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Analysis of how Israel created a technology ecosystem that is only second to Silicon Valley

Analysis of how Israel created a technology ecosystem that is only second to Silicon Valley

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    Israel tech cluster at cjl london Israel tech cluster at cjl london Presentation Transcript

    • Lecture Centre for Jewish Life «Investing in Israeli High-Tech» by Edouard Cukierman July 9th 2012Main Office - 3 Daniel Frish St. Tel Aviv 64731, Israel Tel: +972-3 695-0666 Fax: +972-3 695-0222
    • Israel Cluster’s Ingredients Catalyst Presentation7. Transparency of governance 1. Education and universities 2. Government support6. Entrepreneurial spirit Israel Cluster 3. Technology sector expanding internationally5. VC and access to globalfinancial markets 4. Defense industry 2
    • 1. Education and Universities 1. 1 Israel – Brainpower that can be leveraged Catalyst Presentation Number of Engineers Per 10,000 Employees 140 85 65 53 38 35 35 34 28 25 22 19 Source: Technion Israel Institute of Technology 2010 / SolveITLabs. Analysis, April 2010 Investment in Education % GDP 9.2% 7.0% 6.4% 6.4% 6.2% 5.9% 5.7% 5.5% 5.3% 5.0% 4.7% 4.0% Source: Ministry of Finance 2010 / Worldbank 2010draft. confidential 3
    • 1.2 Israeli Innovation Model: “The Tech Transfer” from University to Industry Catalyst PresentationCreation of institutionalized basis for scientific research Technology transfer: the secret engine Dr. Albert Einstein, on his visit to the Technion, 1923• World pioneer in tech transfer since 1959• 2 of the world’s top 15 tech transfer 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 draft. confidential 4
    • 2. Government Support In Israel Catalyst Presentation Technology Education  Constantly rising government spending on hi-tech education Co-investment Military Budget with VC industry  Talent Incubator Yozma VC Fund and Health Fund Immigration Chief Scientist Support  Jewish Agency  Government R&D grants since 1970’s  Gvahim and still growing  MASA  Incubator Program for start-ups  Nefesh B’Nefesh draft. confidential 5
    • 3. Technology sector expanding internationally 3.1 Israel Economic Status 2005-11 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 vs. Developed Markets, 2005-11 5.7% 6.0% 5.4% 4.9% 4.7% 4.7% 5.0% 4.0% 4.0% 3.2% 3.0% 2.9% 2.7% 2.7% 3.0% 2.3% 2.0% 0.8% 1.0% 0.0% 2005 2006 2007 2008 2009 2010 2011 -1.0% -2.0% -3.0% Israel OECD -4.0% -3.5% Source : OECD draft. confidential 6
    • 3.2 The High-Tech Sector Is The Growth Engine Of The Israeli Economy Catalyst Presentation Industrial Export by Technology Intensity (1990 vs. 2011) 1990 Industrial exports 2011 Industrial exports $7.7B $40.7B 1990 2011 Source : The Central Bureau of Statistics, Israel 2011 draft. confidential 7
    • 4. Israel Defense Industry Catalyst Presentation“Many Israeli start-ups should pay royaltiesto the army. The military service deservessome of the credit. Israels army does not justtrain soldiers, it nurtures entrepreneurs”*.* Quote of Edouard Cukierman in the interview to the “Economist”. draft. confidential 8
    • 5. VC And Access To Global Financial Markets 5.1 VC Investments Catalyst Presentation VC Investments per Capita in 2011, US $ 180 164 160 140 120 92 100 80 55 60 40 18 20 4.5 7 8 0 China Europe India Russia Brazil USA IsraelSources: IVC Research Center, IVC 2012 Year book ;Pwc, MoneyTree Report 2012; RVCA Yearbook 2012;INSEAD PE Report 2012 draft. confidential 9
    • 5.2 A decade of Israeli European / US Public Offerings Catalyst Presentation  Portfolio companies of Catalyst, which went public onIsraeli IPO’s NASDAQ: PowerDsine (PDSN), Scopus (SCOP), Omrix (OMRI), Europe USA In: Commtouch (CTCH), BOS (BOSC), Cyalume (CYLU), Dot Hill Number of Capital Raised Number of Capital (Hill), Orckit (ORCT). Some portfolio companies like MTI went Year public on AIM. Offerings ($M) Offerings Raised ($M)  Cukierman & Co. (CIH) is the leading Investment House for Up to1998 14 200 74 3,269 IPOs of Israeli firms in Europe. Transactions of CIH include: Summit, Visonic and Metaltech in London, Astra and VCON in 1999 12 446 20 3,375 Paris, Wizcom, OTI and Electronics Line in Germany. 2000 7 353 33 4,649  As of today, Israeli companies raised over $27B through foreign public equity offerings, in addition to over $46B in secondary sale 2001-2003 1 118 12 2,806 on the market by shareholders. 2004 5 150 12 1,117  With 176 companies going public on American Stock Exchanges, Israel was ranked #3, after China and Canada, in terms of number 2005 20 1,106 4 355 of foreign companies (excl. North American companies) listed on 2006 16 2,078 8 3,460 NASDAQ.  With 84 Israeli companies going public on European Stock 2007 6 2,117 11 1,210 Exchanges, Israel was ranked #2 in terms of number of foreign 2008 2 222 _ _ companies traded on European Exchanges.  CIH is the sole NYSE Euronext’s Israeli listing sponsor. 2009-2011 1 3 4 192 Total 84 6,793 178 20,433 Source : Israel VC Indicator Survey: 2008, 2009 & 2011; NASDAQ, NYSE, EURONEXT (2011) draft. confidential 10
