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Israeli Entrepreneurial VC Ecosystem Overview W W W . I V C – O N L I N E . C O M May 2019
Israeli Entrepreneurial VC EcosystemOverview
W W W . I V C – O N L I N E . C O MMay 2019
IVC Research Center
Overview
Israel
Established
1997
Established in 1997, the premier, leading online provider of data and insight onthe Israeli High-Tech and venture capital ecosystem.
Coverage:• 8,300 active startups• 2,100 Investors• 41,000 Key Executives• 368 Multinational Corporates• 375 Accelerators & Startups Communities
We provide the most comprehensive, accurate, updated data, research and insights onIsrael's High-Tech, Startups, Private Equity and Venture Capital.
Our clients are of strategic and financial investors, VC funds, Family offices, Angels, CVC, PEfunds, Fund of Fuds, Incubators & Accelerators, service providers, NGO’s, governmententities, multinational corporations, academy, technology transfer companies, startups,research institutions, entrepreneurs and more.
Our Goal: to serve our customers by enabling in-depth exposure, understanding and insightsof the Israeli High-Tech ecosystem and inter relationships enabling them in formulating,achieving and implementing their goals and investment strategy in Israel
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Israeli High-Tech Ecosystem Track Record
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Israel at a Glance
Population Area 2018 GDP Growth 2018 GDP 2018 GDP/Per
capita Ratio of national debt/GDP (2017)
Investment in R&D
9.02 million 22,145 sq.km 3.2% $352 billion $41,000 60% 4.5% of GDP
Inflation 2019Unemployment
rateEmployees OECD Credit rating Multi Lingual
1.28% 3.9% 3.98 million2010 full
membershipS&P AA-
Hebrew, English, Arabic and Russian are some of the most
spoken languages in Israel
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“The Israeli high-Atech industry has become a huge
success, with a large amount of IPOs second only
to the US, and high levels of innovation.”
Oracle
Larry Ellison
Tom Leighton
“From the Technology point of view Israel is the
most interesting place in the world after Silicon
Valley.”
Founder & CEO, Akamai
“If you’re going to the Middle East to look for oil, youcan skip Israel. If you’re looking for brains, look nofurther. Israel has shown that it has adisproportionate amount of brains and energy.”
“Israel is a major player in the high-tech world…Thereis a greater concentration of talented high-techmanpower here in comparison to other countries –almost to the extent of Silicon Valley.”
Warren Buffet
Bill Gates
Tim Cook
“We have an enormous admiration for Israel, not just as an important ally for the U.S. but as a place to do business. Apple looks on Israel as a strategic market full of unique capabilities ”CEO, Apple
Global Industry Leaders – on Israeli High-Tech
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CEO, NVIDIA
"One of the things I've learned about Israelicompanies is that everyone wants them. I don't knowof any large company in the world today that doesn'twant to be in Israel. Ask the bankers - all of thecompanies wanted Mellanox. Look at me - I won,"
Jensen Huang
60.5
103.8
22
78.1
14
4.8
45
63.8
13
5.1
37
76.4
18
5.5
73
99.5
21
7.2
81
0
20
40
60
80
100
120
US Europe /UK Israel China/Asia
2014 2015 2016 2017 2018
Global Comparison – VC Investments, 2014-2018, $b
Source: PwC | CB Insights MoneyTree™ Report Q4 2018
ISRAEL IS FOCUSED ON TECHNOLOGY INNOVATIONHIGHST INVESTMENT PER CAPITA IN THE WORLD
Per capita 2018Israel $809US $302China $58Europe $41
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Source: IVC Research Center
Global recognition as a leading innovative technology center
2nd only to Silicon Valley in innovation
Human Capital emerged as Israel’s principle resource
Growth engine of the economy
The Israeli High-Tech Sector – Main Achievements
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Israel High-Tech Sector Track Record 2009-2018
$42.8 billion was raised by Israeli high-tech companies
$11.95 billion was raised by Israeli VC Funds, mostly from
foreign investors
More than 10,065 startups established
M&A: $93 billion IPO: $3.8 billion
NASDAQ: 98 Israeli high-tech companies are listed
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The Israeli High-Tech Main Hubs
HaifaHaifa is an industrial zone and atech hub. It hosts leadingcompanies such as Microsoft, Inteland Google and academic institutes
Tel Aviv Tel Aviv is one of the greatest tech hubsin the world; it has the highest number ofstartups per capita in the globe and thehighest investment of GDP in R&D
HerzliyaIn Herzliya high-tech park there are60+ startups and large companies,including Apple’s R&D center, andMicrosoft
Foodtech, AgroTech, ii 2020 –
emphasize on periphery
Upper GalileoCyber Center - a joint venture of the Israeli
National Cyber Bureau, Beer Sheva
Municipality, Ben Gurion University and leading
global companies in the cybersecurity industry
Beer ShevaJerusalemThe city already has 470+ active
technology companies
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2 hours drive covers everything
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Israeli High-Tech Ecosystem From Seed to Leading Global Companies
Investors - Angels, Accelerators, Incubators,VC & PE funds, CVCs, Strategic and financialInvestors, family offices. HNWI
Source of Financing - from seed to growth,including crowed financing, general andspecialized by sectors and stage ofdevelopment, VC & PE funds, Secondaryfunds
Seed - 377 active incubators andaccelerators are responsible for nurturingthe youngest pre-seed innovative techcompanies.
