Economic crisis? Not quite yet

November 11, 2008 - 3:29 PM by Nicky · 2 Comments
Filed under: Business, General, Technology

The economic news these days is depressing, gloomy, and quite frankly downright scary. And while Israel hasn’t yet fallen victim to the hysteria that is sweeping the US and the UK, where spending has collapsed overnight, the malls here are beginning to feel the first fall in sales as customers hold on to their wallets a little bit tighter.

Nice to read today then that despite the worsening financial climate, Israeli high-tech companies still managed to raise $600 million in the third quarter of the year – an eight year quarterly high, and up 45 percent from a year earlier, according to the Israel Venture Capital Research Center.

The IVC said the third-quarter capital raising exceeded all projections – and you can see it in the news. Just a couple of days ago, an Israeli Internet start-up, iSkoot, raised $19 million in investment. Most of the investment was in communications, followed closely by the Internet sector.

It can’t stay like this, however. VC’s are already warning people that belts are tightening, and that companies must reduce their burn-rate drastically if they are to survive.

“We don’t expect the same rate of investment in the coming quarters,” said Efrat Zakai, director of research at IVC. “However, 2008 will be logged as a record year, even if the fourth quarter comes in considerably below average.”

In the first nine months of 2008, Israeli high-tech companies raised $1.68 billion from local and foreign venture investors, up 34 percent from the same period of 2007.

“Israeli high-tech companies, responding to early signs of market changes and the falling dollar-shekel rate, have been raising follow-on capital to help them navigate through the long-anticipated global crisis,” Zeev Holtzman, chairman of IVC Research Center and Giza Venture Capital, told reporters.

It’s interesting to see how countries react to the current financial crisis. The UK and the US are undoubtedly deeply traumatized, but here in Israel, you can’t help get the feeling that people just aren’t taking it all that seriously.

Maybe it’s just a question of time, maybe, however, it’s a question of character. The Israelis kinda like a crisis. It’s a chance to come up with interesting solutions using a bit of old string, an elastic band, and a great deal of imagination.

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