Israel tech cluster at cjl london
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Lecture Centre for Jewish Life «Investing in Israeli High-Tech» by Edouard Cukierman July 9 th 2012 Main Office - 3 Daniel Frish St. Tel Aviv 64731, Israel Tel: +972-3 695-0666 Fax: +972-3 695-0222
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Analysis of how Israel created a technology ecosystem that is only second to Silicon Valley
Transcript of Israel tech cluster at cjl london
Lecture Centre for Jewish Life «Investing in Israeli High-Tech»
by Edouard Cukierman
July 9th 2012
Main Office - 3 Daniel Frish St. Tel Aviv 64731, Israel
Tel: +972-3 695-0666 Fax: +972-3 695-0222
Catalyst Presentation
2
Israel Cluster’s Ingredients
Israel
Cluster
2. Government support
3. Technology sector expanding internationally
1. Education and universities
6. Entrepreneurial spirit
4. Defense industry
7. Transparency of governance
5. VC and access to global financial markets
Catalyst Presentation
3
1. Education and Universities
1. 1 Israel – Brainpower that can be leveraged
Source: Ministry of Finance 2010 / Worldbank 2010
Source: Technion Israel Institute of Technology 2010 / SolveITLabs. Analysis, April 2010
draft. confidential
140
85 65
53 38 35 35 34 28 25 22 19
Number of Engineers Per 10,000 Employees
9.2%
7.0% 6.4% 6.4% 6.2% 5.9% 5.7% 5.5% 5.3% 5.0% 4.7%
4.0%
Investment in Education % GDP
Catalyst Presentation
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1.2 Israeli Innovation Model: “The Tech Transfer”
from University to Industry
Technology transfer: the secret engine
• 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 spinoffs
Source: ITTN
Dr. Albert Einstein, on his visit to the Technion, 1923
draft. confidential
Creation of institutionalized basis for scientific research
Catalyst Presentation
5
2. Government Support In Israel
draft. confidential
Jewish Agency Gvahim MASA Nefesh B’Nefesh
Technology Education
Constantly rising government spending on hi-tech education
Military Budget
Talent Incubator
Immigration Support Chief Scientist
Government R&D grants since 1970’s and still growing
Incubator Program for start-ups
Co-investment with VC industry
Yozma VC Fund and Health Fund
Catalyst Presentation
6
3. Technology sector expanding internationally 3.1 Israel Economic Status 2005-11
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
Source : OECD
draft. confidential
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
2005 2006 2007 2008 2009 2010 2011
4.9%
5.7% 5.4%
4.0%
0.8%
4.7% 4.7%
2.7% 3.2%
2.7% 3.0%
-3.5%
2.9%
2.3%
Israel OECD
Catalyst Presentation
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3.2 The High-Tech Sector Is The Growth Engine
Of The Israeli Economy
Industrial Export by Technology Intensity (1990 vs. 2011)
1990 Industrial exports $7.7B
2011 Industrial exports $40.7B
2011 1990
Source : The Central Bureau of Statistics, Israel 2011
draft. confidential
Catalyst Presentation
8
* Quote of Edouard Cukierman in the interview to the “Economist”.
4. Israel Defense Industry
draft. confidential
“Many Israeli start-ups should pay royalties
to the army. The military service deserves
some of the credit. Israel's army does not just
train soldiers, it nurtures entrepreneurs”*.
Catalyst Presentation
9
Sources: IVC Research Center, IVC 2012 Year book ; Pwc, MoneyTree Report 2012; RVCA Yearbook 2012; INSEAD PE Report 2012
5. VC And Access To Global Financial Markets
5.1 VC Investments
0
20
40
60
80
100
120
140
160
180
China Europe India Russia Brazil USA Israel
4.5 7 8 18
55
92
164 VC Investments per Capita in 2011, US $
draft. confidential
Catalyst Presentation
10
Portfolio companies of Catalyst, which went public on NASDAQ: PowerDsine (PDSN), Scopus (SCOP), Omrix (OMRI), Commtouch (CTCH), BOS (BOSC), Cyalume (CYLU), Dot Hill (Hill), Orckit (ORCT). Some portfolio companies like MTI went public on AIM.
Cukierman & Co. (CIH) is the leading Investment House for IPOs of Israeli firms in Europe. Transactions of CIH include: Summit, Visonic and Metaltech in London, Astra and VCON in Paris, Wizcom, OTI and Electronics Line in Germany.
As of today, Israeli companies raised over $27B through foreign public equity offerings, in addition to over $46B in secondary sale on the market by shareholders.
With 176 companies going public on American Stock Exchanges, Israel was ranked #3, after China and Canada, in terms of number of foreign companies (excl. North American companies) listed on NASDAQ.
With 84 Israeli companies going public on European Stock Exchanges, Israel was ranked #2 in terms of number of foreign companies traded on European Exchanges.
CIH is the sole NYSE Euronext’s Israeli listing sponsor.
