Catalyst Presentation«Israel’s Cutting Edge»     by Yair Shamir                           1
Crisis = Opportunity                     Catalyst Presentation Global Financial Crisis  eradicated returns on  traditiona...
How do we profit from this?                     Catalyst Presentation• After decades of safe returns and Western bullish m...
Characteristics of Israeli High Tech                   Catalyst PresentationWithin 60 years, Israel has developed from a m...
Israel 2012 Catalyst Presentation• Population: 7.8 M• Households: 2.16 M• Urban Population: 94%• Area - grand total 22,145...
Israel’s GDP Growth vs                               Developed World                                        Catalyst Prese...
Israel- Goods Export 2011                 Catalyst Presentation European Union                               AsiaRest of E...
Israel- Goods Import 2011                       Catalyst Presentation                 European Union                      ...
Israel Cluster: Key Success Factors                          Catalyst Presentation     6. Transparency of                 ...
1. Education and Universities              1.1. Israel: Brainpower that can be leveraged                               Cat...
1.2. Israeli Innovation Model:     “The Tech Transfer” from University to Industry                                 Catalys...
2. Government Support     Catalyst Presentation                             12
3. High Tech Sector –             Growth Engine of Israeli Economy                                 Catalyst Presentation  ...
3.1. Israel’s Foreign Trade (Export + Import)         with Main Trading Blocks, 1988 / 2010                              C...
3.2. Diversion of Trade to Asian                       Countries                         Catalyst Presentation           D...
4. Venture Capital and Access to                           International Financial Markets                                ...
4.1 Foreign Direct Investments in Israel                              Catalyst Presentation            Foreign Direct Inve...
4.2. 7 Free Trade Agreements with 39 countries       Allowing products to enter without customs                           ...
4.3 Israel Credit Rating                               Catalyst Presentation   September 2011        S&P raised Israel’s ...
4.3.1 Upgrading International Status                              Catalyst Presentation   Late 2007 - Early 2008:        ...
4.4 Major Multinational Companies with    R&D/Innovation Centers in Israel          Catalyst Presentation                 ...
5. Entrepreneurial Spirit                         Catalyst Presentation Jewish Education Studies: Questioning and Challen...
5.1 Highlights in Israeli Innovation         Catalyst Presentation  •Pentium – (Intel)  •Centrino – (Intel)  •Telecom Bill...
5.1.2 Highlights in Israeli Innovation          Catalyst Presentation•Two – bit per cell Flash Memory (Saifun)•Disk on Key...
Some of Israel’s Visible Companies        Catalyst Presentation                                     25
Summary                       Catalyst Presentation Israel is a center of Innovation and technological excellence. Israe...
Just some references from abroad….                                  Catalyst Presentation"Some       Americans     came   ...
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  1. 1. Catalyst Presentation«Israel’s Cutting Edge» by Yair Shamir 1
  2. 2. Crisis = Opportunity Catalyst Presentation Global Financial Crisis eradicated returns on traditional investments Investment Depression coincided with greatest period in history for technology innovation 2
  3. 3. How do we profit from this? Catalyst Presentation• After decades of safe returns and Western bullish market, capital growth shifted to the emerging markets: China, Brazil, India and others• History teaches us that innovation wins in the long run, inspite of market pressures  Investing in innovation is safest bet• True innovation rare to find in traditional markets• Innovation requires deep breading ground and nurturing process 3
  4. 4. Characteristics of Israeli High Tech Catalyst PresentationWithin 60 years, Israel has developed from a mainly agriculture economy to a global technology leader and pioneerStrengths: • Entrepreneurial Spirit • Highly Qualified Scientists & Engineers • Proven Track RecordEngines: • Government Support (R&D, Investment) • Venture CapitalResults: • Strong R&D • New Technologies and Applications • Numerous New Start-ups • International Involvement (Acquisitions & Subsidiaries) 4