Hubs
Accelerators Innovation Centers
Incubators
MNCsR&Ds centers
351
1935296
62300
Israeli VC Funds
The Israeli Tech – Main Trends
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01 02 03 04
05 06 07
From “Startup Nation”
to “Scale Up Nation”
Building larger companies,
larger amounts per round,
longer period until exit
Increase # of active
serial entrepreneurs
More Capital is being
raised by Israeli VC Funds
and startups
More private unicorns
are being created
Smaller # of exits,
higher valuation &
amount
Increase # of NASDAQ
IPOs is expected, M&A
is still the main exit
avenue
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Leading clusters matching
global technology needs
The Israeli Tech – Main Challenges
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01 02 03 04
05 06 07
Dependence on global trends,
economy cycles, exports,
foreign investments,
increased competition
Is valuation of private
companies too high?
Is Support of private
companies’ valuation by
the public market will
continue?
Is the current IPO “window
of opportunities” will
continue?
Increase the number of
employees in the high-tech
sector, from 9% to 12% of
total # of employees
Increase integration into
the high-tech sector of
Israeli Arabs, Orthodox
Jews, Women
Increase the number and
quality of engineers,
education! (budget-
Government responsibilities)
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Is global technology trends
and demands are suitable to
the Israeli innovation
technology clusters & Culture
Global
Internal
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Success Ingredients
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Israel VC Ecosystem – Critical Mass of Success Ingredients
Entrepreneurial Culture
Strong Cooperation
Educated Human Resources
Quality Academic Institutions
Smart Money, Mainly Foreign
Strong Presence of Multinationals
Proven Exit Avenues
Commercialization
Government Support
Modern Infrastructure
vAcademia,
Government, Industry, Defense,
Silicon Valley
Skilled engineers, military service, elite
units, immigration (1991 Russia
Research, scientists, 12 Nobel winners, IP-
patents, Weitzman Institute, Technion
Food chain: VC funds, CVCs, PE, angels,
incubators, accelerators
All sectors, regions; strategic – products needs, clients, DD,
capital, exits
M&A is the main avenue, improved
performance
Defense-developed innovative
technologies, basic science, academic
research
Innovation Authority special programs: grants, incubators,
human resources; tax incentives
Legal, banking, financial, accounting,
IP protection
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Quality startups, serial entrepreneurs, technology clusters,
one hub
Forw
ard
Informal
Creative
Ambitious
Non-Conventional
Com
munic
ative
Improvisation
Innovative
Experimental
Independent thinking
“Chutzpah”
✓Challenging - question everything
✓ Strong drive, must-win attitude
✓ Knock on every door
✓ Solution-driven approach to real problems pros
✓ Cost-effective use of limited resources
✓ Going global from inception
✓ Learn from mistakes – tolerate failures
✓ Short history – past is not a constraint
✓Rewording – financial, prestige, popular
Vis
ion
Inte
grity
Personal Example
Courage
Out-of-the-box
Persistent
Hard Working
Team
Family
Action Driven
Educatio
n Competitive
Frie
ndship
Fast Movers
Inquisitive
Restless
Israel Entrepreneurship DNA – Attitude, Characteristics, CultureDrivers of Innovation and Success
