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According to a report by English-language news agency for Israel and Middle East Haaretz.com, the venture capital sector of Israel has been seen falling behind in a race to capitalize on the surge of the high-tech industry in Israel.

Founder and chairman of research firm IVC Online and of Giza Venture Capital Zeev Holtzman said, "Israeli VC funds are in a slump in terms of the amount of capital managed. Only a handful will manage to raise new funds in the next year or two. Foreign funds will fill the resulting vacuum."

Two years ago, the demise of the venture capital sector In Israel had been predicted. Although it had managed to obtain high returns from its investments in a record number of startups, it has yet to find that momentum to raise new capital.

Holtzman provided an insight and said, "Israel's venture capital sector will thrive for the next 10 years in a way that has never been seen. The investors, 95% or more of them foreigners, will earn loads of money. Israeli startups in which local funds are investing are operating in today's most attractive technological fields."

IVC's recent data provided polarizing details about the venture capital sector in Israel. Investments made by venture capital funds were projected to increase significantly from USD1.9 billion in 2012 to USD2.2 billion this year. Proceeds generated from exits that involve venture capital funds were also projected to increase from USD2.8 billion last year to USD4.9 billion this year.

On the other hand, a drop in capital in venture capital funds available for investment was seen. From 2010 to 2013, the USD600 million raised each year by Israeli funds was the same to the total amount the funds had invested. According to Haaretz, the number of bets that the venture capital funds would be making moving forward was needed to be reduced unless a shift would be seen.Moreover, the number of active Israeli funds had been seen declining from 50 in 2007 to just 27 this year, according to data by IVC.

"The amount of money available for initial investments in startups is in sharp decline. This means that startups, particularly those which will want to do a first round of funding for $3 million to $5 million, will have a hard time doing so. Money for early rounds is in relative shortage," Holtzman said.