Venture capital in Israel
Encyclopedia
Venture capital in Israel has rapidly developed from the early 1990s, and has about 70 active venture capital
funds, of which 14 international VCs with Israeli offices, and additional 220 international funds who actively invest in Israel. Israel's thriving venture capital and Business incubator
industry played an important role in the booming high-tech sector, which gave it the nickname "Silicon Wadi
", considered second in importance only to its Californian counterpart
.
In 2008, venture capital investment in Israel, rose 19 percent to $1.9 billion.
industry in Israel
can be traced to a government initiative in 1993 named the Yozma program (“Initiative” in Hebrew); which offered attractive tax incentives to any foreign venture-capital investments in Israel and offered to double any investment with funds from the government. As a result Between 1991 and 2000, Israel’s annual venture-capital outlays, nearly all private, rose nearly 60-fold, from $58 million to $3.3 billion; companies launched by Israeli venture funds rose from 100 to 800; and Israel’s information-technology revenues rose from $1.6 billion to $12.5 billion. By 1999, Israel ranked second only to the United States in invested private-equity capital as a share of GDP. And it led the world in the share of its growth attributable to high-tech ventures: 70 percent. According to the OECD, Israel is also ranked 1st in the world in expenditure on Research and Development
(R&D) as a percentage of GDP.
Though Israel's thriving venture capital industry played an important role in the booming high-tech sector, the financial crisis of 2007-2010 also affected the availability of venture capital locally. In 2009, there were 63 mergers and acquisitions
in the Israeli market worth a total of $2.54 billion; 7% below 2008 levels ($2.74 billion), when 82 Israeli companies were merged or acquired, and 33% lower than 2007 proceeds ($3.79 billion) when 87 Israeli companies were merged or acquired.
, Accel Partners
and Greylock Partners, that do not have branches in Israel, but actively invest in Israel through an in-house specialist.
In 2009, the Life Sciences
Sector led the market with $272 million or 24% of total capital raised, followed by the Software Sector with $258 million or 23%, the Communications sector with $219 million or 20%, and the Internet
sector with 13% of capital raised in 2009.
roughly 78%-88% of investments that reached Israeli high-tech companies in 2001-2008 were done either by Israeli VC firms (the 38%-49% above) or by foreign or other entities in syndication with Israeli VC firms: 37%-50%.
, started six "incubators" designed to foster seed and early stage technology development through entrepreneurship
. Today there are 24 such incubators located throughout Israel, and 65 percent of the projects are science-related research and development.
In 2007, incubator companies raised $435 million in private funds, up 74 percent from 2006. Currently, the OCS allocates approximately $1 billion per year to incubators and other programs that encourage technology development
Venture capital
Venture capital is financial capital provided to early-stage, high-potential, high risk, growth startup companies. The venture capital fund makes money by owning equity in the companies it invests in, which usually have a novel technology or business model in high technology industries, such as...
funds, of which 14 international VCs with Israeli offices, and additional 220 international funds who actively invest in Israel. Israel's thriving venture capital and Business incubator
Business incubator
Business incubators are programs designed to accelerate the successful development of entrepreneurial companies through an array of business support resources and services, developed and orchestrated by incubator management and offered both in the incubator and through its network of contacts...
industry played an important role in the booming high-tech sector, which gave it the nickname "Silicon Wadi
Silicon Wadi
Silicon Wadi is an area with a high concentration of high-tech industries in the coastal plain in Israel, similar to Silicon Valley in California, in the United States. Silicon Wadi is considered second in importance only to its Californian counterpart...
", considered second in importance only to its Californian counterpart
Silicon Valley
Silicon Valley is a term which refers to the southern part of the San Francisco Bay Area in Northern California in the United States. The region is home to many of the world's largest technology corporations...
.
In 2008, venture capital investment in Israel, rose 19 percent to $1.9 billion.