    • 5.3 Israel Hotbed for Multinational Enterprises Catalyst Presentation 500 4,000 10000 1,500 1,000 400 1000 450 1,000 1,500 2001,500 3,000 Estimated Number of employees in Israel 11
    • 5.4 Israel M&A Selected Transactions & Our Direct Involvement Catalyst Presentation Israeli Companies acquired by International Players International Players acquired by Israeli Companies Seller Buyer $ Millions Year Seller Buyer $ Millions Year Mirabilis AOL 425 1999 European Mineral DSPC Intel 1,600 1999 Eden Springs 110 2002 Water Cox Galileo Marvell 2,700 2000 Brandt Elco Holdings 225 2002Chromatics Networks Lucent Tech. 4,500 2000 Top Tier Software SAP 400 2001 Zone Labs Checkpoint 205 2003 Indigo Hewlett Packard 880 2001 Allibert Keter 20 2003 Precise Software Veritas Software 537 2003 Ofer Brothers Orco Group 100 2005 Eden Springs Danone 699 2003 Ivax Teva 7,400 2005 Orex Kodak 63 2004 Rosebud &CIH Hardstone 173 2006 P-Cube Cisco Systems 200 2004 XenSource Citrix 500 2007Europe Israel (Zisser) Segece Klepierre (BNP) 925 2004/5 Actimize Ltd. Nice Systems 280 2007 Elco Brandt Fagor 200 2005 Bentley Teva 360 2008 Scitex Vision Ltd HP 230 2005 Ratiopharm Teva 5,000 2010 Shopping.com eBay 650 2005 Theramex Teva 372 2010 M Systems SanDisk 1,550 2006 Microtune Zoran 166 2010 Iscar Ltd. Berkshire Hathaway 4,000 2006 Mercury Corporate HP 4,500 2006 European Israeli TransactionsTaro Pharmaceuticals Sun Pharmaceuticals 454 2007 Omrix Johnson&Johnson 438 2008 Transactions Involving Fund Principals Fraudscience PayPal Inc. 169 2008 Solel Solar System Siemens 418 2009 From 1999 to 2012, over 684 Israeli companies Merial Sanofi-Aventis 4,000 2009 were involved in M&A transactions with foreignShamir Optical (50%) Essilor 130 2010 enterprises for a total worth of more than $46b. Provigent Broadcom 350 2011 Oridion Systems Covidien 346 2012 Objet Stratasys Inc. 634 2012 Source: IVC Research Center, IVC 2012Year book Clal Industries Access Industries 350 2012 12 draft. confidential
    • 6. 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). According to WEF Global Competitiveness Report 2008-2009, Israel ranked 3rd for Registered Patents Per Capita draft. confidential 13
    • Cukierman & Co. Range of Activities Catalyst Presentation Corporate Finance Private Equity Funds Family Office• Private Placement • Venture Capital• Initial Public Offerings • Private Equity• Mergers & Acquisitions • Secondary Advisory• Strategic & Financial Consulting draft. confidential 14
    • Track Record Transactions Advised by Cukierman Investment House Catalyst PresentationSince its establishment in 1993, Cukierman & Co. Investment House Ltd. has been engaged in transactions valued over €3b through Private Placement, IPO and M&A. draft. confidential 15
    • The Opportunity To Invest In Israeli Companies Traded In Europe Catalyst Presentation 205 112 * Cukierman 15 Index is an average of the 15 largest Israeli companies traded in Europe. This index, published initially by Globes, reflects the performance of the major Israeli companies in Europe. Published by: From 2002 to 2005, Israeli companies were underperforming due mainly to risk perception of the Israeli Market. Since the third quarter of 2005, Israeli companies have been outperforming the index of European companies traded in the same European Exchanges. 16
    • Catalyst Partners Experience and Track record Catalyst Presentation 17
    • Where European and Israeli Business meet! 10th Edition: October 29th , 2012 Catalyst PresentationOrganized by Catalyst Fund and Cukierman Investment House Ltd., Go4Europe isone of the most prestigious conferences in Israel. Go4Europe addresses the currentissues of raising funds and establishing strategic alliances across borders.In the previous years, our conference has welcomed several Heads of State, includingMr. Ariel Sharon, Mr. Benjamin Netanyahu, Mr. Ehud Olmert and President NicolasSarkozy.Go4Europe’s 9th Edition was held on October 31st 2011 and hosted 1,288 participants.Among them 400 came especially from Europe, including key EuropeanParliamentarians and investors from European institutions and Family offices.Among the participating companies and sponsors:RUSNANO, EBRD, RVC, DLA PIPER, APM, NYSE EURONEXT, VEOLIA, TEVA, M&AEUROPE,BANKHAPOALIM,ASSYA,OTTO,LCF,ROTHSCHILD,FRANCETELECOM,PHILIPS,EVOLVA,NOVARTIS,SANOFIAVENTIS,ALCATEL,NOKIA,PHILIPS,DEUTSCHTELECOM,VINCI,…. To register or view the agenda: www.go4eu.com 18
    • С уважением,Екатерина Thank you! Contact: edouardc@catalyst-fund.com Tel: +972 3 6950 666