Israel VC Funds Down 92% from High

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Israel VC Funds Down 92% from High

Some of the best technology in the world was invented in Israel. The VoIP market was launched in the country and the biblical land of milk and honey still leads the world in communications and technology. Many US-based companies do much of their R&D in Israel in fact because there is such a strong pool of talent and the Israelis seem to be very inventive.

With a strong track record and in a market where technology seems to be one of the more stable investment areas, it is a bit of a surprise to see that the amount of VC funds raised last year was less than one-tenth of the all-time high of $2.9 billion raised in 2000. The actual number raised in 2009 was $229 million- the third-lowest of the decade.

My perhaps contrarian viewpoint on the matter is that the credit-crunch in many ways may be good for the remaining investors as there will be less competition for each idea. One thing which became abundantly clear in 2001 was there were many good ideas but too much money chasing them.

Perhaps this level of investment is more appropriate and moreover the rise of cloud-based infrastructure means the cost to start new companies today is a fraction of what it once was.

One final bit of good news for startups is the rise of piggybacking where you can leverage existing platforms such as Twitter, Facebook and various app stores to make money without having to develop entire social networking platforms or smartphones yourself.

So while the investment amount has decreased more 90% from the high, it may be argued that they price of launching a new company has also decreased by a commensurate amount.

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