History
The origins of the now thriving Venture CapitalVenture capital
Venture capital is financial capital provided to early-stage, high-potential, high risk, growth startup companies. The venture capital fund makes money by owning equity in the companies it invests in, which usually have a novel technology or business model in high technology industries, such as...
industry in Israel
Israel
The State of Israel is a parliamentary republic located in the Middle East, along the eastern shore of the Mediterranean Sea...
can be traced to a government initiative in 1993 named the Yozma program (“Initiative” in Hebrew); which offered attractive tax incentives to any foreign venture-capital investments in Israel and offered to double any investment with funds from the government. As a result Between 1991 and 2000, Israel’s annual venture-capital outlays, nearly all private, rose nearly 60-fold, from $58 million to $3.3 billion; companies launched by Israeli venture funds rose from 100 to 800; and Israel’s information-technology revenues rose from $1.6 billion to $12.5 billion. By 1999, Israel ranked second only to the United States in invested private-equity capital as a share of GDP. And it led the world in the share of its growth attributable to high-tech ventures: 70 percent. According to the OECD, Israel is also ranked 1st in the world in expenditure on Research and Development
Research and development
The phrase research and development , according to the Organization for Economic Co-operation and Development, refers to "creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and the use of this stock of...
(R&D) as a percentage of GDP.
Though Israel's thriving venture capital industry played an important role in the booming high-tech sector, the financial crisis of 2007-2010 also affected the availability of venture capital locally. In 2009, there were 63 mergers and acquisitions
Mergers and acquisitions
Mergers and acquisitions refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly in its sector or location of origin, or a new field or...
in the Israeli market worth a total of $2.54 billion; 7% below 2008 levels ($2.74 billion), when 82 Israeli companies were merged or acquired, and 33% lower than 2007 proceeds ($3.79 billion) when 87 Israeli companies were merged or acquired.
Characterization
Israel’s venture capital industry has about 70 active venture capital funds, of which 14 international VCs with Israeli offices. Additionally, there are some 220 international funds, including Polaris Venture PartnersPolaris Venture Partners
Polaris Venture Partners is a venture capital firm specializing in seed and early stage investments particularly in companies engaged in the information technology and life sciences sectors....
, Accel Partners
Accel Partners
Accel Partners is a global venture and growth equity firm funding companies from inception through the growth stage.The firm is based in Palo Alto, California with major offices in Bangalore, Beijing, London, and Shanghai....
and Greylock Partners, that do not have branches in Israel, but actively invest in Israel through an in-house specialist.
In 2009, the Life Sciences
Life sciences
The life sciences comprise the fields of science that involve the scientific study of living organisms, like plants, animals, and human beings. While biology remains the centerpiece of the life sciences, technological advances in molecular biology and biotechnology have led to a burgeoning of...
Sector led the market with $272 million or 24% of total capital raised, followed by the Software Sector with $258 million or 23%, the Communications sector with $219 million or 20%, and the Internet
Internet
The Internet is a global system of interconnected computer networks that use the standard Internet protocol suite to serve billions of users worldwide...
sector with 13% of capital raised in 2009.
roughly 78%-88% of investments that reached Israeli high-tech companies in 2001-2008 were done either by Israeli VC firms (the 38%-49% above) or by foreign or other entities in syndication with Israeli VC firms: 37%-50%.
Technological business Incubators
In the early 1990s, the Israel government created a technological business incubator program (Hebrew: חממה טכנולוגית) to leverage the strengths of approximately 750,000 scientists, engineers, and physicians who had just arrived from former USSR. Israel's Office of the Chief Scientist (OCS), a division of the Industry, Trade and Labour Minister of IsraelIndustry, Trade and Labour Minister of Israel
The Industry, Trade and Labour Minister of Israel is the political head of the Israeli Ministry of Industry, Trade and Labour and a position in the Israeli cabinet....
, started six "incubators" designed to foster seed and early stage technology development through entrepreneurship
Entrepreneurship
Entrepreneurship is the act of being an entrepreneur, which can be defined as "one who undertakes innovations, finance and business acumen in an effort to transform innovations into economic goods". This may result in new organizations or may be part of revitalizing mature organizations in response...
. Today there are 24 such incubators located throughout Israel, and 65 percent of the projects are science-related research and development.
