant time for Israel: according to official figures, from 1993 to 2000, venture capital has been attracted more than $ 7 billion, and the number alone, IT-companies over 4 thousand As regards the number of startups per capita to Israel So far the leader: according to statistics of the same IVC, the country has more than 3850 start-ups (the approximate ratio - a start-up to 2000 inhabitants). Israel has about 70 venture capital funds, of which 14 - international companies with their units in the country, and, in addition, about 220 funds have offices in Israel, but are actively investing in local start-ups. According to the report of PricewaterhouseCoopers International Innovation in Medicine, Israel remains the leader with respect to venture capital GDP - 1.2%, with a wide margin ahead of Brazil (from 0.3%). In a country where it was developed by ICQ (1996), and where was created the first outside the U.S. R & D-center of Intel (1974), investments in high-tech economy is really mean to much. More serious for Israel may be the consequences of the current stagnation. Not a single fund. Some market participants have not lost hope. The case of the big funds in Israel really are not going well, but Israel is still one of the fastest growing economies, so that "one way or another high-tech companies will be funded," says vice-president of the American company yet2.com Eugene Buff. "Israeli startups can safely survive the existential crisis of the local venture capital industry - believes Yossi Vardi, a famous Israeli innovator, the founder of ICQ and business angel. - In the future, funds will play a much smaller role, will be responsible for financing mainly business angels and major technological players. " Vardi acknowledges that the money in the market right now is really much less than before the crisis. But the amounts that are needed for seed funding and later rounds, also fell. "I see an infinite number of new ideas and a huge number of foreign players eager to Israel to find companies that meet their needs and preferences," - he insists. Statistics, however, tells a different story: in 2010 the company seed stage of development attracted $ 38 million - the minimum amount since 2004. The share of crops in general, venture capital has fallen to 3%, given that an average of 7 years, she hesitated at 7%. IPO - not an option. Possible reasons for the venture capital industry in Israel is facing a severe slump, leads an online magazine, University of Pennsylvania Knowledge @ Wharton. Wharton Business School professor Raphael Amit, referring to statistics, shows that most of the IPO technology companies does not provide adequate returns to investors participating in the placement. And he doubts that in the near future we can expect in general at least some impact. Many companies are prepared for deployment, but the market situation has forced them to abandon such plans. Excess of supply over demand leads to lower prices, and this situation will persist for a long time. So in the near future venture funds had relied to replenish budgets at the expense of out of the successful projects for a better hope it is not necessary. "If it is possible to exit the company with pleasure it is used either to oppress them, investors or entrepreneurs themselves want to finally get the big money - complains Len Rosen, head of the Israeli office of Barclays Capital and one of the leading investment banks in the penetration of Western Israeli hi- tech. - As we have seen, the best place were quite large after break, when the market was temporarily closed to new IPO ». What is happening in Israel - only part of a larger cyclical downturn, he said. "The problem is not only Israel but all in hi-tech, just in Israel, it is a bit sharper," - said an investment banker.