While the Economy Slows Down in Israel and the World...

Straight from the Jerusalem Boardroom #165, July 20, 2012

According to an IVC (Israel Venture Capital) study, there was a 20% and a 6% decline in Israel’s high tech investments, during the 2nd quarter of 2012 ($453MN), compared with the 2nd quarter of 2011 and the 1st quarter of 2012 respectively. Only 18% were early stage 1st round investments (Globes Business Daily, July 17, 2012).  Most Israeli economic indicators, such as GDP growth, exports, budget deficit, unemployment and tax income reflect the slowdown, although they are better than almost all OECD countries.

However…

1.  According to a study by Deloitte Touche, one of the four leading CPA firms in the world, Israel is the 4th most attractive and most reliable site for overseas investors.  The study was based on interviews with 440 global investment entities, - mostly venture capital - 30% Americans and 2.5% Israelis.  Israel trails the USA, Brazil and China, ahead of India, Canada, Singapore, Taiwan, Australia, England, Germany and Japan (Globes, July 17).

2.  Israel’s FIMI buyout fund closed its 5th fund, raising $850MN, 50% from overseas investors from the USA, China, Japan, Europe and Australia.  Since its establishment in 1996, FIMI raised $1.25BN for its previous four funds, including $510MN for the 4th fund.

3.   eBay is strengthening its operations in Israel, and its chief executive will make his first business visit to the Jewish state in September…. John Donahue will be promoting eBay’s operations in Israel and highlight the character of the joint center in Tel Aviv and Netanya.  eBay invested in Israel seven years ago with the purchase of Israel’s Shopping.com for $634MN.  eBay also bought the gift Israeli project which was launched in September…. Donahue will also visit PayPal Israel, which was established following its acquisition four years ago. ‘Israel is one of the main centers of our industry for technological innovations and talent.  eBay’s investments in Israel have made significant contributions to the overall vision of the company’s trade and payments.  I hope to meet new Israeli companies, strategic partners and our local employees,’ said Donahue. (YourJewishNews.Com, July 5).”

4.  The Sunnyvale-based Finisar, the world’s largest supplier of optical subsystems and components acquired Israel’s Red-C for $43MN.  In 2008, Finisar acquired the American company, Optium, which procured Israel’s KaiLight in 2007 for $40MN (Globes, July 4). 

5.  The Boston-based Battery Ventures invested $30MN in Israel’s Direct Insurance (Globes, July 16).   General Electric ($27.5MN) leads a $31MN round of private placement in Israel’s InSightec, joined by the Atlanta-based Meditech Advisors (Globes, July 10).  The Chicago-based Adam Street Partners, the Manchester-based OnLine Ventures and the San Francisco-based Venture Strategy Partners participated in a $10MN round in Israel’s FiftyOne (July 11).  The Palo-Alto-based Norwest Venture Partners led a $5.5MN round of private placement in Israel’s Seculert (Globes, July 12).  The South Korea-Israel MaC venture capital fund invested $2MN in Israel’s EyeSight (Globes, July 11).