TheCoils has a good post (in hebrew) that gives an overview on what happened in Israel regarding internet seed investments. 2007 was a very active year. Way more than 2006. I expect 2008 to be also an active one but many of those early investment will have to prove (including for our own portfolio companies) that a sustainable model is in place.
The interesting part of 2007 was that different models of investment were established in Israel and as TheCoils say, there is no Israeli VC that has not (tried to) put in place a special seed program to address correctly the internet companies.
If you can't read Hebrew there is a great table recapitulating the investment operations made over 2007 (click above to enlarge). The Internet Lab proves out to be one of the most active internet seed programs there. We are working very hard to make it also efficient and 2008 will be important for us in that respect.
Another trend i notices is that appetite from foreign investors (with no representation in Israel) for israeli startups: Mayfield, Spark, Mangrove (Zlio), Accel but also power angels Peter Thiel. And probably soon more (i heard about a deal or two coming up)
An important thing to spot is that many startups did not receive funding and probably won't. This is not necessarily a bad news: you do not always need VC money to succeed and you can build a very nice company without that (for example with angel money only). You can find some of those startups here
Finally 2007 was quiet in terms of M&A activity in Israel: all the attention was of course on Quigo (disclosure we invested in the new company of the founder of Quigo, Outbrain) that sold to AOL for 300+ m USD. Yedda was also acquired by AOL.
TheCoils should probably add also dPolls that was acquired by Toluna.
2008 will reserve many opportunities for M&A as many startups will hit some nice milestones and some won't be able to pursue but still offer some nice assets to be acquired. The question will remain: Are we able to build giant internet players in Israel? I am not sure we will have the answer in 2008. Actually i think we won't. We'll need more patience for that.
2007 was a good year for the Israeli internet ecosystem and i think we are on a good learning curve. I am a bit concerned by the lack of developers and good wed design guys. But i am sure this will change soon. Really look forward for 2008
I hope that in 2008 LGILab will do even more. After all when LGILab launched in February 2006, the plan was to invest in 10 companies in 1 year. Almost 2 years have gone by and LGILab has publicly announced investments in 6 companies if I'm not mistaken. So it seems there's still a gap to cover. Still, keep up the good work and lots of luck in the future.
Posted by: Yaniv | 01 January 2008 at 09:54 AM
Yaniv, we have not said we would do 10 invetments but up to 10. We never said either in would be in one year. What matters is not the number of investment but our capacity to make them successful. 2008 will be important for that
Posted by: ouriel | 01 January 2008 at 09:59 AM
I knew I saw it somewhere.
Thank god for the internet. Look here (at the bottom):
http://finance.walla.co.il/?w=/134/920521
I stand corrected, it says 10 companies in TWO years.
But who's counting ;)
I definitely agree with your statement. Quality over quantity is the choice for me.
Posted by: Yaniv | 02 January 2008 at 11:28 AM
Our official message is that we would invest up to 10. We are focused on making good investments and supporting projects we believe in. this will become clearer soon. All the packaging around is secondary
Posted by: ouriel | 02 January 2008 at 12:11 PM
Sounds great!
Anyway good luck in 2008, and hope you find a lot of good projects to invest in.
Posted by: Yaniv | 02 January 2008 at 03:49 PM
I think everyone is eventually acquired by everyone else. It seems that way, at least. :)
Posted by: Dara | 19 January 2008 at 07:34 AM