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More than 10% of entrepreneurs founded more than one company
More than 3% of entrepreneurs founded more than two companies
80%
14%
4% 2%
1 Company
2 Companies
3 Companies
4 and more Companies
Entrepreneurs in The Israeli High-Tech Industry
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SERIAL ENTREPRENEURES
26,541 Israeli Entrepreneurs (Founders and Co-Founders) 8%
92%
CTOs BY GENDER
CEOs BY GENDER
Male
Female
8%
92%
4%
96%
FOUNDER BY GENDER
Nearly 9% of the total amount of the Israeli technology workforce
Source: IVC Research Center Source: IVC Research Center
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Israeli Start-ups - Established Vs. Ceased (2009 – 2018)
The Israeli high-tech industry continues to produceabout 1,000 new innovative companies every year
739
773
903
1150
1149
1371
1309
1145
926
600
358
395
440
501
657
720
598
582
465
350
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018E
# of Established
# of Ceased
#8400 ACTIVE COMPANIES
Source: IVC Research Center
Select Private Israeli Unicorns - Scaling up - More Companies are looking to become global leaders
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Added Value of Multinationals Presence in Israel, from all Region & Sectors
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Know How, Management Skills, Market & Product Demands, Capital, Exits
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Current Trends
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High-Tech Companies by Stage
1235
2903
3609
562
0 500 100 0 150 0 200 0 250 0 300 0 350 0 400 0
Seed
R&D
Initial Revenues
Revenue Growth
15%
35%43%
7%
As of March. 2019
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Source: IVC Research Center
Capital Raising By Start-ups 2013-2018, $M, #
1,125 1,235 1,241 1,433 1,840 2,085
427
2,372 3,161
3,986 4,465
4,532
5,420
1,166
866
9921,036
987
981918
0
200
400
600
800
100 0
120 0
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2013 2014 2015 2016 2017 2018 Q1/19
Israeli $m Foreign & Other $m Total # of Deals
7,505
6,372
5,898
5,227
3,497
4,396
22
1,593
Foreign investors more than 70%So
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Israeli High-Tech Investments By Investors Type, $M
VC Funds
Corporates
Accelerators & Incubators
Corporate VCs
Investment Companies
Private Investors
Other Investors
VC Funds consist of more than 50%
1266
1467
1693
2050
2333
2541
746
208
307
319
605
574
591
84
61
42
47
52
75
158
16
250
332
409
463
466
739
186
488
594
604
572
609
1121
148
710
846
950
1046
992
1090
236
513
808
1205
1110
1323
1264
177
2013
2014
2015
2016
2017
2018
Q1/2019
Source: IVC Research Center
Israeli High-Tech Exits – M&As & IPOs, 2014-2018, $M, #
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5613 51393221
54993684
2021
1592 1898
2284
1840
2620
1022 1250 4400 1100 8100
15300
6900
126131
123 133
103
0
20
40
60
80
100
120
140
0
5000
10000
15000
20000
25000
2014 2015 2016 2017 2018 Q1/19
<$400m $400m-$1000m $1000m-$5000m >$5000m # of Deals
$8,277 $8,287$9,905
$23,739
$12,634
2424
$11,541
M&As is more than 90% of Exits, $
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Select Large M&As Deals
Acquired by Nvidia
For $6.9BAcquired by Intel
For $15.3BAcquired by Cisco
For $5B
2019
Acquired by IBM Corp.
For $650m
2013
Acquired by Medtronic
For $1.6B
2018
2012
Acquired by Salesforce.com
For $850m
2018
Acquired by Google
For $1.19B
2013
Acquired by KLA-Tencor
For $3.4B
2018
Acquired by D+H
For $1.25B
2015
Acquired by Rakuten Inc.
