israel venture capital journal

December 2007 Vol. 7, No. 4

Includes IVC Q3 2007 Surve

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European VCs in IsraelAlex Brabers / 4The border between business and politics is very thin - almost non-existentCharlotte Gutman / 5R&D programs give boost to Israeli-European cooperative effortsJessica Steinberg / 6

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1

Board of AdvisersDavid Rubin, ChairmanTech Capital Ltd.Zeev HoltzmanGiza Venture CapitalGil Avnimelech, Academic AdviserBen Gurion University of the Negev

Sr. Editorial ConsultantJoel Bailey, MaxiVest Ltd.

General ManagerGuy HoltzmanExecutive EditorMichal AdamResearch DepartmentDoron Rosenbaum, Information Mgr.Efrat Zakai, Director of ResearchGraphicsIlan PeeriCover IllustrationDaniel MorgensternAdvertising, SalesGali Idan, Koby Simana, Mike HamuyEuropean Public RelationsCGP Europe, S.A.PrintingA.R. Printing Ltd.

Israel Venture Capital & Private Equity Journalis published by

IVC Research CenterRamat Aviv Tower40 Einstein StreetPOB 17672Tel Aviv 61175 [email protected]

Information contained herein has beenobtained from sources believed to bereliable but its accuracy and completeness,and that of any opinions based thereon, arenot guaranteed. No statement or opinionshould be construed as a recommendationor offer to buy or sell any security. Nostatement in the articles or otherwisecontained herein should be construed aslegal or other professional advice andshould not be relied upon as such. Thepublisher assumes no responsibility forerrors or omissions. The publisher, itsemployees, affiliates and clients may sell ormaintain an equity position or have otherdirect or indirect financial interest incompanies discussed herein or mayperform services for such companies. Nopart of this publication may be reproducedin any form without the prior writtenpermission of the publisher.

NOTICE TO NON-ISRAELI RESIDENTSThe information provided in thispublication should not be construed,implicitly or explicitly as containinginvestment recommendations.

© Copyright 2007

ISSN 1565-5245

IVC JIsrael Venture Capital &P r i v a t e E q u i t y J o u r n a l

Note from the Editor

European investment in Israel has historically been relatively light. While a fewmajor European technology companies and institutional investors have beenunhesitating supporters of Israeli venture funds and private companies, theirimpact has been measured. But there are signs that investment and Israel-European cooperation are on the rise. This issue of IVCJ examines both thegrowing European interest in Israel and efforts by Israeli companies to expand thescope of their activities to across the Mediterranean. The opportunities are there forboth sides.

Michal Adam, Executive Editor

Table of Contents

Global institutions give more emphasis to Israel 2Zeev HoltzmanEuropean VCs in Israel 4Alex BrabersThe border between business and politics is very thin – almost non-existent 5Charlotte GutmanEuropean Framework Program for R&D bolsters Israeli research 6Marcel ShatonThe FP7 snowball effect 7Elie BerdugoR&D programs give boost to Israeli-European cooperative efforts 8Jessica SteinbergEurope offers opportunities for Israeli firms with a local presence 11Bert van der HeideGlobal marketing starts with Eastern Europe development 12Meidad Ben-Yochanan and Avi LeviGO4Europe makes case for European markets 13Israeli footprints spread over East European real estate 14Wendy EllimanMobile entrepreneur Rafi Ton taps Europe first 17Isabel MaxwellNew IVA president to tackle venture industry agenda 18Centerfold: Capital Raised by High Tech Companies in Europe and Israel 20Why your great innovation might be worthless 23Steve Schuster

IVC High Tech Survey – Q3 2007 38Efrat Zakai, Director of Research, IVC

Departments

Company Profile: Leonardo Media ........................................................................................................................24

Israeli Fund Raising Scorecard ..................................................................................................................................26

Fundscope ..................................................................................................................................................................................27

Noteworthy News ................................................................................................................................................................27

Exits..................................................................................................................................................................................................28

Capital Raised..........................................................................................................................................................................30

Conference Calendar..........................................................................................................................................................32

Trading Places..........................................................................................................................................................................34

Companies Raising Capital ..........................................................................................................................................35

Young Technology Companies in the Spotlight ..........................................................................................36

Zeev Holtzman

Zeev Holtzman, founder and chairman ofGiza Venture Capital, is positive onprospects for greater interest in Israel fromEuropean institutions. He explains why.

While Israel has strong trade relationswith the US, Europe and Asia, inthe realm of investments, thedynamics vary substantially. USinstitutions have been at the

forefront of VC investments in Israel, and leadingUS venture funds have been taking stakes in Israelitechnology firms for many years, and theycontinue to do so. European investors have by nomeans ignored Israel but, compared to the US,investment from Europe has lagged sorely behind.Asia ranks a distant third, in both directinvestment in the high-tech sectors and ininvestment via venture capital funds.

But the playing field is changing. I see thesetrends intensifying over the next few years, whichwill markedly impact investment in Israel:1. Europe is becoming increasingly interested in

Israel. European institutions are open tomaking more investments in venture capitalfunds, viewing the Israel venture capitalphenomenon as an attractive opportunity. Andspecifically when it comes to developing inno-vative technology, Israel is seen as competingeffectively with the US, Europe and the rest ofthe world.

2. European institutions are comparing Israeli VCfunds to US funds with regard to performance.Several leading Israeli funds have performedwell and are increasingly being seen favorably.

3. There is a limited capacity for US funds – espe-cially top quartile funds - to absorb capitalfrom European institutions. The substantialcompetition among US institutions to invest intop quartile funds sometimes leaves Europeaninvestors out in the cold.

4. Israel is being seen as an attractive alternativeto top tier US funds, presenting an investmentopportunity where European investors canobtain high level performance.

5. More and more capital is running to Asia, espe-cially to India and China, but most of thoseAsia-bound investors are not looking forleapfrog technologies. Instead, they areentering these countries for the huge potentialof their markets.

6. Sophisticated investors are making the differ-entiation between the type of investmentsfound in Israel and those available in India andChina.

7. Taiwan, China and India will have identified

the need to have transfers of technology inorder to feed their domestic manufacturingmarkets. The best way to make that transfer isto invest in high-tech and VC funds. Asianinvestors will, as a result, emulate Westerninvestors and begin investing in Israel.

8. Investors that are now directing massive flowsof capital to China and India appear to befollowing the herd. At the end of the day, it islikely that most will be disappointed, and largesums will be lost there.

Europe-Israel connection will bestrengthened

There are several factors that should ease theway for intensified European investment. Israel'sgeographical proximity makes it relatively simplefor European investors to identify investments,capitalize on opportunities and monitor invest-ments in Israel. Operating in the same or nearbytime zone is part of that package as well. Whilesome foreign investors are apprehensive due togeopolitical factors, most European investors arebeginning to better understand and becomeadjusted to the geopolitical realities. They realizethat the impact of Middle Eastern politics on thehigh-tech sector is limited and are taking their cuefrom leading global European companies –Siemens, Philips and Deutsche Telekom forexample – that are already present in Israel, andfrom those institutions and funds of funds – espe-cially funds from Switzerland, the UK andGermany – that have already invested in Israel.

Israel is becoming part of the normal VC assetclass for European institutions. If their strategyallows them to invest in venture capital, then theywill be here.

VCs can recapture their allureIn the last several years, private equity has had

better returns than venture capital. Yet venturecapital has become more experienced, sophisti-cated and mature. Despite the slowdown in 2000-2003, a change in the market is at hand, partly dueto the crisis in private equity from the impact of thesub prime mortgage situation. In the next five toseven years, it is expected that venture capital willagain become an attractive class, and privateequity will result in substantial disappointment toinvestors. Savvy investors are already increasingVC allocations – and this is of direct benefit toIsrael.

Cooperation between European andIsraeli VC funds

In general, Israeli venture firms still prefer towork with and co-invest with US funds. European

2

Global institutions give more emphasis to Israel

Continued on page 33

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Most European VCs that have reached somescale invest in Israel. Alex Brabers,executive vice president of GIMV – Belgium’slargest investment company – examines theirreasons and looks at differing investmentapproaches.

For most VCs, investing in local deals ispreferable to investing outside theircountry. They know the business culture,the business network and the eco-system,and can spend less time reaching portfolio

companies and providing local support. The largerEuropean VCs, however, invest to some degreeoutside their home countries. The size of theirfunds won’t allow them to invest solely in thehome market, and local deals have to bebenchmarked internationally. Deals in certainareas often seem to come in batches (e.g. GPSchipsets, micro-projectors, DVB-H) and whencomparing these deals, VCs will choose thecompany with the best risk profile independent ofits location. Geography remains a relativelyinsignificant factor for success.

When benchmarking deals internationally, onesoon encounters Israeli deals given its buoyanttechnology environment, which represents thelargest concentration of successful tech firmswithin ‘Europe.’ Due to existing airline schedulesa return trip from Europe takes only one businessday (and admittedly one night flight), the sametime needed for traveling to the south of France,for example. Israel is therefore a natural market forEuropean VCs to consider.

European VCs adopt different approaches tothe Israeli market. The most committed funds,mostly with a US origin, set up local teams(Greylock, Sequoia). These teams operate rela-tively independently from their London or USoffices, but they do leverage the brand andnetwork. They try to become fully embedded inthe local market in order to be considered a trueIsraeli fund, but with excellent access to Europeand the US. Other VCs maintain a local Israelirepresentative for deal sourcing, networking anddeal support. This representative is typicallycomplemented by staff flying in from the headoffice to support and lead the deals, each in hisarea of expertise.

Most European VCs support their deals on afly-in-fly-out basis without having any permanentstaff on the ground. In such cases, it is assumedthat they can, to a large extent, source deals fromtheir head office in London or the continent.

Deal sourcing, however, remains to a largeextent a local activity where you need to be physi-cally close to the market. This is even more so the

case for early stage deal flow, especially in such ahighly networked country as Israel. In the currentgeneration of Israeli high technology, companiesare often founded by a serial entrepreneur on hissecond or third company, who has already estab-lished strong relationships with local VCs.

Will these Israeli tier 1 deals approach interna-tional VCs for their first round and, if so, why?This case is comparable with serial entrepreneursin the UK who prefer tier 1 VCs in the UK ratherthan tier 2 or tier 3, not to mention continental VCs.Adding value to an early stage deal on a fly-in-fly-out basis seems cumbersome, especially consid-ering that one of the initial tasks is recruiting,mainly a local function. Leading a deal in such ascenario is not advisable for a European VC. Onthe other hand, building a syndicate with a stronglocally networked VC is a possible solution to thisissue.

Recently European funds GIMV and 3iadopted an original approach. Considering thatthe Israeli market is highly networked, theydecided to partner with a local VC. As both VCsare evergreen funds, with a listed vehicle, theywere able to make investments as limited partnersin local tier 1 VCs (GIMV in Genesis Partners, 3i inGiza). Both Israeli funds focus on early stage Israelideals (ICT for Genesis Partners and ICT/medtechfor Giza) and have not sought to expand into laterstage or international deals. Both parties, theEuropean LP and the Israeli VC, act as comple-mentary teams. The local VC takes care of dealsourcing and local networking, and allows theEuropean VC to co-invest in selected deals. This ispossible because Giza and Genesis Partners, inmost cases, lead these deals in the first professionalcapital round and are thus able to invite the otherparty to the syndicate.

Co-investments by the European VCs onlyoccur where there is a clear European angle to thedeal, with strong industry contact from theEuropean VC in order to maximize the potentialadded value. The follow-up from the European VCis indeed on a fly-in-fly-out basis, but it dependson the local partner for a substantial part of thelocal issues. The interests of both parties are fullyaligned, as both enter the deal at the same time andat the same valuation. There are, therefore, nodifferences in the respective cost bases nor differ-ences in the exit horizon.

Such partnerships are not only productive forco-investments in Israeli start-ups, they can also bethe basis for mutual support in due diligence orbusiness building for deals for which no co-investment opportunity exists. Indeed, bothparties can consult each other to benchmark dealsagainst respective European or Israeli deals. The

4

European VCs in Israel

“Most EuropeanVCs supporttheir deals on afly-in-fly-outbasis withouthaving anypermanent staffon the ground.”


Charlotte Gutman

The meshing of business and politics is areality, but that is not necessarily a bad thingfor Israel. In fact, it can serve Israel well.Charlotte Gutman, managing director ofthe pan-European public relations firm CGPEurope, provides her perspective.

In her speech at the Prime Minister’sConference for Export and InternationalCooperation, Israel’s Foreign Minister TzipiLivni, who had just returned from China,said: "Tiny, little Israel received an award for a

dairy company helping big China in agriculture.Israel is there to help not only itself. Borders areless and less important. However, it is a fact thatthe global threat and economy are connected.Israel will be able to position itself on the politicallevel thanks to its successful economy."

It has been a difficult and lengthy road tofinally reach this approach by the Israeligovernment. I remember a time, not so long ago,when Israeli officials believed that there was aclear distinction between the Ministry of Industry& Trade and the Ministry of Foreign Affairs.

In the summer of 2006, when war broke out inthe northern part of Israel, I tried to interest Israelibusiness leaders in a lobbying group at theEuropean Parliament. The idea was to getsuccessful businesses in Israel to support theefforts of the "European Friends of Israel," a groupof parliamentarians from the EP and nationalgovernments. Of the 600 global Israeli companiescontacted, only 10 companies understood that thesuccess of this group would have a direct influenceon business issues. I am sorry to say that Israelicompanies missed an excellent opportunity.

We have seen economic embargos try to harmcountries, and we of course know about theblacklist, which prevents Israel from being anofficial business partner for some countries.During the years of the intifada, we also saw manytough propaganda campaigns, such as those insupermarkets in Europe, which tried to damageIsrael’s economy, and the negative political reac-tions that resulted in the cancellation of businessmeetings. Israeli business people had to justifythemselves in some European countries whereanti-Israeli activities were, and still are, far-reaching. Today, looking at the amazing achieve-ments of the Israeli economy, it is hard to look backand remember those times as being a permanentthreat to the country and its people.

I have witnessed some major moves forward inrecent years. Planes and hotels are fully bookedwith tourists, and the word "Israel" is not as tabooas it used to be in the European market. However,Israeli business people still have to defend the

moral values and dignity of Israeli society whilerepresenting their companies abroad. Besides thegovernment, companies and individuals have tocombat the distorted image of Israel and Israelis.The job of communications – to reduce the gapbetween the reality of Israel and its image abroad –is not over, and probably never will be.

In the meantime, Israel is confirming itsposition as a key player in the worldwide economyby signing major strategic agreements with the EU.Israel was welcomed at the Organization forEconomic Cooperation and Development (OECD),next to 30 other countries. Thanks to its economicachievements, Israel is now on board as a fullmember of this prestigious organization. As anobserver in several committees, Israel has alreadymade important contributions in fields such astaxes, science and technology. OECD Secretary-General Angel Gurria summed it up when he saidsuccinctly: "The benefits of this accession processare manifold. It is a triple-win partnership: Israelwins, the OECD wins and the world economy willwin too."

EU-Israel business dialogue The "EU-Israel Business Dialogue" was offi-

cially launched at the Prime Minister’s Conferencein Tel Aviv on November 1, 2007. The conferencecomprised 20 European and Israeli businessleaders in the presence of Günther Verheugen, VPEU Commissioner for Enterprise and Industry, andEliyahu Yishai, Minister of Industry, Trade andLabor.

"This dialogue shall encourage Europeancompanies to do more business with Israel and toinvest more in Israel. There is a huge economicpotential that is not yet fully exploited," saidVerheugen. The chairman of the European side isDr. Mathias Doepfner, CEO of the German mediagroup Axel Springer. The Israeli side is to bechaired by Internet entrepreneur and investorYossi Vardi.

In the first year of operations, the EU-IsraelBusiness Dialogue will focus on banking andfinance, energy and clean technologies, lifesciences, retail and manufacturing, telecommuni-cations, media and Internet, tourism and trans-portation.

