JERUSALEM, March 20 (Reuters) - Israeli venture capital funds raised just $1.5 billion in 2023, down 74% from 2022 and its lowest level since 2015, a joint government and private report said on Wednesday.
2023 was a tough year for fundraising and Israel's tech sector due to a global economic slowdown exacerbated by investor jitters over Israel's plan to overhaul its judiciary and October's attack by Hamas gunmen that sparked war in Gaza.
According to the report from the Israel Innovation Authority, the IVC Research Center, law firm Gornitzky GNY and consultancy KPMG Israel, just 21 Israeli venture funds raised funds last year, versus 62 funds for $5.9 billion in 2022.
It noted that Israel's 24 largest funds have $29 billion under management.
Three VC funds accounted for 51% of the total capital, raising over $200m each - Qumra Capital IV, TLV Partners V, and Viola Growth IV.
"The importance of fundraising and investment rounds is undeniable, yet our industry's strength lies in many factors," said Dina Pasca Raz, partner and head of technology at KPMG Israel.
"To prevent an exodus of innovation, it's crucial to offer compelling incentives to entrepreneurs, preventing companies from leaving Israel, thus sustaining and bolstering this robust foundation".
Dror Bin, CEO of the Israel Innovation Authority, said it had injected 400 million shekels ($109 million) into companies with significant business and technological assets which have limited funds to last more than a few months. The authority also has launched another 500 million shekel fund to conduct 100 funding early stage funding rounds.
($1 = 3.6786 shekels) (Reporting by Steven Scheer; Editing by Andrew Cawthorne)
