Israel Venture CapitalThe Israeli Case

June 2006

IVA OverviewThe IVA is the organization representing the Israeli venture capital community.

Venture Capital is a major source of financing for start-up and early stage technology companies.

Israeli VCs have played a major role in making Israel an important global source of innovation.

June 2006 3

Israel’s High Tech EcosystemIngredients for Innovation:

June 2006 4

Multi Nationals with R&D Centers in Israel (Partial List)

AlcatelAnalog DevicesAMCCAvayaBMC SoftwareBoston ScientificBroadcomComputer AssociatesCEVACiscoConexantFreescale SemiconductorGE Medical SystemsHP (including HP Labs)IBMInfineonIntel

InterpharmKLA-Tencor Kollmorgen ServotronixMarvell SemiconductorMicrosoftMotorolaNational SemiconductorOraclePfizerPhillipsQUALCOMMSamsungSAPSiemensSilicon GraphicsSun MicrosystemsSunGardTexas InstrumentsVeritas Software

June 2006 5

Foreign VCs Investing in Israel

Accel PartnersAdvent InternationalAlice VenturesAlta BerkeleyAmadeus CapitalAmpersand Venture ManagementApax PartnersBancBoston VenturesBattery VenturesBenchmark CapitalBertelsmann VenturesBessemer Venture PartnersBoston Capital Ventures

Global Catalyst Partners Greylock PartnersHarbourVest PartnersHummer Winblad Venture PartnersJAFCOKodiak Venture PartnersLightspeed Venture PartnersMenlo VenturesMercator VenturesMeritech Capital PartnersMerlin BiosciencesMerrill Lynch Venture CapitalMission VenturesMPM Capital

133 Foreign VC Funds Invested in more than one company

in Israel from 2000-2004 (Partial List)

Cont.

June 2006 7

Capital Raised By Israeli VCs

-100

900

1900

2900

3900

($M

)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Source: IVC research center

June 2006 8

Capital Raised By Israeli Companies - 2006

$1.62 billion

June 2006 9

Israeli High Tech Companies Newly Established, by Sector 2001-2005

In 2004, more companies were established in life sciences than in any other industry for 4th consecutive year

0

40

80

120

160

200

2001 2002 2003 2004 2005

Communications Enterprise & IT Life Sciences Miscellaneous Internet

Source: IVC online database

June 2006 10

Capital Raised by High Tech Companies, Israel & US ($M)

0

2000

4000

6000

8000

10000

12000

California Mass Israel Texas New Jersey New York Washington

2003 2004 2005

Source: Israel – IVC Research Center, US – Venture One

June 2006 11

Capital Raised by High Tech Companies, Israel & Europe ($M)

0

500

1000

1500

20002003 2004 2005

Source: Israel – IVC Research Center, Europe – Venture One

June 2006 12Cont.

M&A Transactions (1996-2005)

9

12

21

38

63

28

65

61

58

34

389

Total Number of Deals

456

666

1,306

4,267

16,065

581

2,273

1,189

1,834

2,475

31,112

Total Volume ($M)Year

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Total

June 2006 13

Selected Hi Tech M&A 2005Foreign Acquirers

AcquirerHP

Cisco System

Broadcom

McKesson

eBay

Juniper Networks

Alcatel

Intel

Kodak

Cadence Design

UGS

Israeli CompanyScitex Vision

Sheer Networks

Siliquent Technologies

Medcon Telemedicine

Shopping.com

Kagoor Networks

Native Networks

Oplus Technologies

Orex

Verisity

Technomatix

IndustryPrinting Technology

Communications

Communications

Medical Devices

Internet

Communications

Communications

Communications

Communications

Enterprise Software

Enterprise Software

Value of Acquisition230

122

84

105

634

67

55

100

62

315

227

June 2006 14

Selected Hi Tech M&A 2005Israeli Acquirers

Israeli AcquirerTeva

Comverse

Amdocs

Checkpoint

Amdocs

Retalix

Retalix

M-Systems

Nice

Nice

Foreign AcquirerIvax

CSG (GSS Division)

DST Innovis

Sourcefire

Longshine

TCI Solutions

IDS

Microelectronica Espanola

Fast Video Security

Dictaphone

IndustryPharmaceutical

Communications

Communications

Enterprise Software

Communications

Enterprise Software

Communications

Communications

Communications

Communications

Value of Acquisition7.400

251

238

225

30

34

44

40

21

38

June 2006 15

Selected Hi Tech M&A 2006Foreign Acquirers (Partial List)

AcquirerPMC- Sierra

Johnson & Johnson

EMC

Stryker

BMC

Microsoft

Dentsply

TA associates

Epix

CA

Microsoft

Israeli CompanyPassave

ColBar

Kashya

Sightline

Identify

Gteko

Uri-Dent

Alma Lasers

Predix

Xosoft

Whale

IndustryCommunications

Life Science

Enterprise Software

Medical Devices

Enterprise Software

Enterprise Software

Medical Devices

Medical Devices

Pharmaceutical

Enterprise Software

Enterprise Software

Value of Acquisition300

159

153

150

150

120

100

90

90

80-120

76

June 2006 16

Selected Hi Tech M&A 2006Foreign Acquirers (Partial List)

AcquirerLucent

Francisco partners

LSI Logic

Zerox

Solutions 180

Fitserv

AMS

EMC

Pricer

EMC

Unity

Israeli CompanyMobilitec

Ex Libris

Storage

XMPies

HotBar

InsureWork

MedImpulse

nLayers

Eldat

ProActivity

Celletra

IndustryCommunications

Enterprise Software

Communications

Enterprise Software

Internet

Enterprise Software

Medical Devices

Enterprise Software

Communications

Enterprise Software

Communications

Value of Acquisition75

62

55

54

52

52

50

50

40

30

20

June 2006 17

Potential Co-operation

Human CapitalLarge Markets for Israeli ProductsCapital for Israeli VC’sR&D and Innovative infrastructureExperienced VC Industry

June 2006 18

Спасибо за внимание