Israel is the first neighboring EU country to jointhe Competitiveness and Innovation Program(CIP), under which the European Commissionpromotes innovation, entrepreneurship andgrowth of small and medium-sized enterprises.According to Verheugen, "Competitiveness andinnovation are joint challenges for Israel and theEU. There are many areas of entrepreneurship andinnovation policy in which Israel and the EU have

5

The border between business and politicsis very thin – almost non-existent


Marcel Shaton

When it comes to support for research anddevelopment, the European Union has animpressive track record through its FrameworkPrograms. Marcel Shaton, Director Generalof ISERD - the Israel-Europe R&DDirectorate, describes the EU’s 7thFramework Program and explains how it canprovide real benefits to Israeli firms.

The European Union's FrameworkPrograms (FPs) are the main financialtools through which the European Unionsupports research and developmentactivities that cover almost all scientific

disciplines. The EU aims to become the mostdynamic competitive knowledge-based economyin the world, and the knowledge triangle –research, education and innovation – is a corefactor in its efforts to meet this ambitious goal.

The Seventh Framework Program (FP7) 2007 –2013 bundles all research-related EU initiativesunder a common roof, playing a crucial role inreaching the goals of growth, competitiveness andemployment. It is the key pillar for building theEuropean Research Area (ERA).

The FP is the largest program bringing togetherindustry and academia. Participation is viasubmission of R&D proposals by a cross-Europeanconsortium of industries, universities and researchcenters. Approved research grants are for severalyears and are not subject to royalty payments. TheFP7 budget has been increased by 40 percent fromthe level of previous programs and totals approxi-mately €50 billion.

FP7’s four-fold objectivesThe broad objectives of FP7 are grouped into

four categories: Cooperation - joint research efforts among

research organizations from different countriesaimed at achieving a leading edge in an essentialfield in science or technology. The budget forcooperative programs is approximately €32.3billion. In terms of participation by Israel, theseprograms are the most important.

Ideas – support for new ideas in basic research.In practice, this is accomplished through theEuropean Research Council, established as a scien-tific foundation similar to the American NationalScience Foundation. Its budget is some €7.46billion.

People – improving human resources. TheMarie Curie Actions, with a €4.73 billion budget, isresponsible for a variety programs in this area.

Capacities - support focused on research infra-structure and studies for small and medium enter-prises (SMEs) with a budget of €4.22 billion.

There is a specific program corresponding tothe main areas of EU research policy for eachobjective. All programs work together to promoteand encourage scientific excellence, and Israel'sparticipation in FP7 enables it to benefit from theachievement of these goals.

ISERD facilitates program forIsraeli participants

ISERD, operating through the Office of theChief Scientist of the Ministry of Industry, Tradeand Labor, aims to promote joint Israeli-EU R&Dventures within the EU’s R&D FrameworkProgram. ISERD is an inter-ministerial directorate,established by the Ministry of Industry, Trade andLabor; the Ministry of Science, Culture and Sport;and the Planning and Budgeting Committee of theCouncil for Higher Education.

ISERD represents Israel in the FrameworkProgram’s management committees at theEuropean Commission. It is also responsible for thepromotion of Israeli interests in the FrameworkProgram’s key organizations, such as research insti-tutions and universities, as well as for promotingand raising awareness of the program amongindustrial and academic communities in Israel.

Quantifying the benefits In the Sixth Framework Program (1996-2000),

the Israeli partners received €204 million inresearch grants in projects that were valued atmore than €3.5 billion. The total reflects the valueof knowledge Israel gained from FP6, in additionto intangible benefits, such as networking, visi-bility, reputation and business intelligence.Compugen, for example, partnered with aconsortium that received a budget of €4 millionfrom the EU. Even though only a quarter of thatsum reached Compugen directly, over 80 percentof the consortium’s activity was designed to enrichCompugen’s knowledge inventory. Without theEU, Compugen would have had to raise the fullinvestment itself in order to obtain the same levelof knowledge.

Peptor participated in a small consortium, andit received just a few tens of thousands of euro.However, under the auspices of the consortium,clinical testing was conducted on a molecule witha financing grant of €1.8 million, saving Peptor€1.8 million in testing expenses. These examplesdemonstrate how total project budgets can be usedto measure the true value to Israeli organizations.

Satisfaction runs highA 'Dahaf' survey among Israeli participants in

FP projects, conducted by Prof. Mina Tzemach,found that most researchers in industry and

6

European Framework Program for R&Dbolsters Israeli research


Elie Berdugo

Elie Berdugo, European Incentives Managerat Ernst & Young Israel, explains howbenefits from participation in the EU’s 7thFramework Program can easily mount toenable companies to more readily reach theirresearch and commercial goals.

EU Commissioner Janez Potocnik, who isresponsible for science and research, hasreflected on a snowball effect in which"more competition will lead to betterresearch. Better research will lead to more

private investment in research. More investmentwill lead to better facilities, and better facilities willattract and retain better researchers." This virtuouscycle is a challenge for Israeli R&D and providesjustification for its deep involvement and success inFramework Program (FP) 7, the European Union’smain instrument for funding research anddevelopment.

Given the current role of EU-sponsoredresearch and technology development activities,normal assumptions would suggest that, based onthe EU’s legal principle of subsidiarity, R&Dprograms are being focused on activities too largeand/or too complex for any single country toundertake alone. However, the FP role has much todo with promoting cooperation with researchcenters and universities inside the EU and withthird countries or international organizations.Collaborative research projects also encourage thetraining and exchange of researchers and facilitatejoint research ventures among companies, univer-sities and research institutions across Europe.

A main benefit of the new seven-year FP7launched in 2007 is that it provides exposure toleading European corporations while promotingcooperation between companies. Relations forgedwhile working together in a consortium lead toother joint efforts. The program also has a clearposition on promoting involvement of small andmedium-sized enterprises, and proposes attractiveterms for these companies.

In general, the funding percentages are verygenerous, and there is no requirement to paybackroyalties. The main advantage, though, for bothglobal companies and start-ups is the opportunity tomake strategic alliances and ultimately to reachcommercial objectives. FP7 is in fact a business devel-opment platform to enter and reinforce Europe.

Being involved in an FP7 consortium providesaccess to a challenging and innovative R&D projectbased on a partnership between academic andindustrial partners. The benefits of collaboratingwith various countries and types of entities aretangible, but the European Commission alsoinvites projects to collaborate with other projects in

the same field of research, Benefits are derived notonly from the relationship with your group ofpartners, but also from meeting and collaboratingwith other projects and partners in your field ofexpertise. Another type of snowball effect orvirtuous cycle can be drawn here: participating inan FP7 consortium will provide extended cooper-ation with all types of partners including final end-users of the technologies. In other words, Israel’sstrong technological added value in many fields ofresearch can be leveraged using the FP7 businessdevelopment platform.

As an attention-grabbing example, the newgeneration of Given Imaging’s PillCam is inte-grated in FP6 as described by a ZarlinkSemiconductor press release: "The EuropeanConsortium coordinated by Given Imaging (Israel)and Developing a Cancer Screening System for theGastrointestinal Tract includes ZarlinkSemiconductor (Sweden and UK), FraunhoferInstitute for Biomedical Engineering, IsraeliticHospital and Indivumed (Germany), ImperialCollege of Science, Technology and Medicine(London, England), ITC-irst Research Institute(Italy), The Hebrew University of Jerusalem,Novamed and Ernst &Young (Israel). Thisconsortium called NEMO will invest €4.7 millionover the next three years, of which the EuropeanCommission will contribute €2.8 million."

Another example is Ben Gurion University’s(BGU) partners in the field of disease diagnostics."The GLYFDIS Consortium includes three world-leading laboratories in glycome analysis and twoindustrial partners," according to the GLYFDISWeb site. This consortium gives BGU the oppor-tunity to leverage its collaboration with Europeanuniversities and to work closely with the lifesciences industry to offer and bring new diagnosticsolutions to market.

Now, the interesting piece of information isthat the NEMO and GLYFDIS projects are in thesame FP6 environment and can therefore benefitnot only from their own partners, but each can alsocollaborate with other projects – all converging tooffer innovative diagnostics.

Unfortunately, the first step to enter FP7 some-times appears difficult to Israeli companies thatconsider FP7 projects "one-shot opportunities"instead of an opportunity to build an adequate FP7strategy. Key elements to succeed in FP7 are themonitoring of relevant EC proposed R&D objec-tives and opportunities, attending EC informationdays and preparing or participating in projects.This first level of effort should enable benefits fromthe FP7 snowball effect that results in increasedparticipation in projects and in accomplishingR&D and commercial objectives. ■

7

The FP7 snowball effect

Yair Amitay

Dr. Daniel Kofman

Jessica Steinberg looks at some of theprograms that have been created over theyears to promote wide-ranging Israeli-European research and business relationships.

It was in 1978, nearly 30 years ago, thatMatimop, the Israel Industry Center forResearch and Development, was formed as anot-for-profit government company thatwould be the international arm of the Office

of the Chief Scientist (OCS), essentially pushingthe incubated ideas of the OCS into the for-profitworld.

"It was at the time that BIRD was created," saysYair Amitay, executive director of Matimop,referring to the foundation that supports industrialresearch and development cooperation betweenthe US and Israel. "We never thought about thiscurrent level of involvement. We were thinkingabout how to push technology and industry fromIsrael, and we did a whole bunch of things. Somethings succeeded."

At the time, the push was to expose Europe toIsraeli innovation. As Israel’s number-oneconsumer partner because of its geographicalproximity, almost 50 percent of Israel’s importsand exports have always been, and continue to be,European-based. But there has always been a gap,with more imports to Israel than exports, whichhas given rise to trade, research agreements andplans with European countries to help Israelicompanies increase their exports.

Matimop functions as the interface betweenIsraeli companies and their international counter-parts, promoting joint development of advancedtechnologies and encouraging participation in themany international programs for bilateral andmultilateral cooperation in industrial R&D, signedand funded by the Office of the Chief Scientist(OCS) of the Ministry of Industry, Trade and Labor.

The OCS looks to strengthen Israel’s compet-itive abilities through research and development,because that’s Israel’s main advantage, saysAmitay, "high-tech and brains."

"Our mazal is that we really have that uniquequality," he says. "No other country in the world,even in absolute numbers, has the number of start-ups that we have. It’s due in part to the OCS’stechnological incubators and the Israeli entrepre-neurial spirit, and one sticks to the other. It’s aphenomenon, but because everyone is so cuttingedge, they’re already oriented from the firstmoment to work in the big world rather than thelocal market, and, fortunately or unfortunately, inthe most competitive markets, meeting the biggestcompanies, the multinationals. We figure that ifyou can’t beat them, join them. So the Israeli

companies and organizations built the tools forcompanies to cooperate in joint ventures andresearch and development, which is easy to dowhen both sides are interested. It’s all aboutstrategic alliances."

Europe doesn’t care as much about bridgingthe consumer gap with Israel, but it does see inIsrael potential technology that’s so useful andimportant. That’s where Israel began creatingformal frameworks for cooperation, starting withbilateral or binational agreements between Israeland other countries. The first agreements werewith France and Holland in the mid-1980s. "Thenthere was nothing for a long time," says Amitay.But later on, Israel joined in the multilateral Eurekaprogram, which is essentially a network of chiefscientist programs in European countries that hasbeen around for some 20 years.

There is no main fund in Eureka, as eachnational authority funds its own companies.Instead, it is dedicated to creating joint venturesbetween companies. When Israel joined Eureka inthe 1990s, the program had already been in exis-tence for some time and was reluctant to includeIsrael because it’s not a European country. NowIsrael is a full member, like the other 37 membercountries, and will be the chair in 2010, "because ofthe added value that Europe gets from jointventures with Israel," says Amitay, who, as thedirector of Matimop, is managing director of theIsraeli Eureka.

Within the Eureka program, there are sub-clusters of companies focusing on a specific area.Celtic, for example, is a cluster of wirelesscompanies, while Medea works on microelec-tronics, Pedea handles semiconductors, and Iteaconcentrates on software systems. Israeli companyRad Data Communications is one of the foundersof Celtic, along with Alcatel, British Telecom,Ericsson, Nokia, Thomson, Eurescom, FranceTelecom, Italtel and Telefonica. Another local,Tower Semiconductor, is in the core group ofPedea.

"The added value of an Israeli company inthese kinds of clusters is that they’re out in theworld with other big chiefs, the biggest companiesin Europe," says Amitay. "Under normal circum-stances, an Israeli company trying to get to Alcatelwould have to go through 18 people to get to theCTO. But with Israel in the core group, smallcompanies can talk face to face with the peoplethey need to meet. It’s a basic system that gives realopportunities to Israel companies, big and small."

In the past year, Israel gave about $15 million toEureka projects, via the Office of the ChiefScientist.

For Dr. Daniel Kofman, CTO at Rad and a

8

R&D programs give boost to Israeli-European cooperative efforts


10

founder of New Generation Internet for theEuropean Union, the visibility that Eureka offers isvery rewarding. "In these projects, there is an inter-esting exchange of knowledge that helps forecastthe market and has an important impact in futuremarkets and, in some cases, there is effectiveresearch efforts provided by partners that couldn’thappen otherwise," explains Kofman, who movedto Israel from Paris 15 months ago. "It doesn’tmean that all partners work together, but there’s alot of bilateral cooperation on specific topics."

Along those lines, Eurostar is the brainchild ofthe Eureka initiative, focusing on small andmedium-sized enterprises in all industries. UnlikeEureka, where funding comes only from nationalsources, and whose budget caps tend to limit theinvolvement of small businesses, Eurostars usesfunding from national sources that is then matchedby the European Union in a three-pronged effort ofthe EU, Eurostars and the home nation. Amitaycalls it the work of "four years and a lot of politics."

But, for all the issues with Eureka and itsfunding, as well as being limited to mostly largerenterprises, there is the occasional start-up thatbenefits from this enmeshment of industry andpolitics. Veterix, an Israeli start-up working on acattle-health diagnostic system, was in the Eurekaprogram and benefited greatly. Eliav Tahar, Veterixfounder, maintains that government-sponsoredprograms, such as the incubator program andEureka, were instrumental in getting it off theground. "These programs come and help entrepre-neurs obtain money at the start of their journey,"explains Tahar. "We’re an idea that if we didn’t

have these international programs, it would havebeen hard to create something."

Beyond Eureka and its clusters are theEuropean framework programs, or F7, as thecurrent round is called. Israel has been part of thisEuropean Union effort since 1995, paying to be amember country of this endeavor that allows all ofa country’s entities – such as academic, medical,transportation, cultural and social – to compete forplacement. Each framework is now seven years,with an annual budget of some $7 billion euros.Israel’s share is 1 percent of European Union GNP,or about 70 million euros, since it is a non-memberstate. According to Amitay, Israeli companies havecollected more than Israel has paid for, "so at leastwe’re in good shape," he comments.

"It’s very hard for Israeli companies to enter atender in Europe, but once we’re part of aconsortium of local European companies, then theinterest is much higher," he adds.

"It’s huge and complex," says Kofman of theframework programs. "The European commissionhas the mission of granting collaborative research,between industry and academia. There are tens ofpartners, and then smaller groups focused onspecific issues. Intellectual property can be anissue, so there are downsides. But a group caninclude potential clients, vendors or academicinstitutions."

The smaller groups include clusters such asGalileo, which focuses on the European globalsatellite navigation program, of which Israel istaking part. It’s a European program, but Chinaand Israel are both involved, comments Amitay –China because of its huge market and Israelbecause of its technology. Israel paid 18 millioneuros toward participation in Galileo, and thereare now 10 new projects in Israel that are partici-pating. Sesar, a new project involving civilianaviation control in Europe, may also include Israel,although Israel has yet to be accepted.

