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Foreign investment keeps seeking Israel’s hightech

Straight from the Jerusalem Boardroom #241

  1. The sustained growth of Israel’s economy for 15 consecutive years – 3.1% and 3.3% growth projected for 2019 and 2020 respectively – the flow of foreign investment to Israel’s hightech industries, the expanding production of natural gas in Israel and low unemployment (3.6%), have led Standard & Poor’s credit rating agency to reaffirm Israel’s AA- rating with stable economic outlook, notwithstanding Israel’s growing budget deficit (3.8% of GDP) and the current electoral turmoil (The Marker, August 5, 2019).
  2. The downturn of Arab economies is presented by Dr. Adam Reuter, Chairman and Founder of Financial Immunities, Israel’s largest financial risk management firm. According to Dr. Reuter, more than ¾ of the Arab countries face a severe economic crisis, which has also afflicted the wealthy Persian Gulf countries due to the significant decline of the price of oil, their over-reliance on oil production, and the intensified lethal threat by Iran’s Ayatollahs. Seven Arab countries face the potential of insolvency (Morocco, Oman, Bahrain, Jordan, Egypt, Iraq and Lebanon), and six additional Arab countries experience a de-facto bankruptcy (Syria, Libya, Sudan, Yemen, Tunisia and Algeria).

The reduced price of oil has been generated, substantially, by the dramatic expansion of oil and natural gas exploration in the US (e.g., shale oil, directional and horizontal drilling, fracking, etc.), which has transformed the US from the world’s largest oil importer to the largest oil and natural gas producer and the third largest oil exporter. The US is increasingly becoming the leader of the global oil industry, which has minimized the impact on the price of oil by the collapse of two major oil exporting countries, Iran and Venezuela (Globes, August 6).

  1. The San Francisco-based CRM (Customer Relationship Management) tech giant, Salesforce, acquired the Francisco Partners-owned Israeli company, Clicksoftware, for $1.35BN. Francisco Partners acquired Clicksoftware in 2015 for $438MN. Previously, Salesforce acquired the following Israeli companies: Datorama – $850MN in July 2018, Bonobo – $50MN in May 2019, Implisit – tens of millions in May 2016 and Navajo – $30MN in August 2011 (Globes, August 9). Amazon acquired Israel’s E8 Storage for $50MN-$60MN, which will be integrated into Amazon’s Israeli research and development center – Annapurna Labs, which was acquired for $350MN in January 2015. In January 2018, Amazon acquired Israel’s CloudEndure for $250MN (Globes, August 1).
  2. Japan’s Softbank led a $200MN investment in Israel’s Cybereason – which has a $1.5BN market value – along with the aerospace and defense giant Lockheed-Martin, Boston-based Spark Capital and Menlo Park and Cambridge-based CRV (Charles River Ventures). Softbank’s previous investment in Cyberseason was $150MN (Globes, August 7). Israel’s Monday.com raised $150MN (market value – $1.93BN) in a second round of private placement led by the Palo Alto-based Sapphire Ventures, the Philadelphia and Hong Kong-based Hamilton Lane and Boston-based HarbourVest Partners (Globes, July 31). Israel’s Lightricks raised $135MN (market value – $1BN) in a round of private placement led by Goldman Sachs along with the NYC-based Insight Venture Partners (Globes, August 1). Israel’s Inmode raised $70MN on NASDAQ at a market value of $450MN (Globes, August 12). Volvo, Toyota and the Greenwich, CT-based W.R. Berkley Corporation invested $31MN investment in Israel’s UVeye (Under Vehicle Eye). The Geneva-based Forestay Capital led a $15MN round of private placement in Israel’s vCita (Globes, July 23).



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Straight from the Jerusalem Boardroom #248
https://bit.ly/3u29k9g

Foreign investment in Israel’s high-tech companies surged to new heights in the 1st quarter of 2021 – $5.7bn in 172 deals – which is up 89% over the impressive 4th quarter of 2020 and double the volume of the 1st quarter of 2020.

2020 was the first year of surpassing $10bn in capital raised by the Israeli high-tech sector from investors in the US, Asia and Europe, who trust the maturity of Israel’s brain power. Investments in Israeli companies more than tripled in six years, reflecting the effective response by Israeli startups to the technological, medical, pharmaceutical, educational, social and digital challenges posed by Covid-19.

Israel’s economic performance in defiance of Covid-19 is presented by Dr. Adam Reuter, the Chairman and Founder of “Financial Immunities,” Israel’s largest financial-risk management firm, and the co-author of Israel – Island of Success:

  1. Israel has led the globe in the rapid administration of Covid-19 vaccinations due to effective negotiations with Pfizer and an efficient, country-wide medical infrastructure.
  2. Israel is the second lowest among OECD countries in the number of Covid-19 deaths per number of Covid-19 cases: 0.7% compared to the 2.3% OECD average. Israel features a young population (median age of 30 compared to the OECD’s 42) and an effective country-wide medical infrastructure, including top level HMOs and hospitals.
  3. Israel is ranked 12th from the bottom among the 37 OECD countries in the number of deaths per million inhabitants: 645 compared to 1,145 OECD average.
  4. The International Monetary Fund’s 2025 GDP growth forecast for OECD countries: Israel – 4%, OECD average – 2.2%, US – 1.8%, Australia – 2.5%, Ireland – 2.6%, France and Canada – 1.7%, the UK – 1.6%, Germany – 1.2%, etc.
  5. Israel’s 2020 GDP was reduced by 2.5%, compared to the OECD average reduction of 4.1%, South Korea – 1%, Norway – 0.8%, Australia – 2.6%, US – 3.5%, Japan – 4.8%, Germany – 5%, France – 8%, the UK – 10% reduction, etc. GDP growth was recorded in New Zealand – 2.4% and Ireland – 3.5%.
  6. In 2020, Israel was ranked 20th among the 37 members of the OECD in terms of GDP per capita, featuring $43,000 (GDP – $408bn), ahead of Japan, Italy and Spain, and very close behind the UK ($44,000) and France ($45,000).
  7. Israel’s debt-to-GDP ratio increased from 60% in 2019 to 72% in 2020, compared to the OECD’s average increase from 66% to 82%. The 2020’s debt-to-GDP ratio was 266% in Japan, Italy – 161%, the US – 131%, Germany – 73%, etc.
  8. Israel’s foreign exchange reserves-to-GDP ratio of 41% (3rd among the OECD countries) attests to its financial stability, and Israel’s capability to raise foreign credit promptly in a cost-effective manner. Israel’s foreign exchange reserves in March 2021 – $186bn.
  9. During the past decade, Standard and Poor (S&P) accorded Israel a positive credit rating trend, unlike the negative trend for the G-7 countries. In 2020, notwithstanding Covid-19, Israel’s credit rating (S&P) remained at AA.
  10. Some 380 global high-tech giants operate in Israel, including Microsoft, Amazon, IBM, Intel, Cisco, Apple, Verizon, Applied Materials, Dell, HP, Kodak, Oracle, Philips, SAP, Medtronics, GM, eBay, GE, etc. Israel leads the world in the ratio of research and development investment to GDP: 4.9%. 85% of this investment comes from the business sector.

 




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