As every month, VC Cafe is re-posting the “Invest in Israel” Newsletter, published by the investment promotion center of Israel’s Ministry of Industry, Trade and Labor, which offers many helpful tools for prospecting investors. In this first edition of 2014, the highlight is in the 2013 performance of VC-backed companies in Israel, reaching a decade record in return. Browse the headlines below for more news. For the Invest in Israel archive, click here.
ISRAELI EDUCATIONAL APP TAKES MILLION-DOLLAR PRIZE AT GLOBAL CONTEST
TinyTap, an Israeli start-up that has developed an educational app platform based on user-generated content, was one of three top-prize winners at the Consumer Electronics Show in Las Vegas. Competing with hundreds of companies from across the globe, the company was selected as a winner of the Verizon Powerful Answers award, which comes with a monetary prize of one-million dollars. The app, the first of its kind, allows parents and teachers to easily design educational games for children on iPads, iPhones, or Android devices. It was selected for best meeting the description of “powerful solutions to the world’s toughest challenges.”
JOHNSON AND JOHNSON TO OPEN MED-TECH INCUBATOR IN ISRAEL
Johnson and Johnson recently announced that it will be expanding its network of innovation centers, establishing a new center in Israel. With current locations in San Francisco, Boston, London, and Shanghai, the medical giant’s innovation centers work on developing new approaches to a range of diseases. The planned Israeli branch will operate as an incubator and will be located in Rehovot, near the Weizmann Institute. The initiative is the result of collaboration between J&J, Israel’s Chief Scientist’s Office, Japan’s Takeda Pharmaceuticals, and Israel’s OrbiMed. The company said that the new incubator “is the latest in a series of recently announced collaborations to fuel entrepreneurship in the world’s scientific hot spots.”
U.S. FLAVORINGS GIANT IFF BUYS ISRAEL’S AROMOR FOR $88 MILLION
New York-based International Flavors & Fragrances (IFF) has acquired Israeli food flavorings maker Aromor of Kibbutz Givat Oz in the Lower Galilee. Terms of the deal were not disclosed, but analysts estimated that the company was sold for $88 million. The company is privately held, and half owned by the Kibbutz. The company’s factory will remain at its present kibbutz location, located near Afula.
INDIA AND ISRAEL TO SET UP $40 MILLION FUND FOR JOINT VENTURES
India and Israel recently announced plans to set up a $40 million fund to support joint technological ventures. The fund is designed to consolidate and strengthen economic ties between the two countries, with each country contributing $20 million to the fund over a period of five years. T Ramaswami, Secretary to the Government of India’s Department of Science and Technology, said “The R&D fund is being created with a view to commercialize technologies and to leverage innovation for economic collaboration.” The fund will help Israeli companies participate in large Indian government-led ventures, will foster R&D collaboration between Israeli and Indian companies, and will further seek to adapt products developed in Israel for the Indian market, Israeli officials said.
10-YEAR STUDY: DRAMATIC INCREASES IN ISRAELI INVESTMENT RETURNS
The IVC Research Center recently released a comprehensive 10-year Israeli High-Tech Exits Report, compiled in collaboration with SiSense Ltd. The report suggests dramatic increases in venture capital-backed exits, in average deal size, and in average return-on-equity ratios. According to the report, VC-backed exits in Israel soared to $4.2 billion in 2013, a decade high. The average exit rose to $83 million, while the 2013 equity-return ratio reached an all time record of 5:3. The report comes amidst skyrocketing foreign direct investment in Israel in 2013.
LOCKHEED MARTIN AND EMC PARTNER FOR ADVANCED RESEARCH AND DEVELOPMENT IN ISRAEL
Defense contractor Lockheed Martin and data storage equipment maker EMC Corporation announced plans to jointly invest in advanced technology projects at the Advanced Technologies Park in the southern Israeli city of Be’er-Sheva. The companies intend to develop partnerships with Israeli industry, government, and academic institutions to advance research and development projects in cloud computing, data analytics and cyber technologies. The companies expect the collaboration to result in the introduction of new technologies into their market portfolios. EMC employs more than 1,000 people in Israel and has invested billions of dollars through the acquisition of nine Israeli companies, various investments in Israeli technologies, and the establishment of numerous sales and R&D centers. Lockheed Martin’s presence in Israel has been centered around primarily aerospace and defense projects.
ISRAELI CELLPHONE CHIP INCORPORATED IN GOOGLE’S NOTEBOOK
Altair Semiconductor, an Israeli start-up that produces 4G communication chipsets for cellular devices, has concluded a deal with Google and HP to install its chip in the new Chromebooks. With speeds up to ten times faster than the speed available with the more prevalent 3G chip, many manufacturers are beginning to produce products that support the 4G, Long Term Evolution chip. The faster communication offered by Altair’s chips is particularly compatible for Chromebooks, which are cloud-connected notebooks that use Google Chrome’s operating system and Google apps, and which require fast communication.
CISCO TO INVEST IN JVP CYBER FUND AMIDST MAJOR GROWTH IN CYBER SECTOR
A Cisco executive announced that the company will participate in the JVP fund designated for cyber, which totals $60 million. The statement was made at the CyberTech 2014 conference in Tel Aviv held in January. Experts estimate that the global cyber market will reach $93 billion in 2017. Israel has more than 220 local cyber security companies, alongside 20 foreign R&D centers. IVC Research Center has reported that in the past 4 years alone, over 100 new cyber-security companies have sprouted up in Israel, with nearly $400 million invested in 78 companies during this period. The launch of the cyber campus in Be’er Sheva under the auspices of the Prime Minister’s Office and with the collaboration of leading MNCs has accelerated interest in Israeli cyber companies as well