Within F7 are CIP and ENP, previously knownas innovation relay centers (IRCs) until the sixthframework, and designated to provide solutions tothe traditional low-tech industry and the transferof know-how from high-tech to low-tech. Israel’sManufacturer’s Association is the contact inEurope, providing tech audits in factories andfinding solutions to improve processes.

Cooperative Agreements

Under binational support agreements, Israeli companies and theirforeign partners agree to cooperate in the development of a newproduct, process or service, finding one another through the Matimopdatabases and cooperating through the Office of the Chief Scientist.Israel currently has such agreements with Belgium, France, Germany,the Netherlands, Portugal, Spain and India.

Israel’s Ministry of Science is a promoter of "international sciencerelations," exporting and importing knowledge to and from countries ofthe European Union, former Soviet Union and southeast Asia. Atpresent, the ministry cooperates with Germany, France, Great Britain,China, India and South Korea. Each cooperative effort has its own fund,usually contributed to by each country, and promotes scientific andtechnological cooperation in a range of subjects, from human geneticsand mathematics to sustainable agriculture and astrophysics.

Selected Programs for Israeli-European Cooperation

Program Purpose

Eureka an enabling network of more than 20 European countries, assisting companiesand research institutes to collaborate in high-tech and market-oriented R&Dventures

Celtic European cooperation in telecom, a Eureka cluster

Itea, Medea, Pedea Eureka clusters in information technology, microelectronics, semiconductors

Galileo global navigation satellite system with EU and ESA

Sesar Single European Sky ATM Research for air navigation systems

Basha develops technological and scientific cooperation with countries of EasternEurope and the CIS as well as provides assistance to immigrant scientists.

ERA – MORE joint initiative of the EC and 33 countries in the EU Framework to benefit thedevelopment of scientific researchers


“A local presenceincreases visibility andpromotes contact withpotential customers aswell as strategicpartners. It shows alevel of commitment tothe market.”

There are attractive markets in Europe forIsraeli technology companies.Bert van der Heide of Kurtz Marketing& Management in the Netherlandsdescribes how Israeli firms can take advantageof available incentives to open branches inEurope and better access the burgeoningopportunities.

Europe, an increasingly importantmarket

Although the US has traditionally been a major trading partner for Israeli industry, Europe is becomingincreasingly important as a market forIsraeli high-tech companies. This is a

logical consequence of the expanding EuropeanUnion that now consists of 27 countries and nearly500 million citizens. The standard of living isrelatively high, and consumers, who aredemanding advanced products and solutions, arewilling to pay for quality and innovation. A case inpoint is the opportunity that has arisen for both lifescience and ICT companies in medical diagnostics,prevention and treatment. Europe’s agingpopulation has created a strong demand for bothremote monitoring solutions (using wireless,telecom or Internet technologies) and medicaldevices, areas in which Israeli companies haveconsiderable expertise.

Complementary industriesEuropean industry includes many global

corporations (e.g. Philips, Siemens, Océ, Zeiss,SKF) and large scientific institutes that are highlyfocused on fundamental research. In contrast,Israeli high-tech industry is characterized by anapplication orientation. These varying approachesserve to make European and Israeli industrieshighly complementary to each other.

Europe needs entrepreneurship and inno-vation, which Israeli industry offers in abundance,and Israeli high-tech companies requiresubstantial international markets to sell their tech-nology and products. Teaming up with a "bigbrother" in Europe in order to bring their productsto the market is an option to which Israelicompanies should give serious consideration.

Starting an office in EuropeProximity to the customer is always a wise

approach, and therefore Israeli companies seekingto do business in Europe should consider opening

a regional office to coordinate business devel-opment and sales activities. A local presenceincreases visibility and promotes contact withpotential customers as well as strategic partners. Itshows a level of commitment to the market.

In addition to finding a location nearcustomers, site selection for a new Europe-basedoffice should consider tax issues, the availability ofa well-educated workforce and physical andknowledge infrastructure.

Many cities in Europe are welcoming of inter-national companies seeking to open offices in theirregion and offer benefit packages to thenewcomers. This is mainly accomplished by short-term financial incentives, such as the payment ofrent, for a specified period of time.

The start-up phase of a new office is usually themost difficult, and it has been our experience thatcompanies need to look beyond short-term incen-tives and solidify long-term relationships in orderto optimize chances for success.

Proactive approach by RotterdamOne city that has taken a particularly pro-active

approach and adapted its offering to support inter-national companies – with a particular eye towardIsraeli firms – is Rotterdam in the Netherlands. InOctober, the city of Rotterdam organized a seminarin Tel Aviv, in conjunction with IVC, that focusedon business opportunities in Europe for Israeli lifescience and ICT companies and the uniquebenefits extended by Rotterdam when opening anoffice there. The seminar laid out the cooperationand financing possibilities, and individualmeetings were held between the Israeli high-techfirms and the Rotterdam delegation.

In addition to Rotterdam’s central location,high level of human resources, excellent infra-structure and support from the City DevelopmentCorporation, Rotterdam offers free strategicmarketing and business development servicesthrough Kurtz Marketing & Management, aRotterdam-based consultancy. Kurtz is also activein arranging cooperation with researchers atRotterdam’s Erasmus University Medical Center,one of Europe’s leading institutions in the lifesciences.

In conclusion, Europe offers considerableopportunity for Israeli companies in advancedtechnology. Both government and private organi-zations are well prepared to help Israeli firmsovercome the hurdles and penetrate this growingmarket. ■

11

Europe offers opportunities for Israelifirms with a local presence

Log on today to the companies of tomorrowwww.ivc-online.com

Meidad Ben-Yochanan

Avi Levi

Epizoda, a young start-up in mobilebroadcasting, has taken the bold move tolocate its offshore development center in theUkraine – at least until its A round closing.Company executives Meidad Ben-Yochanan and Avi Levi, explain this choiceafter comparing alternatives in India and Asia.

Start-ups – it is all about challenges

Creating and building a new technologicalstart-up is a very demanding mission. Infact, this task is basically an aggregationof many small, medium and largechallenges: clearly defining the market in

which you are about to operate, determining theoptimal marketing solution, recruiting the bestteam, and so on. However, by far the mostchallenging mission of an entrepreneur is to reachall of the above goals within a limited and day-to-day decreasing budget – regardless of whether youare being self-funded or have raised money frominvestors.

The early days of a new start-up are very muchtechnology driven. This is the time for your ITspecialists and software developers to achieve asmuch as possible and to position your firm towardits upcoming development stages. It is preciselythose early days that are the most critical relatingto costs. Promoting development with low levelsof spending is the biggest challenge of all.

The above description is common to any newventure, whether in Israel, the US or elsewhere,and this situation contributes to the practice ofoutsourcing software development initiatives tooffshore centers such as India, China and Russia.This short article outlines factors that should betaken into account when deciding where to locatean offshore center.

Going offshore – issues forconsideration

Choosing to operate an offshore outsourcingprogram is, by all means, a cost-containmentdecision. Nevertheless, both start-ups and maturecompanies should recognize a number of importantissues in their decision-making process. Thefollowing is a review of several issues from theperspective of an Israeli start-up that is comparingtwo offshore center options: India and the Ukraine.

For companies evaluating a possible offshorecenter, the expense is the first and most immediateissue to be examined. Problems start whenmanagers focus only on a direct hourly rate, orproject rate, costs. Setting up an offshore devel-opment center contains many indirect decisions,all of which influence the company’s P&L. Beforemoving forward, let’s just note that the hourly cost

of development in the Ukraine is between $25 and$30, while in India, the cost tends to be as much as$35, due to the rampant demand for cheap labor.So, if we are evaluating, for example, a 6-9 monthproject, we must start by considering the level ofinvolvement that will be needed to secure a satis-factory level of productivity from the team beingestablished.

Going offshore with a mid-size project with amid- to high level of complexity is normallyaccompanied by one to two weeks of on-site workby an IT manager. The start-up period is a crucialtime that has a major influence on success. Theproject leader must deal with important aspects,such as bringing together the best and most expe-rienced team of professionals, building strongworking relationships with one’s offshore vendor,narrowing the learning curve of the new team, andother related issues. Therefore, the closer youroffshore center is, the less complex the startingperiod is. Miles are very much the name of thegame here. A three hour direct flight from Tel Avivto Kiev just cannot be compared to a 7 1/2 hourflight to Delhi in terms of team control and projectinvolvement.

An important benefit is concealed within thedistance of the offshore center: the time differencebetween its location and that of Tel Aviv. Theabsence of a time difference between Israel and theUkraine can dramatically extend the working dayand involvement capabilities, as compared to a 4-hour time difference between South Asia and TelAviv. If it assumed that each office will work until7 pm, a full working day exists with a Ukrainianvendor, while working with an Indian vendorwould end at 3 pm local time.

Of course, the cost of traveling to distant loca-tions can have a direct effect on the frequency thatyour manager will be able to travel, if we arediscussing a self-funded venture. A Tel Aviv-Delhi

12

Global marketing starts with Eastern Europe development


Ukrainian IT Outsourcing Services, 2000-2006

Source: Market Vision

Guy Ravid

The advantages of European markets for listingequities was a key topic at this year'sGO4Europe conference held at the Tel AvivHilton in mid-November. Organized by theCukierman & Co. Investment Houseand Catalyst Fund, the conference hostedmore than 700 participants from both theIsraeli and European business and investmentcommunities.

“About 60 percent of trading worldwidein 2005 and 2006 occurred onEuropean exchanges," said GuyRavid, CEO at Cukierman & Co."This is a great vote of confidence for

the European markets. As companies can havetheir shares listed and traded on exchanges incountries other than the one in which they arehosted, it's interesting to note that the value ofsuch trading on exchanges in Europe, principallyLondon, has been much higher than on the twomain US exchanges – the New York StockExchange and NASDAQ."

Graham Dallas, Senior Manager at the LondonStock Exchange attributed the upsurge inEuropean activity, in part, to "…the revolution intelecommunications and IT capacity and the hugerise in the influence of institutional funds." Dallassaid, "Intermediaries are providing global servicesfor global clients and market data are being dissem-inated more rapidly than ever before. The devel-opment of the wider global economy has inten-sified, with multinational companies seeking outcapital in international capital markets. Financialregulators, faced with the globalization of markets,have been cooperating more than ever before."

"In absolute terms, over the past decade, therehave been more foreign equities trading in Europethan in the US," added James Posnett, ManagingDirector for European Products – Eurolist &

Alternext. "Most of the investment was inEuropean stocks. The increased turnover onexchanges outside the US demonstrates thatinvestors have become more confident in localmarkets." The Sarbanes-Oxley factor and geog-raphy ranked high in Posnett's assessment: "TheSarbanes-Oxley Act 2002 cannot be ignored as partof the reason many foreign companies arechoosing non-US listing venues," Posner main-tained. "And Europe has the natural advantages oftime zone, language – particularly northernEurope – and geography. Europe is closer than theUS to large emerging economies with growingpools of capital."

On foreign exchange matters, Guy Raviddiscussed the size of the European market – thelargest for foreign exchange trading. Ravid said,"Europe accounted for 55 percent of tradingworldwide in the latest BIS triennial survey under-taken in April 2007. Average daily turnover rose by75 percent to $2,223 billion between April, 2004and April, 2007, while US turnover was up 44percent to $607 billion.

Abraham Cohen, Director – Camalia CapitalMarkets in the UK, sought to explain these figures."The sharp rise in European volumes over the lastcouple of years, particularly in the UK, has beendue to the importance of FX as an asset class andan increase, predominately in Europe, of fundmanagement assets (i.e. hedge and pension funds).Daily turnover here is high. We trade more USdollars in percentage terms than in the US, and upuntil just over a year ago, more euros on thismarket than in all euro area countries combined.There are many decisive factors, including the factthat Europe is situated between the US and Asiantime zones, the huge increase in the fundmanagement industry, the large number ofinvestment banks and prime brokers located inEurope, an efficient telecommunications infra-

structure and the concentrationof financial institutions.Incidentally, London has moreforeign banks than any othercenter in the world."

Speakers at the conferencealso included Paul Betbeze,Chief Economist of CreditAgricole SA (France) and PelegAmir, CEO of LaminaTechnologies, who made a pres-entation about the economicdevelopment opportunities inWestern Switzerland. ■

13

Report from the Conference Circuit

GO4Europe makes case for European markets

Right to left: Graham Dallas, James Posnett,Paul Betbeze, Peleg Amir.

Shachar Lemkin

Shimon Yitzhaki

Israeli corporate involvement in Europe is byno means limited to the technology sector.Wendy Elliman finds that Israeli firms havebeen prime movers in Eastern European realestate for more than a decade, and there's nolet up in sight.

Aluxury vacation village in an up-and-coming Bulgarian ski resort, a 120-store shopping center in downtownBudapest and a development of closeto 2,000 residential units on the banks

of Vltava in Prague are three among literallyhundreds of real estate investment initiatives inEastern European countries in the pastdecadeinvolving Israeli concerns.

"It sometimes seems like Israelis are all overEastern Europe," says Shachar Lemkin, CEO ofLeader Real Estate International Ltd., which isbuilding not only the holiday village for skiers inBansko, southern Bulgaria, but also hundreds ofoffice blocks and thousands of residential unitsacross Russia, the Ukraine, Latvia, Romania and Bulgaria. "But Israeli investors, in fact,comprise perhaps 15 percent of the total EastEuropean real estate market."

Fifteen percent, however, is a significant sharein a market worth hundreds of millions of euros,and which continues to grow steadily and rapidly,year by year.

"The economies of Eastern Europe experiencedlarge, solid growth with the ending ofCommunism," says Ehud Ben Shach, president ofthe Neocity Group, a four-year-old Israeli realestate development company that is behind theVltava initiative, possibly the largest constructionproject in Prague's modern history. "The GDPs ofthe Czech Republic and Hungary, for example, areincreasing at an annual rate of 6 percent. Economicactivity all over Eastern European is on a persistentupturn, as East European countries join the EECand link to Western economic systems."

With socio-economic trends and economicperformance in the countries of the former USSRconsistently improving, their populations areseeking larger apartments, better employmentprospects and new commercial and leisure oppor-tunities. And Israeli companies are willing andable to provide them.

"Twelve years ago when we built EasternEurope’s first shopping center in Budapest, neitherbanks nor investors wanted any part of it," saysShimon Yitzhaki, CEO of Elbit Medical Imaging."They looked at average salaries in Hungary anddecided there was no buying power there. But wesaw Budapest residents wearing Western clothesand flocking to movies and restaurants, and

reasoned ‘If they enjoy Western clothes and leisure,why not Western shopping, as well?’"

Through its own sources, Elbit financedBudapest’s Duna Plaza shopping mall with its 120stores, video arcade, bowling alley and nine-screenMultiplex, and has gone on to build 43 moreshopping centers throughout Eastern Europe. "Itwas only after we built the third that we begangetting calls from investors," smiles Yitzhaki."First from Americans, and later British, Germanand Italian. Today, there are a dozen major mallsin Budapest alone — not all of them ours!"

Israeli companies are very good at constantlyseeking out new markets in which to invest, saysJoel Adler, a corporate partner at the London lawfirm of Mishcon de Reya, which handles manyinternational corporate transactions. "They under-stand very clearly that they must look furtherafield in order to grow internationally," he says."While their traditional focus has been on propertyinvestments in the West, rising real estate prices inEastern Europe have led them toward theseemerging economies with their particularlyevident opportunities in real estate markets andtremendous profit potential."

Elbit, which had hitherto put its cash intobuilding West European hotels, was among thefirst Israeli companies to venture into the thenvirtually untapped Eastern European market ofthe mid-1990s, initiating, constructing, operating,managing and selling shopping and entertainmentcenters. Today with a $1.1 billion market cap, it isone of the leading real estate companies in thearea, with commercial and residential holdingsprincipally in Hungary, Poland and the CzechRepublic, but also in Romania, Russia, Latvia,Poland and Greece. It is now looking to duplicatethis success on the Indian subcontinent.