Source : Israel VC Indicator Survey: 2008, 2009 & 2011; NASDAQ, NYSE, EURONEXT (2011)
5.2 A decade of Israeli European / US Public Offerings
Israeli IPO’s In:
Europe USA
Year Number of Offerings
Capital Raised ($M)
Number of Offerings
Capital Raised ($M)
Up to1998 14 200 74 3,269
1999 12 446 20 3,375
2000 7 353 33 4,649
2001-2003 1 118 12 2,806
2004 5 150 12 1,117
2005 20 1,106 4 355
2006 16 2,078 8 3,460
2007 6 2,117 11 1,210
2008 2 222 _ _
2009-2011 1 3 4 192
Total 84 6,793 178 20,433
draft. confidential
Catalyst Presentation
11
5.3 Israel Hotbed for Multinational Enterprises
1,0
00
1,5
00
1,0
00
1,5
00
3,0
00
200
10000
1000
Estimated Number of employees in Israel
450
500
400
4,0
00
1,5
00
Catalyst Presentation
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5.4 Israel M&A Selected Transactions & Our
Direct Involvement
Transactions Involving Fund Principals
European Israeli Transactions
Israeli Companies acquired by International Players
Seller Buyer $ Millions Year Mirabilis AOL 425 1999
DSPC Intel 1,600 1999 Galileo Marvell 2,700 2000
Chromatics Networks Lucent Tech. 4,500 2000 Top Tier Software SAP 400 2001
Indigo Hewlett Packard 880 2001 Precise Software Veritas Software 537 2003
Eden Springs Danone 699 2003 Orex Kodak 63 2004
P-Cube Cisco Systems 200 2004 Europe Israel (Zisser) Segece Klepierre (BNP) 925 2004/5
Elco Brandt Fagor 200 2005 Scitex Vision Ltd HP 230 2005
Shopping.com eBay 650 2005 M Systems SanDisk 1,550 2006
Iscar Ltd. Berkshire Hathaway 4,000 2006 Mercury Corporate HP 4,500 2006
Taro Pharmaceuticals Sun Pharmaceuticals 454 2007 Omrix Johnson&Johnson 438 2008
Fraudscience PayPal Inc. 169 2008 Solel Solar System Siemens 418 2009
Merial Sanofi-Aventis 4,000 2009 Shamir Optical (50%) Essilor 130 2010
Provigent Broadcom 350 2011 Oridion Systems Covidien 346 2012
Objet Stratasys Inc. 634 2012 Clal Industries Access Industries 350 2012
International Players acquired by Israeli Companies
Seller Buyer $ Millions Year
European Mineral Water Cox
Eden Springs 110 2002
Brandt Elco Holdings 225 2002
Zone Labs Checkpoint 205 2003
Allibert Keter 20 2003
Ofer Brothers Orco Group 100 2005
Ivax Teva 7,400 2005
Rosebud &CIH Hardstone 173 2006
XenSource Citrix 500 2007
Actimize Ltd. Nice Systems 280 2007
Bentley Teva 360 2008
Ratiopharm Teva 5,000 2010
Theramex Teva 372 2010
Microtune Zoran 166 2010
From 1999 to 2012, over 684 Israeli companies were involved in M&A transactions with foreign enterprises for a total worth of more than $46b.
Source: IVC Research Center, IVC 2012Year book
draft. confidential
Catalyst Presentation
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6. Entrepreneurial Spirit
• 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
Catalyst Presentation
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Cukierman & Co. Range of Activities
Family Office Corporate Finance
• Private Placement
• Initial Public Offerings
• Mergers & Acquisitions
• Strategic & Financial Consulting
Private Equity Funds
• Venture Capital
• Private Equity
• Secondary Advisory
draft. confidential
Catalyst Presentation
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Since its establishment in 1993, Cukierman & Co. Investment House Ltd. has been engaged in transactions valued over €3b through Private Placement, IPO and M&A.
Track Record
Transactions Advised by Cukierman Investment House
draft. confidential
Catalyst Presentation
16
* 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.
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.
The Opportunity To Invest In Israeli Companies Traded In Europe
Published by:
205
112
Catalyst Presentation
17
Catalyst Partners Experience and Track record
Catalyst Presentation
18
Where European and Israeli Business meet!
10th Edition: October 29th , 2012
Organized by Catalyst Fund and Cukierman Investment House Ltd., Go4Europe is one of the most prestigious conferences in Israel. Go4Europe addresses the current issues of raising funds and establishing strategic alliances across borders. In the previous years, our conference has welcomed several Heads of State, including Mr. Ariel Sharon, Mr. Benjamin Netanyahu, Mr. Ehud Olmert and President Nicolas Sarkozy. Go4Europe’s 9th Edition was held on October 31st 2011 and hosted 1,288 participants. Among them 400 came especially from Europe, including key European Parliamentarians 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&A EUROPE,BANKHAPOALIM,ASSYA,OTTO,LCF,ROTHSCHILD,FRANCETELECOM,PHILIPS,EVOLVA,NOVARTIS,SANOFIAVENTIS,ALCATEL,NOKIA,PHILIPS,DEUTSCHTELECOM, VINCI,….
To register or view the agenda: www.go4eu.com