In 2007, incubator companies raised $435 million in private funds, up 74 percent from 2006. Currently, the OCS allocates approximately $1 billion per year to incubators and other programs that encourage technology development
Dun and Bradstreet venture capital ranking
The 2009 Dun and Bradstreet venture capital ranking in Israel includes:| Name | Capital Managed $ million |
Notable Investments / Exits |
| Pitango | 1300 | AudioCodes AudioCodes AudioCodes Ltd. designs, develops, and sells products for voice, data, and video over IP networks. The company is an early pioneer of the VoIP industry having shipped VoIP solutions as early as 1995.-Company history:... , Boxee BOXEE Boxee is a cross-platform freeware HTPC software application with a 10-foot user interface and social networking features designed for the living-room TV... , Radcom Radcom RadCom is the monthly magazine published by the Radio Society of Great Britain and is provided free to all corporate members of the society. Typically 100 pages, it includes a mixture of news, theory, construction and technical articles of interest to the amateur radio community... , Radware Radware Radware , is a provider of integrated Application delivery, Network Security and Load balancing solutions based in Tel Aviv, Israel. Radware, which is a member of the Rad Group of companies, is a public company and its shares are traded on NASDAQ.- History :... , Retalix, VocalTec VocalTec VocalTec Communications Inc. , is an Israeli telecom equipment provider. The company was founded in 1989 by Alon Cohen and Lior Haramaty, who invented and patented the first Voice over IP audio transceiver... |
| Star Ventures | 1000 | Alvarion Alvarion Alvarion Ltd. , is a 4G communications company. The company manufactures and exports a range of network solutions, including WiMAX, IEEE, PtMP, TD-LTE and WiFi to service providers and enterprises covering a variety of industries such as mobile broadband, residential and business broadband,... , BigBand Networks BigBand Networks BigBand Networks is a multinational corporation headquartered in Redwood City, California, United States. BigBand manufactures and sells digital video and data processing platforms and solutions in areas ranging from digital video to CMTS.-Locations:BigBand has 2 major development centers... , Ceragon Networks Ceragon Ceragon Networks Ltd. provides high-capacity microwave Ethernet and TDM wireless backhaul solutions to wireless service providers as well as private businesses... , Radcom Radcom RadCom is the monthly magazine published by the Radio Society of Great Britain and is provided free to all corporate members of the society. Typically 100 pages, it includes a mixture of news, theory, construction and technical articles of interest to the amateur radio community... , Vizrt Vizrt Vizrt, short for VisualiZation Real Time, is a Norwegian company that creates content production tools for the digital media industry. Its products includes applications for the creation of real-time 3D graphics and maps including stereoscopic playout, integrated video workflow solutions and... , Ciena |
| Jerusalem Venture Partners Jerusalem Venture Partners Jerusalem Venture Partners is an Israeli-based venture capital firm, with offices in the JVP Media Quarter in Jerusalem and in New York City.-History:... (JVP) |
850 | Allot, Chromatis, Fundtech, Cogent Cogent Communications Cogent Communications is a multinational internet service provider whose network spans more than 53,300 intercity fiber route miles and 15,800 metro fiber miles. Cogent provides service in over 165 markets across 31 countries in North America and Europe... , Jacada Jacada Jacada is a software and services company which provides unified desktop and process optimization software solutions for the customer service and support market... , Precise Precise Software Precise Software Solutions is an Israeli-American company that develops Application performance management software products.-Early history:... , XMPie Xerox Xerox Corporation is an American multinational document management corporation that produced and sells a range of color and black-and-white printers, multifunction systems, photo copiers, digital production printing presses, and related consulting services and supplies... , Sheer Networks Sheer Networks Sheer Networks is a networking company founded in 1999. It was headquartered in San José, California, USA. Sheer's DNA solution for Network Management was marketed globally through direct sales, as well as through leading SI and VARs around the world... , QlikTech Qliktech QlikTech is a business intelligence software company based in Radnor, Pennsylvania. QlikTech is the provider of QlikView, a business intelligence solution that delivers enterprise-class analytics and search. Its in-memory associative search technology makes calculations in real-time, enabling... , Cyber-Ark Cyber-Ark Cyber-Ark Software, Inc. is an Israeli-American information security company that develops and markets digital vaults, based on their vaulting technology for securing and managing privileged passwords and Privileged identities , and sensitive information within and across enterprise networks... , Qlipso Qlipso Qlipso is an Israeli-American technology company which builds and operates multi-user content-sharing platforms for Flash-based media. The company’s social-viewing platform allows people to extend and enhance their real-life social lives online by providing users the ability to view and share... , Altair Altair Semiconductor Altair Semiconductor is a developer of ultra-low power, small footprint and high performance 4G semiconductors. The company offers solutions for 3GPP Long Term Evolution , and its product portfolio includes baseband processors, RF transceivers and a range of reference hardware products... |