"Initially, it was very difficult to be a developerin Eastern Europe," says Yitzhaki. "The infra-structure was underdeveloped and the weatherwas poor, which led to regular construction delays.But like many Israeli companies, we’re rugged andadventurous. We went ahead and, despite wide-spread skepticism, shopping centers have provedpopular with locals and tourists alike."

Until two years ago, Elbit made some conces-sions to its East European customers in the designof its shopping malls. "We built them with up to 40percent of their space given to entertainment —movies, games, discos —" Yitzhaki says. "Peoplewho wouldn’t necessarily come to spend $200 onclothes came to spend $10 on entertainment. Nowthat shopping malls are an established idea, we’rebuilding them with separate areas for enter-tainment and a greater focus on the shopping."

Of the 44 Eastern European shopping centers in

14

Israeli footprints spread over East European real estate


Ehud Ben Shach

which Elbit has been involved to date, Elbit hassold 25, most of them to French, British and Irishcompanies, earning a very good return oninvestment.

Elbit is now moving on from shopping centersin Eastern Europe. In October of this year, itssubsidiary, Plaza Centers N.V., entered a jointventure partnership with BAS Development,acquiring five residential and office projects inBucharest and two other large Romanian cities for€6.9 million. BAS, a private company that operatesin partnership with the Israeli investment andmanagement company Aura Investments Ltd., willcontinue to manage these projects, which Yitzhakibelieves "will generate significant growth and addvalue for the shareholders."

The emerging middle classes of Eastern Europeare the primary target of Leader Real EstateEurope, a subsidiary of Shrem Fudim. Investing inboth income-generating assets and in commercialand residential real estate development, it iscurrently involved in projects in Eastern andCentral Europe worth over €100 million.

"We began in Germany, and our currentholdings there include both residential andcommercial complexes," says Lemkin. "As EasternEuropean economies began booming in the pastfew years, and became or wanted to become morecapitalized and Western-oriented, we turned eastto meet the need. We’re now heavily involved inRussia and Latvia, as well as more recently inBulgaria and Romania, which joined the EuropeanUnion in January 2007."

In the majority of its Eastern European devel-opment projects, Leader Real Estate is full owner,"but there are no rules," says Lemkin. "It’s some-times very helpful to have local partners. LastAugust, for example, we purchased the Latviancompanies SIA Apuzes nami and SIA Sampeteraciemats, developers of the vast residential complexTobago, in Riga, which we’re now close tocompleting."

The Ukraine, Moldova and the Baltic states ofEstonia, Latvia and Lithuania are the targets of anIsraeli real estate development company set up forthe purpose in October, 2007 by FishmanHoldings, one of Israel’s largest private investmentgroups. Owned by Fishman’s real estatesubsidiaries (Jerusalem Economic Corporation,Industrial Buildings Corporation and DarbanInvestments) the new venture has acquiredproperty and land in the Ukraine and Lithuaniaworth $15 million, and has made a $6 milliondown payment on seven lots in the Ukraine, worthover $24 million.

Romania, Hungary, Poland and the CzechRepublic are the main areas of interest for the four-year-old Neocity Group, the manager and mainshareholder of the Poalim Real Estate fund, a $300-million private investment fund focused onplanning and developing real estate operations in

Israel and Eastern Europe. Its Neo Riviera devel-opment at Modrany on Prague’s Vlatava River isone of 13 housing and commercial real estateprojects in which it's currently involved. Dubbed ‘atown within a city,’ it will comprise not only closeto 2,000 Western-standard homes of all types, butalso have its own shopping, cultural and sportscenters, and marina facilities.

Neocity’s largest East European undertaking isa shopping mall, which opened November, 2007 inthe Romanian Black Sea port of Constanza, thecountry’s second largest city which draws sometwo million visitors during the summer months.Neocity purchased 60 dunams with local partners(one of whom is Constanza’s mayor), for about€10 million, and painstakingly obtained buildingpermits for the city’s first shopping mall. Thenewly opened center occupies 55,000 squaremeters, of which 35,000 is commercial space. It has1,000 parking spaces. Overall, this trade complextook a total investment of €40 million.

In total, Poalim Real Estate has raised $92million since its formation, which is now investedin projects in Romania, Hungary, Poland and theCzech Republic. Together, these projects involvemore than 15,000 residential units and 140,000square meters of commercial space.

"Until recently, real estate prices in Prague andBudapest have been consistently rising," saysNeocity CEO Yoav Moran. "This has created areality in which you can sell a single apartment forthe amount that an entire building cost five yearsago." Neocity has thus had no difficulty in earningon each of their projects, to date, the necessary 18percent return required to turn a profit, afterpaying off all its construction expenses.

In the past year, however, real estate fundsfrom other countries — principally Spain andIreland — have begun entering the EasternEuropean market, and property returns havebegun to drop slightly. Neocity’s response hasbeen to change its property portfolio mix from 50percent residential : 50 percent commercial to 75:25.

"The residential area suits us well for manyreasons," says Moran. "It’s less centralized, thecompetition within it is less intense and, in anycase, we’re entrepreneurs who like to manage ourproperties ourselves. It is also an area that’sgrowing steadily as living standards rise. ARomanian family who happily lived in a 40-squaremeter apartment a few years ago now lives in 60square meters or more. With Eastern Europe’smortgage scene improving beyond recognition,the desire to purchase apartments has grownconcomitantly."

The flurry of Israeli investment in EasternEuropean is, thus far, benefiting Israelis andEastern Europeans alike — as it writes a brightnew chapter in the thousand-year history of Jewsand Eastern Europe. ■

16

Log on today to the companies of tomorrowwww.ivc-online.com

Isabel Maxwell

Rafi Ton

17

Isabel Maxwell profiles NewACT’s Rafi Ton in her continuing series oninvestment and high-tech personalities.

The setting for my interview with theenergetic Rafi Ton, co-founder of mobilestart-up NewACT, seemed very apt for weare in a new café right by Habima, Israel’sNational Theater site in Tel Aviv.

NewACT is one of a new wave of innovativemobile companies now coming out of stealthmode. Its chosen arena is user-generated contentmanagement. The problem the company solves isthe backing up and synchronizing of all user-generated content (contacts, calendar, SMS, MMS,pictures, video, audio, etc.) and other materialfrom mobile phones and online with a superb andsimple GUI and no behavior modification. SaysTon, "The software comes pre-loaded and iscompletely automated for the operators. We givethem a free demo account, and it works like acharm."

Rafi Ton is a first for this column in that hisbackground is in business rather than pure engi-neering or technology. He is an Israeli whoseparents came to Israel in the first wave of Russianimmigration in the early ‘70s. Although the entirefamily was engineering oriented, and Rafi spenthis army service in landline communications, hewanted to do something more business-orientedwith his career. He earned his degree at the lawfaculty of Haifa University where he specialized inhigh-tech law, investments and IP (this was theonly faculty that had some focus on the Internet atthat time, according to Ton) and spent timedesigning Web sites for family and friends. Hesubsequently took a job at the law firm of Eitan,Pearl, Latzer and Cohen-Zedek in Haifa, where hespecialized in intellectual property law, corporatelaw and venture capital investments.

It was there that he was introduced toFollowap, the provider of instant messaging andpresence services that keep community membersalways connected. He left the law firm to beFollowap’s first in-house attorney, VP Asia Pacificand head of business development. Ton managedthe expansion of Followap for the next five yearsthrough 2005 and formed its key alliances withhandset vendors, value added resellers and OEMchannels. After a huge and successful installationin Turkcell in 2005, Ton felt it was time to move on.

He left for a stint at Comverse from 2005-06 –"somehow one has to pass through this[Comverse] stage" - where he was the businessmanager of commercial and business activities forthe messaging Impress division.

But clearly entrepreneuring was in his blood,

and the size of Comverse and the sheer number ofpeople "involved in every step," began to get tohim. During this time, he was carpooling withYoad Gidron, the CTO of the integrated Messaging& Data Infrastructure division of Comverse, andformer co-founder and CTO of Mobilitec. The twospent many hours chugging up and downHighway 2 discussing the problems in mobiletechnology, which grew into a decision to do some-thing on their own. They resigned on the same dayfrom Comverse.

An original concept that Ton and Gidron tookto Turkcell and for which they received seedmoney from Cedar Partners ("more because theyliked the team"), did not pan out. At the same time,though, Ton was having severe problems inbacking up his material from his phone. He andGidron soon began NewAct to solve this need inan elegant and seamless way – "first for a vendorin Italy and then one in Israel, and now one in theUK, and it snowballed from there."

Why, I wondered, did the pair start by going tothe mobile operators in Europe, and not the US?"The most important reason," says Ton, "hassimply to do with numbers. If you consider theleading US carriers – Verizon, AT&T, Sprint – theyare all above 50 million subscribers, which meansthat they will need huge systems; they will take alonger time to decide, and the process just takesforever. In addition, they always want companieswho approach them to have previous customersand good references. No large carrier wants to bethe first one to try a service from a companylocated on the other side of the globe. In the EU,you have tens of potential customers – many ofthem are small, they decide fast, and distance isless of a problem."

Commenting on location and language – andhis wisdom about this is applicable to allcompanies, no matter what their product or service– Ton says, "When working with US carriers, acompany has to have a domestic US presence, withlocal support with people who speak American.We may speak English, but we do not alwaysunderstand the language. With mobile operators inEurope, it is much easier to communicate."

There is still an important requirement to havean agent or representative in the relevant country,"but," says Ton, "since both parties are not nativeEnglish speakers communication is more open andmore direct." I found this comment interesting as anative English speaker. What this means is thattwo non-native English speakers don’t have the‘codes’ in their blood, so there is less chance of mis-understanding, and the words themselves aretaken more literally.

We spoke about the challenges that come with

Mobile entrepreneur Rafi Ton taps Europe first


18

In October, the Israel Venture Associationappointed Yifat Adoram as its newPresident. Formerly with Ernst & Young Israel,where she headed the accounting firm’smarketing efforts, Adoram expects to workclosely with IVA Chairperson Dr. Orna Berry tointensify IVA efforts to strengthen the ventureindustry and Israel’s high-tech companies.Adoram recently spoke with the Israel VentureCapital Journal about her plans in her newposition.

What is the focus of the IVA’s lobbying effortsvis-a-vis the Israeli government?

The main focus is to encourage investment inIsraeli venture capital firms by Israeli and foreignlimited partners. We are seeking to remove imped-iments that prevent certain segments, such as thelife sciences, from growing as rapidly as theirpotential permits. Certain global restrictions in theIsraeli market as well as local regulatory processeshinder the growth of the life sciences segment andhinder VCs from investing in it at the same level asin other developed countries. The ministries ofIndustry, Trade and Labor and of Finance are beingsupportive in removing these impediments. TheIVA, with its Life Sciences Committee, isconducting a dialog that we believe will lead toIsrael’s life science industry becoming moreattractive for investment.

How do Israeli companies benefit from foreignbio firms opening facilities in Israel?

Israel is seen as needing to bolster its pool ofmanagerial talent in the areas of biotech and phar-maceuticals. The biomedical field is not like ITwhere Israel has a well-established, thriving

industry and managers have honed their skillsover time. Of course, we have other things to offerin biomed – bright scientific minds and uniquecapabilities. Also the workforce is less expensivethan in the US. It’s not as cheap as in China, but itis better educated and more skilled.

When foreign firms open facilities here, theywill bring many seasoned managers from abroadand also help in the development of local talent.Israel will certainly be a beneficiary of any suchbiomed influx.

Is it the intention of the IVA to induce localinstitutional investors to invest in the localventure capital industry?

In the short time since I assumed my positionat the IVA, we opened discussions with local insti-tutional investors, explaining what we feel are theadvantages to their greater involvement.Hopefully, this will encourage them to allocatemore funds in our direction.

What is coming up in terms of events topromote Israel’s high-tech industry?

In addition to the IVA’s major annualconference, we are going to have other, morefocused events. For example, we are in discussionswith a 40-person delegation from France – limitedpartners, VCs and the like – that is planning tocome to Israel in February. In 2004, the IVA accom-panied Israeli companies to Paris. The French arenow reciprocating.

It’s a little early, and plans need to be finalized,but Texas could be the venue for an Israeli dele-gation in the spring of 2008. The event will enableIsraeli VCs to meet their counterparts in Texas, aswell as LPs. A showcase of Israeli companies maybe in the offing as well.

What new directions are being taken by theIVA in support of its membership?

We are working on a program that will bringmore benefits for members. It involves a variety ofareas, including data and research, internationalnetworking and educational seminars. Moredetails will be provided in the future as theseinitiatives take shape.

We are also seeking support to create a posi-tioning statement based on the results of ourresearch work. Israel’s advanced technologyindustry has an enviable track record. We feel weshould capitalize on this strong position and let theworld know how we accomplished what we did.We recognize the shift that is taking place to theFar East. IVA members, though, should have theproper tools when going abroad to make the casefor Israel. ■

New IVA president to tackle venture industry agenda

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Steve Schuster

23

Communicated by Steve Schuster – CEO ofRainier Communications

Ihave been developing and marketingcomplex technologies – serious high-tech stuff– for more than 25 years. And over the courseof my career, I have always found thatengineers have very strong opinions about

public relations. Why? Because high-techentrepreneurs become extremely upset and cynicalwhen the nitwits from the PR agency don’tunderstand how to make their wonderfulinnovation a success in the marketplace!

Communicating high-tech innovations to tech-nical audiences is just too hard for the typical PRagency professional to do well. I know this becauseI hired many reputable PR agencies when I workedin high-tech corporations. They were good at PR,but they could not understand technology wellenough to communicate it to the marketplace. Theresult was a lot of frustration and wasted money –a bad return on investment.

I concluded that technology and innovationtruly deserve a credible, knowledgeable voice inthe marketplace. I saw over and over that withoutgreat PR, every great innovation is worth less, andmaybe even worthless.

High-tech entrepreneurs, engineers, inventorsand developers who want to achieve real successwith their work must execute professionalmarketing programs designed to transform thetechnological invention into a business innovation.And the professional public relations resourcesone works with should be completely comfortablewith both crucial sides of the marketing successequation – technology and PR.

Invention + market awareness =innovation

Inventions are "new concepts or products thatcome from ideas or from scientific research."Innovation, on the other hand, is the commercial-ization of an invention. Even a truly greatinvention (intellectual property) may have little orno economic value without PR that is strategicallyconceived and tactically executed with just asmuch effort, intelligence and investment as wasrequired to create the invention itself. Innovationmanagement is not only about creating a tech-nology for the market, but also about creating amarket for the technology

In truly great technology companies, PR nevercomes as an afterthought. Transforming inventionsinto innovations is how money is made, and thosetransformations are the responsibility of yourmarketing team and your PR agency partners.Your marketing team needs to be bold and

remarkable, and truly knowledgeable about yourtechnology and how it affects and is affected by theoverall market ecosystem.

The bottom line is this. No matter what yourproduct is, you are ultimately in the educationbusiness. And that is what good, credible publicrelations is all about. The world needs to beconstantly educated about how you will improvetheir lives with your technology.

Marketing awareness throughcredible PR

PR, when it is done right, is a well-defined andproven process by which your company shapesthe perception of value for its potential customersthrough editors and analysts. Your PR programmust be credible and sustained over time (PR doesnot stand for "press release!"). Your PR has to bestrategically managed and executed in order tocreate the market awareness you need to succeed.Find a PR agency partner who has the experience,discipline and knowledge to make your PRinvestment pay off.

Partner with a PR agency that can understandyour technology and has the right connections toinfluence opinion makers in your market. Find aPR agency that can demonstrate sustained successfor a wide range of technologies and markets overa long period of time, with client relationshipsmeasured in years, not months. Find a PR agencythat can speak credibly for you.

To repeat – without great PR, every great inno-vation is worth less, and maybe even worthless. Byexecuting high-performance PR programs, yourcompany can create, control and influence theagenda of entire markets. And by proactivelybeing in control of the message through the media,you and your company will gain credibility, repu-tation, brand recognition and – ultimately –customers.

