David heller
Upcoming SlideShare
Loading in...5
×
 

David heller

on

  • 412 views

 

Statistics

Views

Total Views
412
Slideshare-icon Views on SlideShare
356
Embed Views
56

Actions

Likes
0
Downloads
11
Comments
0

3 Embeds 56

http://www.israelinnovationday.gov.il 41
http://www.blogger.com 12
http://5207028530692708840_a4520fc797691024a16c17f24b69e84e5b1d3cf6.blogspot.com 3

Accessibility

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    David heller David heller Presentation Transcript

    • Venture Capital Financing as a Driver of Israel High Tech Industry Presented by David Heller Managing Partner, Vertex Venture Capital Israeli-Hungarian Innovation Day, Budapest, October 2013
    • Venture Capital as a Bridge to the World Export Start-Up Companies High Tech Products Import Venture Capital Funds 2 Capital $€₤¥
    • Uniqueness of Israeli Venture Capital  Capital for VC funds >90% foreign sources  VC funds invest in high technology only  VC managers are skilled in risk evaluation of early stage companies  VC managers take an active role in assisting portfolio companies in business development worldwide  M&A is the main route to exit (although Israeli companies are #2 on NASDAQ after China) 3
    • Capital Inflow (Import) 4
    • History of the VC Industry in Israel • One small venture capital fund of US$30 Million Until 1993 1993: VC Industry is Established (Yozma) Post-Yozma • Technology R&D was conducted in a few large local companies • Israeli government established Yozma Fund of Funds • Yozma’s objective was to encourage foreign investors to invest with local partners to establish VC funds in Israel • Large industry of independent venture capital funds (without government money) raised more than US$17 Billion • Technology R&D is conducted in many small companies (start-ups) 5
    • Principles of the Yozma Fund  Government Fund of Funds with budget of US $100 million  Yozma invested in 10 VC funds, US $10M in each fund Foreign Investor Origin Israeli Fund Jerusalem Pacific Ventures USA Polaris  Cash invested in each VC fund: 40% Yozma; 60% foreign investors Europe  Sources of capital: USA, Europe & Asia  Option for investors to buy Yozma’s shares from the government at a fixed price (cost + interest) Asia To date, Israeli VC Funds raised approximately US $17 Billion 170X on the Government investment 6
    • Israel: The Start Up Nation The Economist, January 21, 2012 Venture Capital investment (in USD) per person, selected countries 0 25 50 75 100 125 150 175 Israel United States Norway Sweden Switzerland Finland Denmark • Eco-system of VCs, dozens of incubators and accelerators and repeat entrepreneurs France • Over 4800 active startup companies Britain • Over 600 new start ups created every year Ireland • $1-2B VC investment in high tech companies annually Netherlands Belgium Austria 7 Sources: National Venture Association; European Private Equity and Venture Capital Association; Israel Venture Capital Research Center; UN
    • Innovative Technology Outflow (Export) 8
    • Necessity Drives Innovation & Globalization No Natural Resources Economy based on human capital, innovation and knowledge Scarce Water & Land Development of water and agriculture technologies No Energy Resources Development of solar energy and other alternative energy Security Needs No Domestic Market 9 Development of defense technologies Commercialization of technologies Companies target foreign markets from Day One
    • Israeli Start-Up Landscape  Every year, ~600 new high tech start-ups are established in Israel  Venture capital funds are the main source of capital for high tech start-up companies  Most high tech R&D is done in small companies (10s-100s employees)  Manufacturing capabilities in Israel are relatively limited, therefore, many companies manufacture their products overseas  All high tech companies export their products overseas  Many Israeli companies are being acquired by foreign companies mainly from the USA 10
    • High Tech Start-Up Industry Sectors in Israel Communication 7% 12% IT & Software 18% Semiconductors 16% Life Sciences - Medical Devices and Biotechnology Cleantech 9% Internet 21% 18% 11 Other
    • Multinational Corporations Establish R&D Centers in Israel Build R&D Center Acquire Israeli Company (M&A) Over 100 Fortune 500 multinational corporations identified Israel as an innovation center and have established local operations and/or have presence through acquisition of Israeli companies 12
    • +250 R&D Centers of Multinational Corporations in Israel (partial list) Vast majority started through acquisitions of local companies 13
    • Israeli Companies Were Acquired for Over US $66B (1997-2013) 14 Partial list of M&As. Source: IVC Online
    • Israel’s Technology Success in NASDAQ Listings 140 Non-US NASDAQ Listings 120 100 80 60 40 20 0 China Israel Canada Hong Kong France Japan UK Israel has the largest number of companies traded on the NASDAQ after the USA and China, many of which are venture-backed Israeli companies headquartered in Israel but incorporated in the US (for tax and other reasons) Source: www.globes.co.il; www.nasdaq.com, January, 2012 15
    • Why Is Israel Different? 16
    • Healthy Ecosystem for Entrepreneurship & Innovation     Culture of Entrepreneurship Culture of Innovation Highly Educated Inflow of Talented Immigrants Talented Professionals Support Infrastructure Capital Availability  Experienced VC Community  Government Financial Support 17      Extensive Corporate and Public R&D Defense Technology Transfer Top Universities and Research Institutions Technology Incubators Business Friendly Corporate & Tax Laws
    • Healthy Ecosystem for Entrepreneurship & Innovation  Culture of Entrepreneurship  Culture of Innovation  Highly Educated  Inflow of Talented Immigrants Talented Professionals Support Infrastructure Capital Availability  Experienced VC Community  Government Financial Support 18      Extensive Corporate and Public R&D Defense Technology Transfer Top Universities and Research Institutions Technology Incubators Business Friendly Corporate & Tax Laws
