Mobileye deal to fuel investment in late-stage Israeli start-ups

March 22, 2017

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Intel’s $15.3 billion acquisition of Mobileye has catapulted Israeli hi-tech into the global league, and is likely to stimulate investment in the sector’s other late-stage startups, where funds are most needed.

Fundraising in late-stage startups – more mature firms that are already selling products rather than just the bright but unexploited ideas of entrepreneurs – has begun to increase. According to the Israel Venture Capital (IVC) Research Center, it rose to $2.9 billion in 2016 from $2.4 billion in 2015 as investors search for a higher yield on their investments.

Venture capitalists believe the U.S. semiconductor giant’s purchase last week of Mobileye, which specializes in technology for driverless cars, should accelerate the trend.

“A concern over the years has been that compared to the U.S., Israel cannot produce outsized returns,” said Adam Fisher, a partner who manages the Israel office for California-based venture capital fund Bessemer.