Steve Schuster is CEO of Rainier Communi-cations, a leading US technology-marketing agencythat has been the creative force behind hundreds of PRcampaigns for a wide variety of high-tech innovationsfrom Fortune 500 to start-up companies. With BSEEand MBA degrees, Schuster served in variousmanagement-level roles throughout the high-techindustry. He launched Rainier in 1993 with a vision ofproviding technology companies with a credibleresource for communicating "complex" technologies tothe marketplace. Rainier Communications is head-quartered outside of Boston and has a business devel-opment office in Kadima, Israel. Contactwww.rainierco.com +972-(0)52-288-2338. ■

Technology-Marketing

Why your great innovation might be worthless

Com

pany

Pro

file

Main investors: One Invest, Ha’aretz NewspaperGroup, Giza Venture Capital, AAC CapitalPartners and AlpInvest PartnersYear founded: 1996Headquarters: AmsterdamBranches: London (principal operations), NewYork, Singapore, Tel Aviv (R&D)Employees: 34

Background Established by the Ha’aretz newspaper chain

in 1996, Leonardo Media has carved out a leadingposition in digital content for the travel industry.Leonardo has developed the largest database ofhotel content (including the largest library of stillimage content) within the online travel arena,enabling consumers to see the latest visual contentwhen booking travel arrangements online. It hasexpanded its niche to include a variety ofmarketing and distribution services aimed at cost-effective management of key aspects of the elec-tronic travel business.

Distribution of digital contentLeonardo’s core product is the digital asset

management platform – enabling travel groups ofall sizes to effectively aggregate, manage anddistribute all of their digital content to the GDSand online travel channels in the required format.Leonardo manages rich media content for over65,000 hotels and has contracts in place with over150 global hotel brands.

Leonardo has supplemented its business byproviding a variety of complimentary services:

Private digital libraryLeonardo’s private digital library is a secure

branded private-label image archive allowinghotel groups to make available digital content for

their business partners to download in the desiredresolution and format instantly.

eBooksLeonardo’s eBooks are digital replicas of

printed marketing material, which can be down-loaded an unlimited number of times and areviewable both online and offline. They provide anenhanced online presentation and are fully inter-active with indexes, animated graphics, virtualtours and links to Web sites and/or bookingengines.

WebGalleriesThe WebGallery product transforms still

images into an eye-catching video style presen-tation, complete with audio. Deliverable to theonline travel network and available for hotelgroups to feature on their own branded Web sites,they greatly enhance an organization's onlinepresence.

Online MarketingEmarketing tools are available for individual

and corporate hotels to create, manage anddistribute their marketing and press communica-tions to their target audiences. The system comescomplete with an email distribution system thatallows customers to monitor and track the effec-tiveness of their campaigns.

Travel MediaBank – Leonardo’s B2B websiteTravel MediaBank is the largest B2B image

repository for the travel industry featuring contentfor over 20,000 hotels. Leonardo has over 75,000registered users comprised of travel operators,wholesalers, media, journalists, printers andgraphic designers who access the site to downloadimage content for their print and web require-ments free of charge.

Management expertise in traveland software

Leonardo’s business requires expertise in boththe travel industry and in software development.The company’s CEO, David Elton, has been withLeonardo for over six years and is a seasoned hotelexecutive having worked in senior marketing posi-tions for global brands such as Starwood, The Ritz-Carlton Hotel Company and the Forte HotelGroup. Eliezer Dickstein is chief technical officerand has held a number of senior management rolesin software development including at Exanet – aleading Israeli based software company.

European firms among key investorsThe Ha’aretz newspaper group led Leonardo’s

seed round in 1996. Subsequent financing roundsbrought in Giza Venture Capital, Intel Capital, andtwo prominent European investors – AAC CapitalPartners (formerly ABN AMRO Capital) andAlpInvest Partners. The company’s last financinground was in 2003. ■

24

Leonardo Media

Image from LeonardoMediaBank

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Which funds are raising capital? How much are they targeting? Where do they stand in the process?Fund Raising Scorecard provides answers on a regular basis.

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Target ClosingVC Funds - Closed Type ( $m) Status: Closed Date Remarks7Health VC Closed $70m Q3/07 Life sciences fundCIVC (PNV-Shanzen) VC Closed $200m Q4/06 Will invest in ChinaEvergreen V VC Closed $200m Q4/07Evolution VC Closed $20m Q3/07Greylock (Israel) VC Closed $150m Q3/06Magma (Magnum) II VC Closed $105m Q4/06Peregrine II VC Closed $30m Q4/06Pitango V VC Closed $330m Q3/07Pontifax II VC Closed $100m Q3/07 Life sciences fundPoalim Medica III VC Closed $125m Q4/06 Life sciences fundVertex Israel III VC Closed $150m Q4/06Total Closed VC $M 1465

VC Funds - In ProcessAgate VC 100 First Closing: $60m Q3/07 Medical devices fundAqua Agro Fund VC 100 First Closing: $25m Q1/07 Cleantech fundAviv Venture VC 100 First Closing: $51m Q4/07Bridge Investment Fund VC 15 First Closing: $8m Q1/06 Life science companies relocating to the Great

Lakes Region (Ohio)H2Tech VC 50* First Closing: $10m Q4/06 *$50-70m; Cleantech fundInfinity Israel China VC 250 First Closing: $155m Q2/07 China-Israel related investmentsIsrael Cleantech Ventures VC 60 First Closing: $20m Q1/07 Cleantech fundJerusalem Capital VC 25 First Closing: $10m Q4/06 Web 2.0 fundPortalium Ventures VC 65 First Closing: $11m Q4/05 Expansion to Europe fund; €100 million SCP Vitalife II VC 150 First Closing: $15m Q2/07 Life sciences fundTamir Fishman III VC 200 First Closing: $100m Q2/07Terra VC 50 First Closing: $10m Q3/06 Cleantech fundWanaka Capital VC 50 First Closing: $40m Q2/07 Mid-tech fundCarmel III VC 200 In processChallenge (Etgar) III VC 150 In process Homeland security fundEurofund III VC 75 In processGallatea Ventures VC 10 In process Pre-seed investmentsGemini V VC 200 In processGiza V VC 200 In processJerusalem Global VC 200 In processJVP VC 200 In processPoalim Ventures III VC 120 In processSFKT II VC 50* Plans for 2008StageOne Ventures II VC 100 Plans for 2008Star Ventures VC 100 In processTamarix VC 100 In process Cleantech fundWalden IV VC 125 In processTotal Target VC $M 3075PE & Other Funds - ClosedFIMI Opportunity III Mezzanine Closed $500m Q3/07Fortissimo Expansion-Buyout Closed $80m Q1/06Plenus II Venture Lending Closed $56m Q1/06Plenus III Venture Lending Closed $120m Q3/07Plenus Mezzanine Mezzanine Closed $95m Q4/07Sahvit Fund Mezzanine Closed $30m Q3/07 To invest in pre-IPO mid-size companiesVintage II Fund of Funds Closed $75m Q2/06Vintage II Secondary Closed $125m Q2/07Total Closed PE $M 1081PE & Other Funds - In ProcessAPEX-Tefen Expansion 50 First Closing: $20m Q2/07ART PE (SFKT) Turnaround 35 First Closing: $5m Q1/06 Public fundCatalyst II Expansion-Buyout 100 First Closing: $50m Q1/06Harel Investments Fund Buyout 200 First Closing: $70m Q3/06 Infrastructure fundIGI Expansion-Buyout 75 First Closing: $40m Q1/05Katzir Fund Buyout 75 First Closing: $50m Q3/06 To invest mainly in kibbutz industriesKCS PE Buyout 150 First Closing: $75m Q4/06Pitango Art Fund Art investment 25 First Closing: $12m Q2/07 To invest in artSKY Buyout 150 First Closing: $120m Q2/05Tene II Fund Expansion-Buyout 150 First Closing: $90m Q3/06 Traditional and kibbutz industriesExpand Expansion-Buyout 75 In processImprove Expansion-Buyout 80 In process IT services fundIsrael Secondary Fund Secondary Fund 100 In processPoalim Capital Markets Buyout 100 In processShamrock Israel II Buyout 250 Plans for 2008Viola Private Equity Buyout 300 In processTotal Target PE $M 1965

* According to IVC estimates N/A - not available Source: IVC Online Database

Israeli Fund Raising Scorecard (Jan. 2006 - Dec. 2007)

26

Fund

scop

eNew medtech fund 7HealthVentures raises $70 million

7Health Ventures, a newly formed medicaltechnology fund based in Herzliya, has raised $70million. Founded by Dr. Dalia Megiddo, whoformerly headed Jerusalem Global’s InnomedVentures, 7Health will invest in principally in earlythrough late stage device and medical technologycompanies, and also in biotech, pharma, andhealth-related software and services. Investors in7Health were led by Ruthi Wertheimer-Pick, chair-person of 7Health Venture Capital and a director ofIscar Ltd.

Evergreen fund closed with $200mEvergreen V has raised $200 million from

mostly foreign investors that included AlpInvest,

Bessemer Trust, Hamilton Lane and others. Thefund is investing in software, communications, theInternet and the life sciences with a preference forseed and R&D stage companies. Its initial invest-ments were made in December, 2006.

DFJ Tamir Fishman Venturesformed

Tamir Fishman Ventures has teamed withDraper Fisher Jurvetson (DFJ) to form DFJ TamirFishman Ventures. The new firm will be theexclusive Israeli partner of DFJ, a venture firm thathas a network of global affiliations with offices in30 cities and $6 billion in capital commitments. TelAviv-based Tamir Fishman Ventures, with its port-folio of over 30 companies, will re-brand under thename of the new firm.

27

Cisco targets Central and EasternEurope start-ups

Cisco is targeting technology-related start-upsin Central and Eastern Europe for investment. Itwill invest in opportunities directly, as well asthrough a 30 million euro regional venture fundmanaged by 3TS Capital Partners, a private equityand venture capital firm operating throughout theregion. The fund will invest primarily in small andmedium-sized companies in the technology,media, and telecommunications sectors in Austria,Bulgaria, Czech Republic, Croatia, Estonia,Hungary, Latvia, Lithuania, Poland, Romania,Slovakia, Slovenia, Serbia, Ukraine and Turkey.Yoav Samet, head of Israel and Emerging EuropeCorporate Business Development for Cisco, isleading the company’s investment initiative.

EU-Israel "business dialogue" getsunderway

In early November, European and Israelibusiness leaders, along with EU and Israeligovernment officials, launched the EU-IsraelBusiness Dialogue. Its aim is to strengthen EU-Israel economic relations, remove trade and investment barriers and further cooperation and joint ventures. According toEuropean Commission Vice-President GünterVerheugen, "This Dialogue shall encourageEuropean companies to do more business withIsrael and to invest more in Israel. There is a hugeeconomic potential that is not yet fully exploited."

In its first year, the Dialogue will focus onbanking and finance; energy and clean tech-nologies; the life sciences; retail and manufac-turing; telecommunications, media and Internet;and tourism and transportation. Internet entre-preneur Yossi Vardi was appointed Chairman ofthe Israeli group of participants that include EliHorowitz (Teva), Galia Maor (Bank Leumi), DovLautman (Delta), Ami Erel (Discount InvestmentCorp.), Miki Federman (Dan Hotels, Elbit), Yehuda

Bronitzki (Ormat), Michael Levy (Nilit), AriSteimatsky (Steimatsky) and Imad Telhami(formerly Delta).

Israeli firms take top spots in Fast500 EMEA ranking

Israeli firms placed first, second and third inDeloitte’s 2007 EMEA ranking of the 500 fastest-growing technology companies. Voltaire Ltd.ranked first, followed by Celltick Technologies andRuncom Technologies. According to Deloitte, "asevidenced by the exceptional performance ofIsrael, tech-acceleration nations are emerging.Proportional to population numbers, technologyfirms in Norway, Israel, Sweden, Ireland, Finlandand Holland are in a class of their own when itcomes to technology acceleration, with high-growth technology firms between 2 and 5 timesmore common than anywhere else in the region."

BioView tops list of fastestgrowing life science firms

BioView Ltd. ranked number 1 in the 2007Deloitte Technology Fast 500 EMEA for the LifeSciences/Biotech sector, a ranking of the 500 fastestgrowing technology companies in Europe, theMiddle East and Africa. Among all sectors,Bioview was number 38 in the rankings, which arebased on the rate of revenue growth over fiveyears, from 2002-2006.

Rehovot-based BioView has developed anautomated scanning microscope and imageanalysis systems that perform a wide range ofgenetic tests and have applications in cancerscreening and diagnosis, prenatal and post-natalgenetic analysis and minimal residual disease. Itsproducts are used by commercial and hospitallaboratories. BioView has been traded on the TelAviv Stock Exchange since 2006. Its stockholdersinclude Marathon Investments, Israel HealthcareVentures and Orbotech Technology Ventures.

Noteworthy News

Exits

ICAP plc buying Israel’s Traiana for $328 million

ICAP plc, a leading interdealer broker, isplanning to acquire Traiana, a provider of auto-mated post-trade processing services to financialinstitutions dealing in foreign exchange as well asprecious metals and credit derivatives.

ICAP will pay $247 million in the mostly cashtransaction. Traiana, which has offices in NewYork, London and Ramat Gan, Israel, includesamong its investors Pitango, Evergreen GeminiIsrael and Sequoia Capital.

AOL targets ad firm Quigo for $363 million buyout

AOL is stepping up its acquisition activitiesamong Israel-related companies. The leadingInternet firm is now planning to acquire Quigo, aprovider of content-targeted advertising for $363million. Quigo’s technology will enable AOL to

offer contextual advertising that matches ads to thecontent of a Web page. Quigo recently entered intoa major agreement with Time, Inc. and has anetwork of some 3,000 advertisers. Investors inQuigo include Highland Capital Partners andSteamboat Ventures.

AOL finds answer in Yedda acquisition

AOL has acquired Yedda Inc., a two-year oldRamot Hashavin, Israel firm, for $25 million.Yedda semantic matching technology automati-cally matches questions to other related questionsand topics, and selects users from Internetcommunities to answer the question. AOL plans toincorporate the question and answer functionalityinto select areas on AOL.com and to continueYedda’s R&D center in Israel. Genesis Partners ledYedda’s first outside financing round in early 2007.

Exits: A selected list of recent M&A deals (Q3 - Q4 2007)

AmountCompany Sector* Acquirer ($m) Notes Investors

Saifun Semi Spansion 368 $166m in cash AMD, BAEP, Cipio, CII, Concord, Fujitsu, Gemini, GeneralAtlantic Partners, Infineon, IMS, Jerusalem Global, MorganStanley, M-Systems, Tower

Quigo Internet AOL 363 GlenRock, Hebrew University Retirement Fund, HighlandCapital, IVP, Meritech, Sigma, Steamboat Ventures

Traiana IT ICAP plc 247 $238m in cash Costella Kirsch, Eastman Ventures, Evergreen,Gemini,Pitango, Sequoia Israel, WTIYedda InternetAOL 25 estimated Genesis

Interwise IT AT&T 121 in cash Accenture, Comerica, Dresdner Kleinwort, FIBI, FormulaVertex, GE Equity; General Atlantic Partners, GIMV, HTGC,JPMP, Lazard Technology, Leeds Equity, Link Technologies,Madison Technology Ventures, NTT, PPG, SAP, SFKT, STIVentures, Texas Pacific, Challenge, UBS Capital, Wall StreetTechnology Partners

NUR Macro. Industrial HP 117.5 In cash. Clalit Capital; Fortissimo; Isal; Kanir; Meitav; Mizrahi; OldLane; Proseed; Star; Tamir Fishman; Viola Partners; Privateinvestors

Atrica Comm. Nokia Siemens 100 3Com, Accel, Ascend, Aurum, BellSouth, Benchmark,Bezeq, CDIB, Gemini, GunnAllen, Hontung, Innovacom,Intel Capital, Investor Growth, JK&B, Kreos, LehmanBrothers, Magma,,Part'com, Saturn, TeliaSonera, Challenge,Triton, Vesbridge, WTI Young Associates

NetManage IT Rocket 69 In cash.