    • Culture of Entrepreneurship Entrepreneurial Culture: Israelis tend to prefer creating their own companies instead of working as an employee; They prefer to be their own boss… Values that support entrepreneurial culture:  Individualism & Differentiation vs. Collectivism & Homogeny: Israelis tend to prefer to emphasize their own individual differences from the other rather than being “part of the group”  Error is forgivable: In school, Israelis are educated not to be ashamed to make mistakes, so long as one learns from his mistakes and fixes them  Failure in business is recoverable: Entrepreneur who failed once can recover from failure and start new company (e.g., he may get investment from investors who believe that he learnt the lesson from his failure and will be successful in his new venture)  Risk taking is encouraged: Entrepreneurs are willing to take risk because failure will not diminish their chances to do business in the future 19
    • Healthy Ecosystem for Entrepreneurship & Innovation  Culture of Entrepreneurship  Culture of Innovation  Highly Educated  Inflow of Talented Immigrants Talented Professionals Support Infrastructure Capital Availability  Experienced VC Community  Government Financial Support 20      Extensive Corporate and Public R&D Defense Technology Transfer Top Universities and Research Institutions Technology Incubators Business Friendly Corporate & Tax Laws
    • Culture of Innovation Innovation Culture: At school, in university, in military service, in business, etc. Israeli society encourages individuals to create new ideas and materialize them Values that support the innovation culture:  Informality vs. Hierarchy: Israelis tend to behave and speak in an informal manner with seniors the same way they do with their peers and with their subordinates; criticizing the boss is OK…  Directness vs. Harmony: Israelis speak most of the time directly, sometimes too direct … Israelis believe that open discussion brings better results than a discussion without disclosing the real opinions  Flexibility vs. “Working According to the Rules”: Israelis tend to “bypass” the rules when they think that the rules are wrong and that working against the rules will bring better results. Israeli believes that rules are negotiable… 21
    • Healthy Ecosystem for Entrepreneurship & Innovation  Culture of Entrepreneurship  Culture of Innovation  Highly Educated  Inflow of Talented Immigrants Talented Professionals Support Infrastructure Capital Availability  Experienced VC Community  Government Financial Support 22      Extensive Corporate and Public R&D Defense Technology Transfer Top Universities and Research Institutions Technology Incubators Business Friendly Corporate & Tax Laws
    • Engineers per 10,000 Workers #1 in Engineers and Scientists per Capita 140 120 100 80 60 40 20 0 Israel USA Japan Germany Canada UK Source: Ministry of Industry & Trade Israel has the highest number of engineers per capita in the world 23
    • Healthy Ecosystem for Entrepreneurship & Innovation     Culture of Entrepreneurship Culture of Innovation Highly Educated Inflow of Talented Immigrants Talented Professionals Support Infrastructure Capital Availability  Experienced VC Community  Government Financial Support 24  Extensive Corporate and Public R&D     Defense Technology Transfer Top Universities and Research Institutions Technology Incubators Business Friendly Corporate & Tax Laws
    • #1 in Technology R&D Expenditure as Percentage of GDP R&D as % of GDP 5% 4% 3% 2% 1% 0% Israel Japan Germany USA France UK Source: Ministry of Industry & Trade Israel’s ratio of national expenditure on R&D to Gross National Product is the highest in the world 25
    • Healthy Ecosystem for Entrepreneurship & Innovation     Culture of Entrepreneurship Culture of Innovation Highly Educated Inflow of Talented Immigrants Talented Professionals Support Infrastructure Capital Availability  Experienced VC Community  Government Financial Support 26  Extensive Corporate and Public R&D     Defense Technology Transfer Top Universities and Research Institutions Technology Incubators Business Friendly Corporate & Tax Laws
    • Defense Needs As a Driver of Israeli High Tech Military R&D Technology Engineers Defense Technology 27 Civilian Entrepreneur Commercial Products
    • Vertex Israel: Top Ranking Israeli Investment Firm  Investing in Israeli hi-tech companies  Established in 1997 within the Yozma Program - investment from the Israeli government and Asian investors Longest history with Asian investors Largest number of investors & capital from Asia  Funds of US$600M under management; over 100 portfolio companies  Investors from US, Europe, Israel Vertex Asian investors enjoy access to Israeli cutting-edge technology  Main investor base is from Asia: ~30 investors from Japan, China, Singapore, Hong Kong, Taiwan Unique focus on bridging Israeli technology companies with Asian strategic network 28
    • Asia Access Contributes to Vertex Funds’ Financial Returns  Vertex is the “fund-of-choice” for Israeli companies targeting Asian markets  Vertex’s Asian network assists portfolio companies in Asian markets increase companies’ revenues Quality Israeli Portfolio profitable exits Added Value in Asia • Technological innovation • Entrepreneurship l • Manufacturing • International experience 29 • Markets • Capital Profitable Exits
    • Successful Exits June 2013 Shares sold to: Acquired by: Acquired by: Acquired by: $141,000,000 $98,000,000 2005 2005 (London Stock Exchange: BET) $2,000,000,000 (NASDAQ: SHOP) $634,000,000 2010 Acquired by: Acquired by: (London Stock Exchange: WLF) $225,000,000 $150,000,000 2004 30 $550,000,000 2003 February 2003 2004
    • Vertex Most Recent Exit  Community based real time traffic and navigation mobile application  2008 initial investment  12% ownership at exit  Invested a total of $6M and realized $127M  Return multiple of 21x and IRR of 120%  This transaction is the world’s largest mobile application acquisition ever  4th largest acquisition of Google to date (among June 2013 31 >240 acquisitions)
    • 1 Ha’Shikma Street P.O. Box 89 Savyon 56530 Israel Main: +972 3 737 8888 Fax: +972 3 737 8889 david@VertexVC.com www.VertexVC.com Köszönöm David Heller: david@VertexVC.com 32