Hi-Tech in Israel
Venture-backed Investment
trends
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0
100
200
300
400
500
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1000
1100
($ million)
Total Investments 67 98 147 127 158 123 172 134 130 228 263 389 617 735 1034
Internet-Related 23 24 59 38 65 35 71 43 60 78 178 264 439 397 451
Q1-97 Q2-97 Q3-97 Q4-97 Q1-98 Q2-98 Q3-98 Q4-98 Q1-99 Q2-99 Q3-99 Q4-99 Q1-00 Q2-00 Q3-00
Venture Capital Investment Level SOURCE : Money Tree
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Average Investments by round SOURCE : Money Tree
$ million
# of deals
1999# of deals(Q1-Q3)00
53
61
78
93
35
62
85
81
84 58
0 1 2 3 4 5 6 7 8 9 10 11 12 13
Seed
First
Second
Third/Expansion
Bridge
(Q1-Q3)00 1.6 4.9 8.9 12.8 1.05
1999 1 2.3 4.2 4.6 0.9
1998 1.2 1.9 2.8 3.7 0.4
Seed First Second Third/Expansion Bridge
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Average deal size SOURCE : Money Tree
1999 Avg. YTD Q300 Avg.
U.S. Israel U.S. Israel
Seed 2.7 0.93 4.8 1.6 First 6.1 2.25 8.7 4.9
Second 10.8 4.16 15.5 8.9
Third/Expansion 14.6 4.63 23.2 12.88 Bridge 1.6 0.87 2.3 1.05
1999 Avg. YTD Q3 Avg.
Israel 2.9 5.96
US 8.9 13.2
Europe 1.9 N/A
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Kesselman & KesselmanAverage Investments by the
main Industries source: Money Tree
0 1 2 3 4 5 6 7 8 9
Software
Telecom
New Media
Networking
Medical devices
(Q1-Q3)00 5.155 7.986 5.63 7.56 2.98
1999 3.566 4.426 2.5 5.0 1.8
1998 2.02 3.118 1.18 1.9 2.2
Software Telecom New Media Networking Medical devices
$ million
# of deals
1999# of deals(Q1-Q3)00
31
27
63
50
10
59
87
92
64
79
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Average Deal Size - Total, Internet-Related
& Non-Internet-Related SOURCE : Money Tree
5.07
4.68
6.05
7.58
1.87
2.03
2.132.49
3.22
1.86
2.36 2.06
1.94
2.84
3.09
3.47
5.87
5.70
6.23
5.43
6.55
3.19
3.80
2.92
2.17
2.31
1.682.46
2.20
2.87
3.86
1.73
4.18
2.55
2.02
2.83
1.77
2.282.29
1.91
2.90
2.28
1.80
1.99
1.69
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
Q1 '97 Q2 '97 Q3 '97 Q4 '97 Q1 '98 Q2 '98 Q3 '98 Q4 '98 Q1 '99 Q2 '99 Q3 '99 Q4 '99 Q1 '00 Q2 '00 Q3' 00
Total Internet-Related Non-Internet-Related
$ million
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Kesselman & KesselmanAverage Deal Size - Total , Software, Telecommunication-comparison SOURCE : Money Tree
5.5
8.3
6.7
8.5
6.23
5.70
5.87
3.47
3.09
2.84
1.94
2.062.361.86
3.22
2.492.13
1.99
1.87
4.9
1.9
3.42.9
2.01.6
1.6
1.3
2.3 1.9
3.2
1.4
5.4
4.6
2.6
1.42.7
4.8
4.2
2.5
4.2
1.61.8
4.6
5.1
5.8
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
Q1 '97 Q2 '97 Q3 '97 Q4 '97 Q1 '98 Q2 '98 Q3 '98 Q4 '98 Q1 '99 Q2 '99 Q3 '99 Q4 '99 Q1 '00 Q2 '00 Q3' 00
Average Deal Size Software Telecommunication
$ million
VC FundsKesselman & Kesselman
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2200
Capital raised 58 160 342 374 156 397 727 688 1,617 2,000
1991 1992 1993 1994 1995 1996 1997 1998 1999 YTD Q3
$ million
Venture Capital RaisedSOURCE: Zinook research & data center
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$ m
illi
on
Through Israel VC's 22 27 47 35 72 62 77 51 67 90 99 140 176 226 308
Through other sources 45 71 100 92 86 61 95 83 63 138 164 249 441 509 726
Q1-97 Q2-97 Q3-97 Q4-97 Q1-98 Q2-98 Q3-98 Q4-98 Q1-99 Q2-99 Q3-99 Q4-99 Q1-00 Q2-00 Q3-00
Total Amount raised by Israeli Hi-Tech companies SOURCE: Money Tree
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Venture Capital fund SOURCE: Zinook research & data center
Initial analysis indicates that capital raisings by Israeli VC funds during 2000 exceeds $2 billion.