Ester Neuro LS Amarin 32 $5m in cash Aurum; Medica; Yissum; Private investors

Yedda Internet AOL 25 estimated Genesis

CogniTens Industrial Hexagon 20 CII, Clal CVC, Docor, GM-UMIT, IJT, Infinity, IMS, JPMP,Link Technologies, Periscope, Pitango, Star, Tecnomatix,Challenge, Vertex, Walden, Yozma

SmartShopper Internet Zango 9 Collins Stewart, Deutsche Bank

SapirTech IT Malam 5 Private investors

Rad Natural LS Frutarom 4.1 through bank credit Frutarom

BioDalia LS Rakuto Kasei 3

CureLight LS Medtechnica 1.8 Avasca, EDRPE, Ecklog, Elecsys, Lumenis

Digital Kopel IT Malam 1

CDride Misc IIS N/A share swap IIS Intelligent Information Systems

RDT Hardware Acro Security N/A all stock transaction

ELAM Industrial Undisclosed N/A Coorlite, CTC, EDRPE, Inventech, Isranyl, JC Technologies,

HK firm Sunrise Financial, Challenge, Hebrew UniversityRetirement Fund, Transpac Capital

* IT= IT & Enterprise Software, LS= Life Sciences, Comm. = Communications, Industrial = Industrial Technologies, Semi= Semiconductors, Misc.= Miscellaneous.Source: IVC Online Database

28

AT&T buys Interwise for $121 million in cash

AT&T Inc. has acquired Interwise for $121million in cash. Interwise is a provider of voice,Web and video conferencing services to busi-nesses. Upon completion of the acquisition, AT&Tintroduced a series of Interwise-based voice, videoand Web conferencing products and servicesunder the AT&T brand name. AT&T plans to retainthe Interwise R&D center, based at the Airport Citybusiness park in Lod, Israel. Israeli investors inInterwise included the Challenge Fund and STIVentures. Among the several foreign investors inInterwise was Leeds Equity Partners, whichinvested in the second, third, fourth and fifthfinancing rounds.

Spansion acquiring SaifunNASDAQ-traded Spansion Inc. is acquiring

Netanya-based Saifun Semiconductors Ltd. for$368 million in cash and stock. Saifun, which wentpublic on NASDAQ in November, 2005, is alicensor of NROM technology that allows semi-conductor manufacturers to deliver highperformance, reliable products at a lower cost permegabit and with improved storage capacity.Spansion is a licensee of Saifun’s technology. ClalIndustries and Gemini Israel had been early Saifuninvestors.

NUR Macroprinters targeted by HPHP is acquiring NUR Macroprinters Ltd., a

Lod, Israel manufacturer of wide-format digitalinkjet printers for $117.5 million. The acquisitionexpands HP’s portfolio of digital presses andwide-format printers and extends its digitalcontent creation and publishing platform.Fortissimo Capital Fund is Nur’s principalinvestor, having acquired more than half of theoutstanding shares in 2005.

Medgenics makes initial publicoffering on London’s AIM

Medgenics went public on London’s AIM inDecember, raising £3.3 million. Medgenics iscurrently in clinical trials to test the safety andefficacy of its Biopump that enables patients toproduce their own natural human protein therapyand is targeted at various chronic diseases, such asanemia and hepatitis C. The company’s marketcapitalization was £10.4 million at the offering.Alta Berkeley Venture Partners, Alta Partners andKoor Corporate Venture Capital are amongMedgenics shareholders.

Amarin to buy Ester NeurosciencesAmarin Corporation has agreed to acquire

Herzliya-based Ester Neurosciences for an initial $15million payment and an additional $17 million incontingent payments. Based on technology licensedfrom the Hebrew University of Jerusalem, Esterdeveloped a compound for treating myastheniagravis, an autoimmune neuromuscular disease, nowin Phase II clinical trials. The compound has beengranted orphan drug status by the US Food andDrug Administration and by the EuropeanMedicines Agency. Ester’s principal investors areMedica Venture Partners and Aurum Ventures.

Rocket Software in $69 millionbuyout of NetManage

NetManage, Inc. is being acquired by RocketSoftware in a deal valued at $69 million. Rocket ispaying $7.20 per share, a 95 percent premium toNetManage’s $3.69 closing share price onDecember 11, 2007. Based in Haifa and Cupertino,California, NetManage is a distributor of softwareto transform legacy applications into new Web-based business solutions. The company has beenpublicly traded in the US since 1993.

Pluristem obtains NASDAQ listingPluristem Therapeutics, a biotherapeutics

company involved in stem cell therapy, hasobtained a NASDAQ listing and has begun tradingunder the symbol PSTI. The company’s shares hadpreviously traded in the US in the over-the-countermarket and quoted on the OTC Bulletin Board. Thestock continues to be traded on the Frankfurt StockExchange. Pluristem’s first product seeks toremedy the global shortfall of matched tissue forbone marrow transplantation by improving theengraftment of hematopoietic stem cells containedin umbilical cord blood. The company maintainsits research and manufacturing facilities in Haifa,Israel.

Protalix raises $50 million in shareoffering

In late October, Protalix BioTherapeutics madea public offering of 10,000,000 common shares at $5each, raising $50 million. The Carmiel, Israel-basedbiopharmaceutical firm is focused on developingrecombinant therapeutic proteins to be expressedthrough its proprietary plant cell based expressionsystem. Protalix went public via a reverse mergerwith Orthodontix, Inc. on December 31, 2006 andsubsequently was listed on the American StockExchange.

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Log on today to the companies of tomorrow

www.ivc-online.com

Capi

tal R

aise

dGoldman, Sachs sees its way toinvest $100 million in Mobileye

Mobileye NV has obtained a $100 millioninvestment from Goldman, Sachs & Co., valuingthe developer of automotive vision systems at $600million post-investment. Mobileye’s driver assis-tance technologies aimed at preventing accidentsare being incorporated in vehicles from leadingmanufacturers including BMW, GM and Volvo.The Netherlands-based Mobileye maintains itsR&D center in Jerusalem and sales and marketingoffices in the United States, Cyprus and Japan.Among its other investors are FIBI InvestmentHouse, GlenRock Group, Colmobil Group, DelekMotors and Solid Investment Bank of New York.

AngioScore completes $30m roundfor expansion, development

AngioScore, Inc. completed a $30 million seriesE financing round led by Telegraph Hill Partners.Existing investors Psilos Group Management,QuestMark Partners, UV Partners, CaliforniaTechnology Ventures and Innomed Ventures allparticipated as well.

The California-based firm is a developer ofnovel angioplasty catheters for treating coronaryand peripheral artery disease. It will use thefinancing for sales activities, manufacturing andnew product development.

Medingo’s insulin patch attracts $27million investment

Medingo Ltd. has raised $27 million in afinancing round led by Elron Electronic Industriesand US venture fund Radius Ventures. Elron’scommitment is up to $22 million. Medingo, whichuntil the financing was wholly owned by Elron’ssubsidiary RDC Rafael Development Corporation,is in advanced stages of developing a miniatureinsulin dispensing patch that is more cost-effectivethan standard insulin pumps. Medingo expectsFDA approval and initial sales in 2008. Thefinancing places an $82 million post-money valu-ation on the two-year old Medingo.

Mintera financing reaches $73mwith new $19 million round

Mintera Corporation has raised a $19 million ina series C financing round co-led by PolarisVenture Partners and RRE Ventures. Strategicinvestor JDSU as well as existing investors CourtSquare Ventures, Star Ventures and PortviewCommunications Partners also participated. Thefinancing upped the total amount raised byMintera since its inception in 2000 to more than $73million. Mintera develops high bit-rate fiber optictransport sub-systems for optical networks. The

Acton, Massachusetts-based company will use thefinancing for launching new products and featuresand to develop solutions at higher bit-rates.

Broadlight beaming with $12 million series E round

BroadLight has closed on a $12 million series Efinancing round led by Benchmark Capital, a newinvestor in the company. Broadlight, a supplier ofGPON semiconductors and software, has nowraised more than $50 million through its severalfinancing rounds. Broadlight is based in MountainView, California with a branch in Ramat Gan, Israel.

Celltick investors add $8.5 millionCelltick Technologies has raised $8.5 million

from its principal investors, Jerusalem VenturePartners and Amadeus Capital Partners. Thecompany’s product allows content providers andadvertisers to broadcast targeted content andmarketing messages to mobile idle screens. Celltick,which is based in the United Kingdom, maintainsits research and development facility in Israel.

FraudSciences secures $11 million inseries B financing

FraudSciences Corp. has closed on an $11million series B financing round led by Red-point Ventures of Menlo Park, California. Existing investor BRM Capital also participated.FraudSciences provides online merchants withfraud analytics and credit card transaction verifi-cation services. Established in 2001, FraudSciencesis headquartered in Palo Alto, California and hasfacilities in Tel Aviv.

Jordan Valley snags $11 millionIntel investment

Jordan Valley Semiconductors has received an$11 million investment from Intel Capital. JordanValley, which is developing tools for semicon-ductor metrology based on X-ray technology, willuse the funds to step up technology and productdevelopment. The company, founded in 1996received earlier investments from Clal Industriesand Investments. Jordan Valley is headquarteredin Migdal Haemek, Israel and has a branch inAustin, Texas.

Octavian attracts $10 million fromlocal VCs

Octavian has completed a $10 million secondround financing led by Vertex Venture Capital withthe participation of Carmel Ventures and GeminiIsrael Funds. Octavian, a developer of software forthe investment management industry, will use thefunding for sales and marketing activities and for

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$ £¥

€€ $ ¥ €€

further product development. The company isbased in Woburn, Massachusetts and has offices inTel Aviv.

Imagine gets $15 million… for realImagine Communications has closed on a $15

million series B financing round led by CourtSquare Ventures of Charlottesville, Virginia, withexisting investors Columbia Capital and Carmel

Ventures participating. Imagine, the developer of adigital video platform that offers 50 percent morebandwidth and improved signal quality, will usethe proceeds for accelerating commercial deploy-ments. The round boosted total capital raised to$24 million. Imagine is based in San Diego,California and has its R&D and engineering facil-ities in Netanya, Israel. ■

31

Selected list of other recent financing rounds (Q3 - Q4 2007)

Company $m Round Sector* Stage** Investors

InSightec 30 Internal LS RG Elbit Medical, GE Medical, MediTech Advisors

OptimalTest 16 First Semi. IR Evergreen, Pitango, Carmel

Amobee 12 Second Comm IR Vodafone, Telefonica, Globespan, Accel, Sequoia

SolarEdge 10 First Cleantech R&D Opus, Genesis, Walden International

Galcon 9 First Cleantech IR WhiteWater

XJet 9 Seed Cleantech Seed Gemini, Good Energies, Spirox

Peer39 8 Second Internet IR Canaan Partners, Dawntreader Ventures, Highbridge Capital

HealOr 8 First LS R&D Pitango

NuLens 8 Internal LS R&D Warburg Pincus, Elron

RayV 8 First Internet R&D Accel

Trivnet 8 Fourth Comm IR Star, StageOne, Magma, Veritas

KoolConnect 7 First Media IR Lewis Trust Group, Arthur Wiener, Plough Penny Partners

Advasense 6 Second - Ext. Semi. R&D CIDC

Yoggie 6 First Semi. IR Silicom Ventures

ComAbility 6 First IT IR Vertex, Stata Ventures Israel

Enure 5 Internal Comm IR Carmel, Elron

5min 5 First Internet R&D Spark Capital

ActiViews 5 First LS R&D Evergreen, Ofer Hi-Tech

Pulsar 5 Fourth Cleantech IR Wanaka, Viola Partners, Lubinsky, Infinity, D Partners

ForeScout 4 Internal IT RG Amadeus, Accel, Meritech, Pitango, Itouchu

Aspect Magnet 4 First LS R&D US private investor

eXelate 4 First Internet IR Carmel Ventures

OrSense 4 Bridge LS R&D IHCV, Star, LTG, Unicycle, Carlo Salvi

Sportingo 3 First Internet R&D Ingenious Media

ExPlay 3 Second Media IR Luminetx

Agent Video 3 Second IT IR 21Ventures

NexPerience 3 Seed-Ext. Comm R&D Vertex

BioPigment 2 First Nano R&D BHCO, Joma Chemicals

Baby's Breath 2 First LS IR Microdel

Aspect AI 2 First Cleantech IR US private investor

QRay 1.5 First LS R&D Syneron

FutureIT 1.5 First IT IR Vicont Barsted

Lextran 1.2 First Cleantech IR Eitan Establishment, Ludan, Hapag

DiSP 1.2 First Cleantech R&D Benji Kahn, TN Ventures

Vidyatel 1 First Comm R&D JVP

CellCure 1 Third LS R&D Teva

OB-Tools 1 First LS R&D Private investors

Dynasec 1 First IT IR Private investors

Human Monitoring 1 First Industrial IR STG, GlenRock, Altshuler Shaham

* Comm= Communications, LS= Life Sciences, IT= IT & Enterprise Software, Semi.= Semiconductors, Nano= Nanotechnology, Industrial= Industrial Technologies,

Media= New Media Technologies

** IR= Initial Revenue, RG= Revenue Growth

For additional details on companies that raised capital, please see: www-ivc-online.com

Conf

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January 9, 2008

2008 Leadership in CorporateDivestitures and Acquisitions ForumNew York, New YorkContact: Dan BelmontTel: 1-646-839-2033Email: [email protected] site: www.execforum.net/corpdivest2008

January 15-16, 2008

Searching for Outperformance inToday’s Private Equity MarketZurich, SwitzerlandTel: 41-22-310-9250Email: [email protected] site: www.financialevents.ch/

downloads/private-equity.pdf

February 4-7, 2008

Israel Web Tour 2008Silicon Valley, CaliforniaContact: Shuly GaliliEmail: [email protected] site: www.israelwebtour.com/blog/

the-2008-steering-committ.html

February 17-20, 2008

RecShow '08 - Middle East Waste &Environmental Management CongressIshtar Kempinski Hotel – Dead Sea, JordanContact: Walid HikmatTel: 962-6-556-2487Email: [email protected] site: www.eng-forum.com/RecShow/

February 19-21, 2008

Russian Alternative Investments ForumMarriott Grosvenor Square Hotel, London, UKTel: 44-20-7490-3774Email: [email protected] site:www.adamsmithconferences.com/xrc22e1e

February 25-26

Internet 2008 - ISOC-IL 11th ConferenceKfar Hamacabbiya, Ramat Gan, IsraelContact: ISOCTel: 972-3-733-0766Email: 972-3-733-0766Web site: www.isoc.org.il

March 1-3, 2008

MEDITEC-CLINIKA 2008Chennai, IndiaContact: S. K. SinghTel: 91-98863-60653Email: [email protected] site: www.meditec-clinika.com

March 2-4, 2008

The 11th America-Israel BusinessExchangeSkokie, IllinoisTel: 1-312-235-0586Email: [email protected] site: www.on-web.co.il/fb/asn.aspx?t=

5540523735&m=3457505635610c745623324b6667627330152m775286

March 4-6, 2008

WIREC 2008Washington Convention Center, Washington, DCContact: Robert SandoliTel: 1-202-647-8510Email: [email protected] site:www.wirec2008.gov/wps/portal/wirec2008

March 5, 2008

2008 International Partnership Award GalaComputer History Museum, Mountain View, CATel: 1-408-343-0917Email: [email protected] site: www.ca-israelchamber.org/

galashowdoc.asp?menuid=352

March 11-13, 2008

International Exhibition for MedicalTechnologies and Hospital SuppliesTel Aviv FairgroundsTel: 972-3-562-6090Email: [email protected] site: www.stier.co.il/english/fair_medax.htm

April 14, 2008

FSA Israel Executive ForumTel Aviv, IsraelContact: Darryl LeavittTel: 1-972-866-7579 ext. 113Email: [email protected] site: www.fsa.org/events

April 27-29, 2008

The 9th China InternationalEnvironmental Protection ExhibitionShanghai, ChinaContact: Helen ZhuTel: 86-21-54592323 ext. 329Email: [email protected] site: www.eptee.com

May 19-20, 2008

IVA Conference 2008Tel Aviv, IsraelTel: 972-73-713-6313Email: [email protected] site: ww.iva.co.il/itemsshow.asp?eventId

=52&editmode=0&reqtype=events

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20 21 22 23 24 25 26

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For more events please visit:www.ivc-online.com/Events.asp

33

selling to mobile carriers/operators and again why selling intoEurope makes sense – "The sales cycle is a long process that cantake between two months and 1 1/2 years. During that timeyou have to visit the customer numerous times. Hence, the costof sale to customers in Europe is considerably lower."