  5. 5. Israel 2012 Catalyst Presentation• Population: 7.8 M• Households: 2.16 M• Urban Population: 94%• Area - grand total 22,145 sq. km• GDP: US $ ~ 218 billion• GDP Per Capita: US $ ~ 28.500 5
  6. 6. Israel’s GDP Growth vs Developed World Catalyst Presentation Israel’s economy keeps growing and continues to be a “safe haven” among the OECD markets => 45% of Israel’s growth comes from the high tech Industry GDP growth – Israel and China vs. Developed Markets, 2005-12 Source : OECD 2012 6
  7. 7. Israel- Goods Export 2011 Catalyst Presentation European Union AsiaRest of Europe North America ROW (by Continent, excl. diamonds) Total of $46.6 Billions $ 7
  8. 8. Israel- Goods Import 2011 Catalyst Presentation European Union AsiaRest of Europe North America ROW (by Continent, excl. diamonds) Total of $62.8 Billions $ 8
  9. 9. Israel Cluster: Key Success Factors Catalyst Presentation 6. Transparency of 1. Education and Governance Universities5. Entrepreneurial Israel Spirit Cluster 2. Government Support 4. VC and Access to Global 3. Internationally Financial Markets Expanding Technology Sector 9
  10. 10. 1. Education and Universities 1.1. Israel: Brainpower that can be leveraged Catalyst Presentation Israel has the largest number of university graduates per capita 140 Number of Engineers Per 10,000 Employees 85 Highest expenditure on 65 53 education in the world 38 35 35 34 28 25 22 19 4 Israelis won Nobel Prize within 5 years in Chemistry and Economics Source: Technion Israel Institute of Technology 2010 / SolveITLabs. Analysis, April 2010 Israel has nearly twice the number of engineers per capita than the US and Japan 9.2% Investment in Education % GDP 7.0% 6.4% 6.4% 6.2% 5.9% 5.7% 5.5% 5.3% 5.0% 4.7% Israel is blessed with an 4.0% exceptional entrepreneurial workforce, ranked 3rd in the world (IMD index) Source: Ministry of Finance 2010 / Worldbank 2010 10
  11. 11. 1.2. Israeli Innovation Model: “The Tech Transfer” from University to Industry Catalyst Presentation Creation of institutionalized basis for scientific research Technology transfer: the secret engine• World pioneer in tech transfer since 1959• 2 of the world’s top 15 tech transfer Dr. Albert Einstein, on his visit to the Technion, 1923 companies (Yeda, Weizmann Institute of Science (1959) and Yissum, Hebrew University of Jerusalem (1964)• > $8 billion in licensed product sales• $ hundreds of millions in tech transfer revenues• Dozens of spinoffsSource: ITTN 11 Draft – Confidential 11
  12. 12. 2. Government Support Catalyst Presentation 12
  13. 13. 3. High Tech Sector – Growth Engine of Israeli Economy Catalyst Presentation Industrial Export by Technology Intensity (1990 vs. 2011)• The technology industry * represents the largest 1990 Industrial 2011 Industrial part of Israel’s Exports exports $7.7B exports $45.8B (72%)• Israel’s High Tech export grew by 670% over the last 19 years• Israel High Tech sector is the first to recover from the economic downturn of the last 3 years• Israel’s high tech sector is a global hub of innovation and is therefore orientated internationally to compete in global markets Source : The Central Bureau of Statistics, Israel 2011* High Tech + Medium High Tech 13
  14. 14. 3.1. Israel’s Foreign Trade (Export + Import) with Main Trading Blocks, 1988 / 2010 Catalyst Presentation Rest of the Rest of the World World 12.6% 24% Eu 15 28% ASIA 11.0% Eu 15 45.2% ASIANorth America 24% 23.3% North America 24% 1988 2010 14
  15. 15. 3.2. Diversion of Trade to Asian Countries Catalyst Presentation Distribution of Israels export of goods by trading blocks, excluding diamonds 23% 34% 32% 14% 28% 39% 24% 24% 23% 68% 19% 15% Other Asia US EU 2007 201115 15
  16. 16. 4. Venture Capital and Access to International Financial Markets Catalyst Presentation Early stage investment by VentureCapital in Israel equals 50% of earlystage investments all over Europe. Israel has a prospering start-up &VC industry, 2nd in the world.Israel’s high R&D (4.27% of GDP,top in the world) and government R&D Expenditure as Percentage of GDP, 2011support of quickly expanding high- 4.8tech sector make it an international 5hub for technology innovations 4 2.7 3 1.8 1.7 2 1.4 1.1 0.8 1 0 Israel US European World China Russia India UnionSources: Dow Jones, VentureSource; Thomson Reuters Israel: the ideal technology partner for ChinaU.S Central Intelligence Agency, World Fact book, 2012 16