| Evergreen | 700 | Aladdin Knowledge Systems Aladdin Knowledge Systems Aladdin Knowledge Systems was a company that produced software for digital rights management and Internet security. The company was by SafeNet Inc, in 2009. Its corporate headquarters are located in Belcamp... , Creo Creo Creo, now part of Eastman Kodak Company, was a Burnaby, British Columbia Canada-based company involved in imaging and software technology for computer to plate and digital printing. The name derives from the Latin creo, "I create."... , Commtouch Commtouch Commtouch is an Internet security technology company founded in 1991. The company is headquartered in Netanya, Israel, with a subsidiary in Sunnyvale, California.... , Compugen Compugen Compugen refers to at least two different companies:*Compugen is a publicly traded Israeli company, listed on both TASE and Nasdaq.*Compugen is a Canadian IT company.... , M-Systems M-Systems M-Systems Ltd., was a Nasdaq-listed Israeli producer of Flash memory storage products founded in 1989 by Dov Moran and based in Kfar Sava, Israel. They were best known for developing and patenting the first flash drive, marketed in 1995 as DiskOnChip, and the first USB flash drive, marketed in... , RADVision |
| Gemini | 700 | Ceragon Networks Ceragon Ceragon Networks Ltd. provides high-capacity microwave Ethernet and TDM wireless backhaul solutions to wireless service providers as well as private businesses... , Mellanox, nLayers NLayers nLayers is a company specializing in network discovery products; software designed to map the entirety of hosts, services, etc. that run on a given organization's network... , Traiana, Riverhead Networks Riverhead Networks Riverhead Networks is a computer security company based in Netanya, Israel and Cupertino, California; The company was acquired by Cisco Systems on March 22, 2004-History:... |
| Vertex Venture Capital | 600 | Actimize Actimize Actimize, a wholly owned subsidiary of NICE Systems, provides financial crime prevention, compliance and risk management products and services to the financial services industry. Primarily headquartered in New York City, Actimize sells its software to all types of firms and regulators worldwide... , SHL Telemedicine Telemedicine Telemedicine is the use of telecommunication and information technologies in order to provide clinical health care at a distance. It helps eliminate distance barriers and can improve access to medical services that would often not be consistently available in distant rural communities... , Terayon Communication Terayon Terayon Communication Systems, Inc. was a company that vended equipment to broadband service providers for delivering broadband voice, video and data services to residential and business subscribers.-History:... , Voltaire InfiniBand, PowerDsine Microsemi Corporation Microsemi Corporation is a manufacturer of qualified high reliability defense, security, aerospace, enterprise, communications, alternative energy, and industrial products for power-related applications... |
| Carmel Ventures Carmel Ventures Carmel Ventures, established in 2000, is an Israeli venture capital fund with over $600 million under management. Carmel is focused on early stage companies in the fields of Software, Internet, Media, Communications, Semiconductors, and Consumer Electronics.... |
600 | NICE Systems NICE Systems NICE Systems Ltd. , together with its subsidiaries, provides solutions that enable enterprises and security organizations to extract insight from interactions, transactions and surveillance.... , Actimize Actimize Actimize, a wholly owned subsidiary of NICE Systems, provides financial crime prevention, compliance and risk management products and services to the financial services industry. Primarily headquartered in New York City, Actimize sells its software to all types of firms and regulators worldwide... , Followap Followap Followap in 1999, was a leading provider of Presence and Instant Messaging solutions to the telecommunications industry. By the time it was acquired in 2006, it had over 17 mobile operators many of them tier-ones, serving a combined user base of over 200 million subscribers... , ECI Telecom ECI Telecom ECI Telecom Ltd is a global telecom networking infrastructure provider headquartered in Petah Tikva, Israel. It provides communications platforms and solutions to carriers and service providers, cable/multiple system operators, wireless/cellular service providers, utilities and carrier of carriers,... , Tecnomatix Tecnomatix Tecnomatix Technologies, Ltd. is the leading provider of