Obviously, and from experience, Ton believes that Europe isa much better place to start sales for mobile technologies than

the US. But he also appreciates that after a company has gaineda few customers and has more financial resources, the UScarriers should be high on everyone’s radar screen.

I have a feeling that NewACT will be a growing footprinton the radars of Europe and of America and the rest of theworld too in the not very distant future. ■

Not every program works. Britech, a joint fund modeled onBIRD and other binational programs with Canada, Singaporeand Korea, wasn’t successful and is now closing. It wassurprising, admits Amitay, and it’s not because there isn’tpotential to work with the United Kingdom. It was just builtincorrectly.

But overall, government financing and support is a goodthing, insists Amitay. "We’ve also become a model in Europe,showing the proportion between private sector investment andpublic sector investment, points out Amitay. "Governmentmoney is just the catalyst. It’s a security network for the first setof risks, and that’s what offers security to make further invest-ments." ■

Israeli funds often seek market access, as Europe is a marketwhich is geographically close and can thus be served out ofIsrael. The European VCs seek benchmarking of the technologyagainst Israeli technology given the presence of large corporateresearch centers in Israel as well as numerous technology start-ups.

Not all VCs can pursue this strategy, as investments in otherfunds are prohibited for most. The specific structure of GIMV

and 3i allows them, however, to invest in Israeli funds, therebycreating a strong tie between both teams. This relationship isnot based on any contractual obligation (which wouldn’t workanyway) but on goodwill, mutual interest and the strength ofan LP investment. It creates a win-win situation for bothparties. ■

venture funds are more focused on investments that aresuitable for their domestic market and have an element ofEuropean-related activities. When spreading their wingsbeyond Europe, the tendency of VCs is to look to US and Asianmarkets – not Israel.

Foreign investment, which constitutes 60 percent of theinvestment in Israeli technology firms, comes predominantlyfrom the US – not from Europe. Although few European VCsdo co-invest, their numbers are limited. As I see it, there is defi-nitely room to increase cooperation.

The level of investment by Israeli companies in Europe hasrisen substantially, primarily reflecting the extensive activitiesof Israeli entrepreneurs in real estate development throughoutEastern and Central Europe. There has been only marginalinvestment in the high-tech sector though. Israel does not haveglobal funds, and its funds focus almost entirely on Israel.Although dedicated funds have arisen for Israel-China invest-ments, this is the exception. Israel-Europe funds in the tech-nology sector are unlikely to be of any consequence over thenext few years. ■

Global institutions give more emphasis to IsraelContinued from page 2

European VCs in IsraelContinued from page 4

Mobile entrepreneur Rafi Ton taps Europe firstContinued from page 17

R&D programs give boost to Israeli-European cooperative effortsContinued from page 10

Don’t miss out on advertising opportunities in the upcoming

Independence Day issuecelebrating Israel’s 60th birthday

May 2008 Contact Gali Idan at IVCJ Today!

[email protected]

Trad

ing

Plac

esUri Weinheber has joined

Lab-One Innovations as its ChiefExecutive Officer. He comes to Lab-One with a background inmanagement, strategic planning,early stage ventures and business

development. Weinheber has held consulting posi-tions for software and telecom companiesincluding Netcom Group, TDnet and Teldan. Hepreviously was the founder and CEO ofVirtualSelf, a real-time analysis software company,which was eventually acquired by TDNet.Weinheber has also held consulting positions atXerox, RadWare, XMPie, Agentix, Ubique,RTimage, Scitex and ClickSoftware, and holds adegree in product design from Tel Aviv University.

Sigal Widman has beenappointed Vice President HumanCapital at Gemini Israel. She will beworking with Gemini portfoliocompanies in recruiting executivemanagement in Israel and abroad,

and in building effective human resources infra-structure for start-up companies. Prior to joiningGemini, Sigal had been at Israel Seed Partners foreight years, where she was a partner and VP -Human Resources. Prior to that time, she estab-lished and managed the Executive Search dvisionat recruitment firm Begisha Shona. Widman has aBA in Hebrew Literature and General Studies fromthe Hebrew University and a Certificate in HRManagement from the Open University.

Ophir Reshef recently joinedBessemer Venture Partners’ Herzliyaoffice as an associate. Previously, hewas a consultant with McKinsey &Company, where he worked withcompanies in Israel and Europe on

projects dealing with IT strategy, marketing, oper-ations, M&A strategy, financial due diligence andregulatory strategy. Earlier in his career, Reshefwas a software engineer for AOL’s ICQ subsidiary,and he was a technology adviser and computerprogrammer for the Israeli Defense Forces. Reshefholds a BA in Economics and Management fromTel-Aviv University.

Assaf Barnea is CEO ofKinrot, a water technology-focusedincubator. Barnea had previouslybeen at Mekorot, Israel's nationalwater company, where he establishedbusiness development activities

through WaTech, The Entrepreneurship andPartnership Center for Water Technologies. Barneaearlier was with Comverse as a director of businessdevelopment and had founded Cardiosense, amedical device start-up. Barnea holds law andbusiness degrees from the Interdisciplinary Center

in Herzliya and a political science and psychologydegree from Tel Aviv University.

Alon Michal has beenappointed a Partner of the CatalystFund, where he is responsible for thescreening and evaluation of invest-ments. He was previously GeneralManager and VP–Finance at biophar-

maceutical firm Pharmos Corporation and hadworked for IDC Israel and Ernst & Young in earlierpositions. Michal, a licensed CPA, holds an MBA inBusiness Administration from Ben-GurionUniversity and BA in accounting from the Collegeof Management in Tel Aviv.

Nir Altschuler has joined IncentiveIncubator as VP Business Development withresponsibility for screening and performing duediligence for new companies, and for providingsupport to portfolio companies through businessdevelopment activities. Prior to Incentive,Altschuler served as a consultant at Shaldor, anIsraeli management consulting firm. He attendedBen-Gurion University, where he earned both hisMBA and a BSc in biotechnology engineering.

Sarit Soccary Ben-Yochanan has joined theAshkelon Technology Incubator(ATI) as its managing director. Sheformerly was with L Capital Partners,where she headed due diligence

activities and assisted portfolio companies withbusiness strategy and business development. Priorto joining L Capital, Soccary Ben-Yochanan waswith the Shalom group of companies and earliershe worked for Trigger Ltd., an Israelimanagement consulting firm. Soccary Ben-Yochanan attended Tel Aviv University, where shereceived her MBA as well as a BA in economics.

Amos Netzer has joined FortissimoCapital as a venture partner. He was previouslymanaging director of TASE-listed PalramIndustries and was also managing director ofplastics manufacturer SMS.

Netzer holds an MS in public policy from TelAviv University and a BSc in industry and admin-istrative engineering from the Technion in Haifa.

Liora Shpindler has joined China-IsraelValue Capital, a private equity fund headquar-tered in Shenzhen, China, as its controller. Based inthe fund’s Herzliya office, Shpindler has responsi-bility for treasury and accounting-related issuesand for providing guidance to portfoliocompanies. She previously was controller at bothPowerDsine and Aladdin Knowledge Systems.Shpindler is a CPA and holds a BA in managementfrom the College of Management in Israel.

34

Personnel changes at your organization?Contact IVCJ and let us know.

35

Companies Raising CapitalCompany Field Amount Purpose Contact Telephone Email

Advanced Medical Medical devices $2m Research, regulatory, marketing Tomas Mendelsohn, CEO 972-9-746-7771 [email protected]

ApNano Material Nanomaterials, coatings $5m Production Menachem Genut, CEO 972-8-930-2671 [email protected]

AttoSense Telecom, wireless $0.55m Sales in Europe, R&D Erez Mutzafi, CEO 972-544-735-011 [email protected]

Ayehu Software Telecommunications $2m Commercialization, marketing Gabby Nizri, GM 972-54-436-8345 [email protected]

BIODALIA Life sciences $4m R&D, upscaling Ayal Barak, VP 972-54-674-7256 [email protected]

Cam-Trax Computer vision - Marketing Yaron Tanne, CEO 972-52-299-3154 [email protected]

CellRide Public transportation $0.25m Development, alpha tests Nissim Ben-Dayan 972-9-954-4749 [email protected]

DigestNews.net Media, Internet $1.5m - Avi Katz, CEO 972-50-755-4686 [email protected]

EST Ecological Chemicals, pharmaceuticals $0.25m Marketing Yehuda Simon, CEO 972-8-665-1215 [email protected]

eWaterTek Water monitoring $2.5m Manufacturing, marketing Harry Moskoff, President 972-50-302-3086 [email protected]

F2K Corporation Software, search engines $0.2m Administrative Ilan Peleg, CEO 972-50-739-5062 [email protected]

Fastnet Comm., data storage $0.2m Development Andrei Grenader 972-54-440-6971 [email protected]

Felloweb Internet $7m Revenue growth Dotan Peleg, CEO 972-3-562-4477 [email protected]

Fly Open Sky Online travel $1m Technology, initial marketing Ayal Segal, COO 972-57-812-0936 [email protected]

Galapagos Systems IT software management $1m R&D, marketing Oren Zamit, CTO 972-50-529-9137 [email protected]

GEd-I Storage security, encryption $1m Sales, marketing, development David Saar, CEO 972-9-865-1054 [email protected]

Guide-X Medtech, robotics $1m Development, animal studies Michael Arad, CEO 972-52-858-8145 [email protected]

HealFUS Medical devices $2m FDA approval Roman Liberson, CEO 972-54-740-9065 [email protected]

Intuition Social networking $3m Marketing, development Saar Ginzburski, CTO 972-52-630-3332 [email protected]

IVIVO Broadcasting $5m Marketing, development Yehezkel Zeira, CEO 972-54-696-5566 [email protected]

Just Play Gaming, Internet - Development, start-up activities Eyal Livnat, Founder 972-54-201-9066 [email protected]

KitchenBug Internet, social networking $0.65m Development, generate revenue Ofir Shahar, CEO 972-54-484-8232 [email protected]

Life Saving Homeland sec., real estate - Start-up purposes Nati Sobovitz, Founder 972-54-800-8089 [email protected]

MDIS Cardiac diagnostics $0.5m Alpha & beta versions Eyal Cohen, Founder 972-52-389-0696 [email protected]

MediViz Healthcare IT $5m Development, marketing Ram Alt, VP - Bus. Dev. 972-54-200-33333 [email protected]

Miras Medical, dental $1.5m Marketing Zvi Rakocz, President 972-54-659-5384 [email protected]

MycoEnzyme Industrial enzymes $1.5m Development, commercialization Moti Rebhun, CEO 972-50-323-1065 [email protected]

Nebo Media Media, entertainment - Development, marketing Yosi Glick, CEO 972-54-443-1333 [email protected]

Novel-Erna Bone implants $0.4m R&D Ballan Nabil, CEO 972-54-571-7399 [email protected]

NVVideo HDTV, mobile, surveillance $1.5m Development, marketing David Blum, CTO 972-54-449-9972 [email protected]

Octabox Internet $0.7m Development, hardware Adam Benayoun, CEO 972-54-483-5975 [email protected]

Olive Engineering Homeland security $0.1m Feasibility study Nehemiah Cohen, CEO 972-52-542-8887 [email protected]

pdway Mobile media, marketing $10m Marketing, technology Omri Kohl, CEO 972-77-714-4488 [email protected]

Pomidor IT & enterprise software $3m Prototypes Iliya Kusner, President 972-54-591-4849 [email protected]

Silpor Music Media, software $0.8m Marketing, development Gershon Silbert, CEO 972-54-495-1526 [email protected]

Speedtouch Semiconductors, comm. $7m Expansion Oren Katzir, CEO 1-408-828-7653 [email protected]

Sphericon Vehicle safety $1m Prototype, marketing Dan Omry, CEO 972-9-744-5066 [email protected]

Sports Events 365 Sports, travel $1.5m Marketing, development Sefi Donner, CEO 972-544-360-360 [email protected]

StimPulse Weight management $1m Development, animal studies Michael Arad, CEO 972-52-858-8145 [email protected]

Surpass Medical Medical devices $4m Clinical trials Ygael Grad, CEO 972-52-839-9570 [email protected]

Spheratec Cleantech, energy, telecom - Manufacturing, marketing Eddie Gamburg, Mng Dir 972-4-900-1188 [email protected]

Takoom E-commerce services $3m Development Cyril Kleczewski, Founder 972-50-771-6177 [email protected]

TechnoSpin Alternative energy $3.5m R&D, operations, marketing Natalie Barlev, VP-Bus. Dev. 972-50-740-2571 [email protected]

Tolarex Biotechnology $5m Development, commercialization Alon Moran, CEO 972-2-677-7685 [email protected]

Trixcell Mobile content - Development, marketing Shlomi Grandes, CEO 972-9-744-5066 [email protected]

Trivya Internet services $10m Expansion Idan Miller, CEO 972-9-957-8230 [email protected]

UpUpdate Desktop applications $0.05m Beta phase development Ron Gross, Founder 972-4-655-8841 [email protected]

ZR-dent Dental $0.08m Feasibility studies Joseph Schwartz, Manager 972-52-687-1434 [email protected]

36

Ubiqam is a developer of innovativewireless infrastructure solutions thatenable operators to offer broadbandservices using a single standard wirelesstechnology infrastructure. Its solutioncompletely relieves wireless operatorsfrom their dependency on traditionalwireline providers when offeringbundled voice and data broadbandservices. Ubiqam’s Wireless Intra-Network Embedded Backhaul tech-nology creates the “backhaul free” base-station/access point. The technology istransparent to the underlying radionetwork and can be implemented inconjunction with any wireless tech-nology. Ubiqam is currently in theprocess of securing its first round ofinvestment.

Hayoman has developed a Web-based personalized platform thatassembles and provides tools for the useof events-related information, filteredaccording to a user’s individual profile.Each such profile is determined by theuser’s selections as well as a dedicateddata mining system. Hayoman’splatform includes a Web-based appli-cation that furnishes content providersand advertisers with direct access to pre-defined types of users, offering themtargeted and highly relevant businessproposals. In March, 2007, Hayomanintroduced its first Web site, dedicated tothe Israeli business community.Additional worldwide sites are currentlyplanned.

Saguna Networks is a youngcompany developing a set of newnetwork optimization products. Saguna’spatent pending technology is aimed atoptimizing live video and audio deliveryto mobile devices. Saguna products helpto dramatically reduce the bandwidthconsumption required by mobile-TVservice over the mobile network, thussignificantly reducing network operatingexpenses.

New at IVC OnlineClinical Phases Search

The IVC Online Database recently expanded its data on life sciencecompanies in the therapeutics, diagnostics and medical device sub-sectors.Information has been added about products and their research and devel-opment progress (discovery, pre-clinical, Phases I, II and III clinical trials,FDA- and CE-approved). The information can be located using theAdvanced Search engine.

