Youngest start-ups struggling for capital
When you add the small number of early-stage start-ups getting first-round investment with the increasing number of exits in Israel, you get a dwindling number of mid-size companies, defined as those with revenues exceeding $20 million. According to data compiled by analysts Oren Raviv and Dan Yachin from the market research firm IDC, more than 60 Israeli start-ups raise more than $20 million a year. However, compared with data from 2011, that actually marks a decline of 20% to 30%.
"The intermediate stage is problematic," said Raviv. "More companies are sold and fewer of them enter the pool of firms that surpass the $20 million bar." "Exits are a blessing, but looking ahead there is cause for concern," said Yachin. "The cream of the Israeli start-up crop is 'picked' when the founders exit. The problem arises when we look ahead and see that the venture capital pool has contracted compared with the market," he said.
By Orr Hirschauge