Manufacturing Process Management and Product lifecycle management software to the electronics, automotive, aerospace and heavy equipment industries, currently owned by Siemens AG... , Red Bend Software Red Bend Software Red Bend Software is a software company providing mobile software management technology to mobile phone manufacturers and operators. Red Bend’s software has been deployed by handset manufacturers including Kyocera, LG Electronics, Motorola, Sharp, Sony Ericsson and ZTE, as well as companies in the... , OpTier OpTier OpTier is an information technology management company that provides software solutions for business transaction management and application performance management .OpTier's Business Transaction Management suite includes:... , Mformation Mformation Mformation Technologies is a software company that provides a suite of mobile device management software products that helps mobile operators, service providers and enterprises remotely activate, configure, manage, control and secure the mobile devices of their consumer and business... , Kontera Kontera Kontera Technologies, Inc. is an advertising network, providing in-text advertising and information services.Kontera's technology is based on several proprietary semantic, statistical, linguistic, and yield-maximization algorithms that analyze online content, extract and rank topics and keywords,... |
| Genesis Partners Genesis Partners Genesis Partners is a venture capital firm that focuses on early stage investments in innovation driven companies serving markets that include enterprises, financial services, communications, consumer and consumers electronics, digital media, and energy... |
600 | ClickSoftware, FilesX, ProSight , Tescom, Allot, AudioCodes AudioCodes AudioCodes Ltd. designs, develops, and sells products for voice, data, and video over IP networks. The company is an early pioneer of the VoIP industry having shipped VoIP solutions as early as 1995.-Company history:... , Kidaro, Fundtech, Wintegra |
| Infinity Fund | 600 | Shopping.com Shopping.com Shopping.com is a price comparison service owned by eBay and operates websites in USA, United Kingdom, France, Germany and Australia. Shopping.com started out with the name DealTime.com which still operates as a related, but otherwise separate website.... , Scitex Vision, Saifun Semiconductor, Identify Software, TeleMessage TeleMessage TeleMessage is a provider of messaging solutions for carriers and enterprises that deliver Text, Voice, Video and Multimedia messages to and from any communication device.- Corporate history :... , Cyber-Ark Cyber-Ark Cyber-Ark Software, Inc. is an Israeli-American information security company that develops and markets digital vaults, based on their vaulting technology for securing and managing privileged passwords and Privileged identities , and sensitive information within and across enterprise networks... , Teledata Networks Teledata Networks Teledata Networks is a global provider of Access network solutions for Telecom Service Providers. The company creates solutions that enable service providers to migrate to Next Generation Networks , and also support a Triple Play service portfolio.... |
| Giza Venture Capital | 600 | Zoran Corporation, M-Systems M-Systems M-Systems Ltd., was a Nasdaq-listed Israeli producer of Flash memory storage products founded in 1989 by Dov Moran and based in Kfar Sava, Israel. They were best known for developing and patenting the first flash drive, marketed in 1995 as DiskOnChip, and the first USB flash drive, marketed in... , DSPC, Libit, Flash Networks, ActionBase |
See also
- Venture CapitalVenture capitalVenture capital is financial capital provided to early-stage, high-potential, high risk, growth startup companies. The venture capital fund makes money by owning equity in the companies it invests in, which usually have a novel technology or business model in high technology industries, such as...
- Economy of IsraelEconomy of IsraelThe economy of Israel is a technologically advanced market economy, including a rapidly-developing high-tech and service sectors. As of 2010, Israel has the 24th largest economy in the world, and ranks 15th among 169 world nations on the UN's Human Development Index, which places it in the category...
- Science and technology in IsraelScience and technology in IsraelScience and technology in Israel is one of the country's most developed sectors. The percentage of Israelis engaged in scientific and technological inquiry, and the amount spent on research and development in relation to gross domestic product , is amongst the highest in the world...
- Silicon WadiSilicon WadiSilicon Wadi is an area with a high concentration of high-tech industries in the coastal plain in Israel, similar to Silicon Valley in California, in the United States. Silicon Wadi is considered second in importance only to its Californian counterpart...
- List of Israeli companies quoted on the Nasdaq
- Start-up Nation: The Story of Israel's Economic Miracle
- Erel MargalitErel MargalitErel Margalit is an Israeli high-tech and social entrepreneur. He is the founder and managing partner of the Jerusalem-based venture capital firm Jerusalem Venture Partners...