New features at IVC-Online Databasewww.ivc-online.com

Young Technology Companies in the SpotlightEach month IVC Online pays tribute to a developing young Israeli high-tech company that has earned special recognitiondue to significant business progress or its having secured substantial capital. Recent IVC selections were:

Database Fact

There are over 5,500 hightech companies covered inthe IVC-Online Database

flight is at least three times more expensive than a flight to Kiev.So, if we assume travel of once a month for 6 – 9 months, thedifference in cost would be thousands of dollars, and thiswould only be for traveling!

It is important, too, to examine some commonly ignoredissues regarding cultural and political manners, ones that areunrelated to budget but very much influence the flow of work.

The IT manager needs to have day-to-day interaction withthe vendor’s workers. Project control and supplying motivationfrom afar is a difficult mission, which becomes increasinglythorny when cultural differences occur. Viewing offshore fromthis perspective provides another element in favor of theUkraine, since cultural gaps are significantly less betweenIsraelis and Ukrainians than between Israelis and citizens ofsouthern Asia and India.

Local economic strength and political stability are two addi-tional issues to take into account when deciding upon thelocation of a development center. For the purposes of ourdiscussion, both India and the Ukraine are quite similar, but theproximity of the Ukraine to central Europe may give one moreconfidence regarding changes in the political climate and theability to relocate a development project elsewhere if thatshould become necessary.

Ukraine – A potential IT giant Ukraine is successfully moving towards being a key

European IT outsourcing center. The chart on page 12 by"Market Vision" shows the average annual growth of UkrainianIT outsourcing services at 40 percent, and the market volume atapproximately $150 million in 2005. Other estimates of theUkrainian high-tech initiative indicate that the overall export ofIT services in 2005 reached $500 million and is growing.

A major contribution to the recent growth is the Ukraine’swell-developed academic network, which trains thousands ofskilled specialists each year. In each 10,000 population, there are107 students studying among 300 universities. The tradition ofphysical, mathematical, and programming schools is the resultof a very strong technological legacy. Nearly 60 percent ofuniversity students graduate in these areas.

The new generation of Ukrainian specialists is goal-oriented, active, highly motivated, and has already approachedWestern standards of business. IT outsourcing to the Ukrainecan be expected to grow as well-trained professionals continueto enter the system. ■

academia believe the European Framework Program is worth-while for Israel. Some 76 percent of industry respondents saidthe projects were relevant to their main work and an over-whelming majority felt their projects were of strategic impor-tance to their company’s work.

One survey question investigated the respondents’assessment of their own contribution to the European projects:Among executives, 68 percent said their participationcontributed to their marketing efforts, while 74 percent saidthey were exposed to advanced knowledge. Among academicsthe rate was 71 percent.

The FP provided 74 percent of executives and 53 percent of

academics with access to new technology with which theyotherwise would not have been involved. There was agreementby 88 percent of executives and 89 percent of academics thattheir involvement in the program advanced their professionalconnections, and 88 percent of executives said the projects hadimproved the image of their companies.

The benefits of being part of FPs are clear. Israeli partici-pation in the FPs is the most integrative instrument leading toIsraeli-European synergy. This cooperation sets the perfecthighway for Israeli businesses to be part of the Europeanmarket of 500 million consumers. ■

a lot to offer, and where cooperation in joint projects andbusiness and innovation networks will create a win-win situ-ation. In today’s world the key to success is not isolation butcooperation."

Growth in waterNEWTech – Novel Efficient Water Technologies – is a new

government program launched at WATEC 2007 to promote theIsraeli water technology sector. Oded Distel, Director of IsraelNEWTech, has forecast water technology industry exports tojump an unprecedented 28 percent in 2007 from the previousyear. According to Distel, this sector will become a main engineof Israel’s growth in the coming years.

WATEC 2007 welcomed 100 business delegations and 2,000visitors. At the closing session, Israel’s President, Shimon Peres,discussed the Red Sea/Dead Sea conduit, a proposed joint

project for Jordan, the Palestinian Authority and Israel thatcould provide a new peace channel for the Middle East.

Cause for optimismAttending WATEC 2007, the Prime Minister’s Conference,

and the Cleantech and Go4Europe conferences on my recentvisit to Israel and seeing the encouraging participation offoreign business people has given me strong hope for thefuture. The buoyant foreign interest was in stark contrast to thepaltry foreign attendance at other Israeli conferences that tookplace soon after the burst of the high-tech bubble and duringthe Intifada days. While listening to the news occasionallycauses apprehension, the present situation gives me cause forguarded optimism that Israel is solidifying its position as aleading technology nation. ■

37

The border between business and politics is very thin – almost non-existentContinued from page 5

European Framework Program for R&D bolsters Israeli researchContinued from page 6

Global marketing starts with Eastern Europe developmentContinued from page 12

Efrat ZakaiDirector of Research,IVC

38

IVC High Tech Survey – Q3 2007

Efrat Zakai, Director of Research, IVC

The following are the findings of the QuarterlySurvey conducted by the IVC Research Center,which for more than nine years has been at theforefront of venture capital and private equityresearch in Israel. This Survey reviews capitalraised by private Israeli high-tech companiesfrom Israeli venture capital funds and fromother investors. The Survey is based on reportsfrom 80 venture investors of which 49 areIsraeli management companies and 31 areother – mostly foreign – investment entities.

In the third quarter of 2007, 108 Israeli high-tech companies raised $414 million from ventureinvestors – both local and foreign (chart 1). Theamount was 9 percent above the $381 millionraised in the third quarter of 2006, but down 5percent from the $436 million raised in Q2 2007.

The average company financing round was$3.83 million in Q3, compared with $4.38 million inthe third quarter of 2006 and $3.69 million in Q2 ofthis year. Seventy-three companies attracted morethan $1 million. Of these, 13 raised between $5million and $10 million each, 11 raised between $10million and $20 million each, and three raised over$20 million.

In the three first quarters of 2007, Israeli high-tech companies raised $1.256 billion, 10 percentabove the $1.145 billion raised in the corre-sponding period of 2006.

Israeli VC investment activityIn Q3, Israeli VCs invested $172 million in

Israeli companies, compared with $142 million in

Q3 2006 and $193 million invested in Q2. TheIsraeli VC share of the total amount invested inIsraeli high-tech was 42 percent, with theremainder of capital coming from foreign investorsas well as non-VC Israeli investors.

First investments accounted for 51 percent oftotal dollar investments by Israeli VCs in the thirdquarter, compared with 44 percent in the corre-sponding quarter of 2006 and 38 percent in Q22007. The average First investment by Israeli VCswas $3.25 million, while the average Follow-oninvestment was $0.83 million.

In the first three quarters of 2007, the Israeli VCfund share of investments in Israeli high-techcompanies was 43 percent, compared to 41 percentin the year-earlier period.

Capital raised by sector (Chart 2)The Communications sector led capital raising

both in the third quarter and in the first ninemonths of 2007. Twenty Communicationscompanies attracted $83 million – 20 percent of thetotal amount raised in the quarter, compared with$70 million or 18 percent in the third quarter of2006 and $93 million or 21 percent in Q2 2007. Inthe first nine months of 2007, Communicationscompanies attracted $300 million – 24 percent ofthe total capital raised.

Ten Semiconductor companies raised $74million, 18 percent of the total capital raised in thethird quarter of 2007, compared with $36 million(10 percent) in the third quarter of 2006 and $55million (13 percent) in Q2 2007. The amount raisedby Semiconductor companies in the third quartetreflected two especially large financing roundsaggregating over $50 million. In the first nine

Israeli VCs Foreign & Other

Chart 1: Capital Invested in Israeli High-Tech Companies by IsraeliVC, Foreign and Other Investors

($m)

0

500

1000

1500

2000

2500

3000

3500

Source: IVC Research Center

2004

45%

55%

1,465

2003

42%

58%

1,011

2002

42%

58%

1,138

2001

41%

59%

1,986

2000

41%

59%

3,092

1999

43%

57%

1,013

2005

49%

51%

1,337

2006

40%

60%

1,622

Q1-Q3/07

43%

57%

1,256

39

months of 2007, the sector attracted $171 million,14 percent of the total capital raised. Thatcompared to $124 million or 11 percent raised inthe same period in 2006.

Fifteen Internet companies attracted $71million, 17 percent of total capital raised. Thisamount, up ten-fold from the third quarter lastyear, was the most raised by this sector since thefirst quarter of 2001. Internet sector capital raisingincreased to $181 million, 14 percent of the total, inthe first nine months of 2007. That compared to $65million or 6 percent of the total raised in the year-earlier period and only $21 million (2 percent)raised in the first three quarters of 2005.

The Software sector ranked close behind theInternet sector with 22 companies raising $70million in the third quarter, 17 percent of the totalcapital raised. Capital raised was 37 percent belowthat raised in the third quarter of 2006 (29 percent)but equal to the amount and share raised in Q22007. In the first nine months of 2007, Softwarecompanies raised $186 million, 15 percent of thetotal capital raised and 26 percent less than thecapital raised by Software companies in the firstnine months of 2006.

In the third quarter, 24 Life Sciencescompanies raised $63 million, 15 percent of thetotal capital raised. Q3 was a relatively slow periodfor the Life Sciences, compared to Q3 2006 when

$115 million (30 percent) was raised and Q2 2007when $98 million (23 percent) was raised. In thefirst nine months of 2007, the sector attracted $229million, 18 percent of the total capital raised, whichcompared to $252 million or 22 percent in thecorresponding period in 2006.

Six Cleantech companies raised $33 million or8 percent of the total capital raised in the thirdquarter of 2007. In the first nine months of 2007,Cleantech companies attracted $78 million or 6percent of capital raised in the period.

Other companies attracted $20 million in thethird quarter (5 percent) and $117 million (9percent) in the first nine months of 2007.

Capital raised by stage (Chart 3)Eighteen Seed companies attracted $28 million,

7 percent of the total amount raised in Q3,compared to $20 million (5 percent) in the thirdquarter of 2006 and $51 million (12 percent) in Q22007. Within Seed companies, one Cleantechcompany attracted 32 percent of the investments,three Software companies captured 22 percent and3 Communication companies attracted 19 percent.During the first three quarters of the year, Seedcompanies attracted 11 percent of the total funds,compared with 7 percent in Q1-Q3 2006.

In the third quarter, 40 Early Stage companiesattracted $139 million or 33 percent of the total

Life Sciences15%

Communications20%

Semiconductors18%

Internet17%


Chart 2: Capital Raised by Israeli High-TechCompanies by Sector (%)

Software17%

Cleantech8%

Other5%

Life Sciences18%

Communications24%

Semiconductors14%

Internet14%

Software15%

Cleantech6%

Other9%

Q3/07 Q1-Q3/07

Seed Early Stage Mid Stage Late Stage

Chart 3: Capital Raised by Israeli High-Tech Companies- by Stage (%) -

1999 2000 2001 2002 20030%

20%

40%

60%

80%

100%


2004 2005 2006 2007

25%

28%

41%

6%

22%

30%

38%

10%

22%

32%

41%

5%

9%

54%

35%

2%

13%

49%

32%

6%

12%

56%

24%

8%

11%

53%

28%

8%

19%

42%

30.5%

8.5%

16%

39%

34%

11%

raised, which compares with $108 million or 28percent in 2006’s third quarter and $121 million or28 percent in the previous quarter .

During the first nine months of 2007, earlystage companies attracted $423 million, 34 percentof the total, compared with $359 million (32percent) in the Q1-Q3 2006 period.

Mid-Stage companies dominated capitalraising both the third quarter and in the first threequarters of 2007. Forty Mid-Stage companiesraised $193 million, 47 percent of total capitalraised in the third quarter. This compares with$183 million or 48 percent in the third quarter of2006 and $185 million or 42 percent in the previousquarter. During the first nine months of 2007, Mid-Stage companies attracted $497 million, 39 percentof the total, compared with $504 million or 44percent in the first three quarters of 2006.

In the third quarter of 2007, 10 Late Stagecompanies attracted $54 million or 13 percent ofthe total, compared with $70 million or 19 percentin Q3 2006 and $79 million or 18 percent in Q22007. During the first nine months of 2007, LateStage companies attracted $203 million, 16 percentof the total, compared with $198 million or 17percent in the Q1-Q3 2006 period.

Israeli VC investments in foreign companies

Israeli VCs invested $9 million in nine foreigncompanies during Q3 2007, compared to $6 millioninvested in foreign companies in the third quarterof 2006 and $18 million invested in the previousquarter. All nine investments were Follow-oninvestments. In the first three quarters of 2007, the

Israeli VCs invested $36 million in foreigncompanies.

Capital raised: Israel vs. Europe andUS (Charts 4-5)

A comparison of data developed by IVC andVentureOne indicates that capital raised by high-tech companies in Israel equalled 26 percent ofcapital raised in Europe both in the third quarter of2007 and in the first nine months of 2007. In Q3,European high-tech companies recorded anincrease of 2.5 percent in capital raised from theprevious quarter, compared to an increase of 8percent for Israeli firms. Capital raised by high-tech companies in Europe in the first nine monthsrose 5.3 percent from that of the year-earlierperiod, compared to an increase of 10 percent forIsraeli firms.

In the first nine months of 2007 capital raisedby Israeli firms was $1.256 billion, just behind the$1.408 billion raised by UK high-tech firms, whichled in capital among all European countries.

Capital raised by high-tech companies in Israelequalled 5.1 percent of capital raised in the US inthe third quarter of 2007 and 5.5 percent in the firstnine months of 2007.

In Q3, US high-tech companies recorded anincrease of 8 percent in capital raised from theprevious quarter, which compared to an increaseof 9 percent for Israeli firms in the same period.

Capital raised by high-tech companies in theUS in the first nine months rose 9.6 percent fromthat of the year-earlier period, while Israeli firmsrecorded a 10 percent increase. ■

40

Source: Israel - IVC Research Center, Europe - VentureOne

Chart 4: Capital Raised by High-Tech Companies (Israel vs. Europe)

Israel Europe

($B)

2004

20.5

2000 2001 2002 20030

5

10

15

20

2005 2006 Q1-Q3/07

9.7

4.8 4.0 4.7 5.0 5.64.7

3.091.98

1.14 1.01 1.47 1.34 1.62 1.26

Source: Israel - IVC Research Center, Europe - VentureOne

($M)

0

400

800

1200

1600

Chart 5: Capital Raised by High-Tech Companies (Israel vs European Countries)Q1-Q3/2007

1,4081,256

1,068

613

279 267 201 192 155

UK Israel France Germany Netherlands Switzerland Spain Sweden Denmark

bio08ad 10/24/07 9:22 Page 1

Composite


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Capital Raising

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has acquired


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$127,000,000 $175,000,000

Jefferies Broadview, is a division of Jefferies & Company, Inc., a leading US investment bank. Through our strategic alliance with Leumi & Co., we havea strong presence in Israel. As a result, we are able to offer capital raising services in the US and Europe, as well as global M&A services to Israeli companies, with a particular focus on technology and life sciences companies. For more information, contact:

Comverse Ltd

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Alec Ellison / [email protected] Broadview

New York1-212-284-8100

October 2006


has acquired

Initial Public OfferingJoint Bookrunner

$228,083,339

February 2007


$400,000,000

February 2007

Undisclosed

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$107,500,000


$102,000,000

February 2007

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$159,965,000

March 2007


$72,000,000

April 2007


$86,550,000

March 2007

0807_Jefco_Leumi_binary_FINAL.qxp 8/30/07 1:49 PM Page 1

December 2007 Vol. 7, No. 4

Includes IVC Q3 2007 Surve

y

Centerfold: C

apital Raise

d by

High Tech Companies in

Europe and Israel

European VCs in IsraelAlex Brabers / 4The border between business and politics is very thin - almost non-existentCharlotte Gutman / 5R&D programs give boost to Israeli-European cooperative effortsJessica Steinberg / 6

Europe In SightWith Compliments

With Compliments

israel venture capital journal

Economy & Finance

sight european vcs

aise invc q ital r nies

compliments europe

israel alex brabers

mpa raellud

rd programs

charlotte gutman

y urve