Total capital raised by venture capital funds from 1991-2000 exceeds $6.5 billion.
According to Zinook’s analysis, more than $3 billion are available for investment.
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Leading Israeli VC fundsSOURCE: FACTS. (D&A)
Fund name Total capital managed ($ in M) # of investments # of exits % exits
Polaris Venture Capital 700 60 12 20%Star Venture Enterprises 594 124 44 35%Genesis Partners L.P. 349 37 9 24%Gemini Capital Fund 296 48 12 25%Formula Ventures Ltd. 290 17 1 6%Israel Seed L.P. 258 42 3 7%Concord Venture Management 255 33 4 12%Jerusalem Ventures Partners 255 30 9 30%Giza Venture Capital Fund 255 43 12 28%Tamir Fishman Ventures 225 The Challenge funds 195 47 1 2%Eurpean Venture Partners 150 10AIG Orion Venture Capital Advisors 110 10Zinook 100 2Acend Technology Ventures 85 8 1 12.5%Israel Infinity Venture Capital Fund 85 21
Total 4,202 532 108 20%
16.
Israel-comparison
Kesselman & Kesselman
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Money Tree Total Investments1997 to Q300
Money Tree Line
0
200
400
600
800
1000
Q1-97
Q2-97
Q3-97
Q4-97
Q1-98
Q2-98
Q3-98
Q4-98
Q1-99
Q2-99
Q3-99
Q4-99
Q1-00
Q2-00
Q3-00
Isra
el
($ m
illi
on
s)
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
U.S
. ($
mil
lio
n)
Israel U.S.
NASDAQ Index
Israel
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Content Sites 14% 1% 3%
E-Commerce Sites:B-B 0% 3% 4%
E-Commerce Sites:B-C 1% 2% 0%
Serv ices 13% 15% 18%
Tools/Applications 47% 37% 37%
Access/Inf rastructure 25% 42% 38%
Q1-00 Q2-00 Q3-00
U.S.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Content Sites 12% 10% 7%
E-Commerce Sites:B-C 13% 13% 8%
E-Commerce Sites:B-B 17% 15% 10%
Access/Inf rastructure 16% 16% 24%
Tools/Applications 20% 22% 29%
Serv ices 22% 24% 22%
Q1-00 Q2-00 Q3-00
Internet-Related Investments by Sub-Category % of Total
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Kesselman & Kesselman
11,062
1,392
1,425
1,512
1,747
2,041
2,386
2,655
2,883
5,94023,737
Other
Illinois
Washington
Virginia
Georgia
Colorado
Israel
New York
Texas
Massachusetts
California
With U.S. States - (Q1-Q3) 00 ($ Million)SOURCE: Money Tree
$ million 1999
16,873
1,306
1,206
777
6,913
1,852
1,010
1,520
3,657
740
Total U.S. Investment= $54,394 Billion
751
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Kesselman & KesselmanWith U.S. States - (Q1-Q3) 00 (#
Deals)SOURCE: Money Tree
1,012
116
144
147
157
163
232
253
400
412
1,501
Other
Illinois
Washington
Virginia
Georgia
Pennsilvenia
Texas
New York
Israel
Massachusetts
California
1999 OF DEALS #
1525
135
138
99
896
111
211
228
347
443
Total U.S.= 4,137 Deals
95
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Kesselman & KesselmanEurope - Investments by Country 1999
($ Million) SOURCE: Money Tree
134
176
211
305
361
388
575
1,001
1,116
1,266
2,325
9
17
9
21
31
66
94
Iceland
Greece
Austria
Portugal
Denmark
Ireland
Finland
Spain
Switzerland
Norway
Italy
Sweden
Belgium
Nethelands
Israel
France
Germany