For $900m
2014
Acquired by Giant Interactive
For $4.4B
2016
Acquired by Covidien
For $970m
2013
Acquired by Thoma Bravo
For $2.1B
2018
Acquired by Mellanox
For $811m
2016
2017
Acquired by Mitsubishi Tanabe Pharma
For $1.1B
2017
25 25
Acquired by Siris Capital for
For $1.7 billion
US Companies are the majority of the acquirers – IBM, Intel, Google, Microsoft, Amazon, Palo Alto Networks, Facebook and many more
Notable Israeli Technology Companies Traded on NASDAQ
Market cap $5.31B
Market cap $3.17B
Market cap $7.7B
Market cap $6.9B
Market cap $1.65B
Market cap $6.84B
Market cap $1.81B
Market cap $4.64B
Market cap $1.43B
Market cap $1.36B
Market cap $2.01B Market cap $1.85B
Market cap $18.1B
Market cap $2.87BMarket cap $3.31B
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Market cap as of today or at the day of acquisition
About 100 Israeli Technology Companies are Publicly Traded on NASDAQMarket cap $248m
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Leading Technology Clusters,Matching Global technology Trends and Demands
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Israeli High-tech - Leading Clusters, #, $m, 2014-2018
637 840 1,185 1,518 1,887
104133 126
175 171
-
200
400
600
800
1,00 0
1,20 0
1,40 0
1,60 0
1,80 0
2,00 0
0
20
40
60
80
100
120
140
160
180
200
2014 2015 2016 2017 2018
$M # of Deals
AI
Cyber
Fintech
177 176 302 410 313
46 46 5058
50
0
50
100
150
200
250
300
350
400
450
0
10
20
30
40
50
60
70
2014 2015 2016 2017 2018
307 507 714 874 1,081
5361 62 62
89
-
200
400
600
800
1,00 0
1,20 0
0
10
20
30
40
50
60
70
80
90
100
2014 2015 2016 2017 2018
341 564 701 569 942
53
79 8365 68
-
100
200
300
400
500
600
700
800
900
1,00 0
0
10
20
30
40
50
60
70
80
90
2014 2015 2016 2017 2018
534 422 810 740 790
82 8199 91 86
0
100
200
300
400
500
600
700
800
900
0
20
40
60
80
100
120
2014 2015 2016 2017 2018
Digital Health
IoT
28
Automotive418 298 786 865 678
42 4660
76 62
0
100
200
300
400
500
600
700
800
900
100 0
0
10
20
30
40
50
60
70
80
2014 2015 2016 2017 2018
# 3 after US and China
Source: IVC Research CenterSource: IVC Research Center
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127220
45
Seed R&D Initial Revenues Revenue Growth
Israeli Cyber Security Sector -
192525
3550
5669
8777
5040
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
# of Cyber Companies Established
cyber security companies are currently active.#439
Raised $4.42 billion in 2008-2018
Company Sector Sub-Sector Deal Amount Deal Date Acquirer
IT & Enterprise Software Security $560m Feb 19, 2019 Acquired by Palo Alto Networks
IT & Enterprise Software Security $2100m Oct 10, 2018 Acquired by Thoma Bravo
IT & Enterprise Software Security $430m Nov 3, 2017 Acquired by Continental AG
IT & Enterprise Software Security $275m Jul 11, 2017 Acquired by Symantec Corp
Main Exits 2017-Q1/2019
About 18% of global civilian (non-Government) investment in the cyber sector are in Israel
Israeli exports of civilian cyber products and services is about 10% of the global market
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Israeli Automotive Sector - # of Automotive Companies Established
Automotive companies are currently active.#453
Raised $4.64 billion in 2008-2018
Main Exits 2017-Q1/2019
111216
3526
4348
6577
5014
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
54
158192
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Seed R&D Initial Revenues Revenue Growth
Company Name Sector Sub-Sector Deal Amount Deal Date Acquirer
Semiconductors Video, Image & Audio $15300m Aug 8, 2017 Acquired by Intel
Semiconductors Fabrication & Testing $3400m Mar 19, 2018 Acquired by KLA-Tencor
IT & Enterprise Software Security $430m Nov 3, 2017 Acquired by Continental AG
Communications Mobile Applications $200m Apr 26, 2017 Acquired by Gett
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Select MNCs with Presence in Israel
Electric carsAutonomous carsSmart mobility
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T h a n k Y o u !
W W W . I V C – O N L I N E . C O M
