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1. Astute US investors leverage current economic insecurity – exacerbated by catapulting oil price – and the resulting decline in global valuations, investing in Israeli companies. While the scope of overseas investment in Israel is gradually reduced, due to the slowdown in US and global economy, sophisticated investors sustain investments in Israel, but in lower valuations.
2. Microsoft is acquiring its 8th Israeli company, Zoomix, for $30MN (The Marker, June 5, 2008). Veriphone acquired its 2nd Israeli company, Gazit-Yesoomim, for $15MN. Its 1st acquisition, Lipman, was made in 2006 for $800MN (Globes, July 3).
3. Susquehanna International Group (SIG) invested $18MN in Israel’s Plimus, its 2nd Israeli investment, in addition to another 2008 investment in WisAir (Globes, July 9). Ascent Venture Partners led a $12.5MN 2nd round of private placement by Israel’s ClickFox (Globes, June 11). Draper-Fisher-Jurvetson (DFJ) led a $10MN 2nd round by Israel’s AniBoom (The Marker, June 29). DFJ, Trilogy Partners and AT&T invested $7MN in Israel’s Zon Networks’ 1st round of private placement (Globes, July 10). Intel Capital, Apax and Smac Partners invested $6MN in Israel’s Mobixell Networks 4th (Globes, July 9). John Miller, co-founder of AVE, and Toronto’s Lion Peak Capital invested $2.5MN in Israel’s StimuHeal (Globes, July 10). Europe’s Milk Capital invested $2.3MN in Israel’s mPortico’s 1st round (The Marker, June 25).
4. IBM is intensifying its R&D operation in Israel (Jerusalem, Haifa, Tel Aviv, Herzliya, Rehovot), which currently employs 750 persons. Three Israeli companies – FileX, XIV and Diligent – were acquired earlier in 2008. Since 1998, IBM has also acquired Israel’s Ubique (1998), iPhrase (2005), Unicorn (2006) and WatchFire in 2007 (Globes, July 7).
5. Israel’s high-tech production grew 4% in 2007, compared with 2006 – an all time high $17BN. High-tech’s employment account for 7% of Israel’s manpower, but high-tech exports ($15MN) accounted, in 2007, to 23% of Israel’s export (The Marker, June 8).
6. Israel at 60. According to Bill Witherell, Cumberland’s Chief Global Economist (June 18, 2008), “during each of the past five years Israel’s economy advanced at a faster pace than the average of all developed economies… Israel has a world class central bank and has followed responsible budgetary policies, despite the heavy costs of its security requirements. Another important plus has been the influx of immigrant engineers, technicians and scientists from the former Soviet Union… A year ago, the OECD, invited Israel to become a member of this grouping of advanced nations with a common commitment to market economies and democratic principles… Fueled by its exports of high-tech goods and services, Israel’s current account surplus is expected to be maintained in the range of 2.5%-3% of GDP. Israel’s most important market is the US, accounting for 45% of its exports in 2006.” Witherell refers to some weak aspects of Israel’s economy: traditional economy burdened by low productivity, education system requires major reforms, income inequality, full-dependence on imported oil and “its political system, based on pure proportional representation, leads to a large number of parties and ever-changing coalitions, which make long-term planning and coherent government policies difficult to achieve.”