  17. 17. 4.1 Foreign Direct Investments in Israel Catalyst Presentation Foreign Direct Investments in Israel Dollar Billions 15.3 11.4 10.9 8.8 97.0 5.5 4.8 5 3.3 2.9 1.8 1.6 2.22000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Jan.-March 12 17
  18. 18. 4.2. 7 Free Trade Agreements with 39 countries Allowing products to enter without customs Catalyst Presentation E.F.T.A Switzerland Norway, Iceland, Liechtenstein Canada E.U. Ukraine (27 Countries) U.S.A Turkey Mexico S. Korea ISRAEL China Panama Colombia India MERCOSUR Brazil, Argentina, Uruguay, Paraguay Negotiated / Considered 18
  19. 19. 4.3 Israel Credit Rating Catalyst Presentation September 2011 S&P raised Israel’s credit ratings to A+ from A. S&P mentioned that their ratings on Israel are supported by their view of its "prosperous and resilient economy, strong institutions, ongoing fiscal consolidation, and robust external performance." December 2011 Moody’s affirms Israel’s A1 rating. 19
  20. 20. 4.3.1 Upgrading International Status Catalyst Presentation Late 2007 - Early 2008: Raising Israel credit rating by Standard & Poors, Moody‘s -‫ו‬Fitch. May 2010: Israels admission to the OECD. May 2010: Updating Israel classification in MSCI index from a developing to a developed country 20
  21. 21. 4.4 Major Multinational Companies with R&D/Innovation Centers in Israel Catalyst Presentation 21
  22. 22. 5. Entrepreneurial Spirit Catalyst Presentation Jewish Education Studies: Questioning and Challenging ”The Israeli Chutzpah”: The absence of hierarchical barriers promotes innovation at all levels of a firm Reaction to isolation and lack of resources Democracy - Culture of transparency Melting Pot: Israeli immigrants are coming from more than 90 countries Problem-solving approach ”A network of startups in a Start-Up Nation”: Israel has the highest amount of Start -up per capita in the world R&D centers with world-wide recognition Israel is blessed with an exceptional entrepreneurial workforce, ranked 3rd in the world (IMD index) WEF Global Competitiveness Report 2008-2009, Israel ranked 3rd for Registered Patents Per Capita Ranked in 1st place for business entrepreneurship by IMD (2009) 22
  23. 23. 5.1 Highlights in Israeli Innovation Catalyst Presentation •Pentium – (Intel) •Centrino – (Intel) •Telecom Billing (Amdocs) •Call Center Logging (Nice / Verint). •Voice Mail (Comverse) •Instant Messaging (ICQ Ubique) •PC Board Inspection (Orbotech) •VoIP (Vocaltec) 23
  24. 24. 5.1.2 Highlights in Israeli Innovation Catalyst Presentation•Two – bit per cell Flash Memory (Saifun)•Disk on Key (M-systems)•Firewall – (Checkpoint)•Sw Performance (Mercury Interactive)•Anti Virus (Alladin, Commtouch)•Virtual Colonoscopy (Given Imaging) 24
  25. 25. Some of Israel’s Visible Companies Catalyst Presentation 25
  26. 26. Summary Catalyst Presentation Israel is a center of Innovation and technological excellence. Israel is a leading Entrepreneurial society. Israel enjoys an excellent track record in Breakthrough discoveries and innovations. Future results are expected to improve due to the maturity of the market. Foreign companies can cost effectively conduct cutting edge research in Israel. Israel’s government and policies strongly support investment and economic growth. 26
  27. 27. Just some references from abroad…. Catalyst Presentation"Some Americans came “Considering the density of “Israel is in 3rd place in terms oflooking for oil, so they didnt Israeli start-ups and local IP and is a very good place forstop in Israel. We came opening businesses. The level successes, Israel is like a bitlooking for brains, so we did of education in Israel has of Silicon Valley”. helped us expand. Israel’sstop in Israel." Bill Gates ability to supply very goodWarren Buffet scientists has helped us, and the government’s positive attitude has helped us attract investments.” CRAIG BART: former Intel CEO 27

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