United Kingdom $ million 1998
1,988
122
124
108
270
189
567
756
112
161
544
45
38
27
6
15
100
Mergers &
Acquisitions
Kesselman & Kesselman
Israeli CompanyIsraeli Company Acquiring CompanyAcquiring Company Details Details of Acquisitionof Acquisition
20002000
Chromatis ( PwC ) Lucent Valued at $4,800 million
MMC (PwC ) AMCC Valued at $4,500 million
Galileo Marvell Valued at $2,700 Million
Scitex (PwC ) Creo Valued at $500 million
Tradum VerticalNet Valued at $480 million
InfoGear Cisco Systems Valued at $301 million
HyNex Cisco Systems Valued at $127 million
PentaCom Cisco Systems Valued at $118 million
Indigo (PwC ) HP Valued at $100 million
19991999
DSP Communications (PwC ) Intel Valued at $1,600 million
New Dimension BMC Valued at $650 million
Libit (PwC ) Texas Instruments Valued at $357 million
Oshap SunGard Data Systems Valued at $210 million
Telegate Terayon Valued at $100 million
Butterfly Texas Instruments Valued at $50 million
Acquisitions of Israeli related Hi-Tech Companies Acquisitions of Israeli related Hi-Tech Companies by foreignby foreign
Investors, 1998-QInvestors, 1998-Q3300 - selected list 00 - selected list SOURCE : SOURCE : Zinook research & data center
Acquisitions of Israeli related Hi-Tech Companies Acquisitions of Israeli related Hi-Tech Companies by foreignby foreign
(Investors, 1998-QInvestors, 1998-Q3300 - selected list 00 - selected list (CONTINUED(CONTINUED
Israeli CompanyIsraeli Company Acquiring CompanyAcquiring Company Details Details of Acquisitionof Acquisition
19981998
Memco Platinum /(CA) 100% for $412 million
Mirabilis (PwC ) America Online 100% for $407 million
Elbit Ultrasound GE Medical Systems Valued at $230 million
Teledata Telecom ADC Telecom 100% for $200 million
Lannet (PwC ) Lucent 100% for $117 million
Elscint GE Medical Systems Valued at $100 million
Wave Access Lucent 100% for $56 million
CLASS Data Systems ((PwC ) Cisco Systems 100% for $50 million
Picture Vision Eastman Kodak 51%
1998 1999 (Q1-Q3)00
Total amount: 1.57 billion 2.967 billion 13.626 billion
# 0f deals 9 6 9
Average deal size 0.17 billion 0.495 billion 1.514 billion
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Capital raised in U.S. 529 336 608 982 743 505 2,016 2,328
Cpital raised in Europe 6 44 28 123 438 588
1993 1994 1995 1996 1997 1998 1999 (Q1-Q3)00
Capital raised in public offering of Israeli companies in the U.S. & Europe (1993-Q300) SOURCE: 1993-1999, Zinook research & data center$ million
IPO,Follow on Offerings (of Venture Capital- backed companies), M&A-comparisonSOURCE: 1995-1999, Zinook research & data center
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
M&A 52% 76% 88.6% 75.4% 83%
Follow on 21% 8% 5% 11.3% 7%
IPO 27% 16% 6.4% 13.3% 10%
1996 1997 1998 1999 YTD Q3
Kesselman & KesselmanThe land of Milk and Honey has The land of Milk and Honey has
becomebecome
the land of Tech and Moneythe land of Tech and Money
Joseph FellusSenior Partner and High-Tech Practice LeaderPricewaterhouseCoopers Israel