ISRAEL INVESTMENT NEWS
Fourth
Quarter, 2002 - VOLUME VI, NO.4
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In this issue….
·
Merck Places Israel on “Will-Invest” List
·
Lucent,
FTVentures Invest in Banter
·
First Israeli Company Listed on Australian Stock Exchange
·
Sequoia, Kardan and Challenge Fund Invest in BitBand
·
Dune Networks Raises $24m
·
New Investment Group Raising $80-100m
·
IBM, BMC, British VC Fund Invest in Aduva
·
Two New Israeli Seed Funds Established
….and more.
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US’ AMD to Invest
$50m in Israeli Start-up Saifun
The Israeli media have
reported that chip maker Advanced Micro Devices (AMD) will invest $50 million
in Israeli start-up, Saifun Semiconductor. In addition, AMD will pay royalties to
Saifun from revenue received from jointly developed products. In exchange for
the investment, AMD will receive a 10% stake in Saifun, and the Israeli company
will withdraw its litigation against AMD.
The investment values
Saifun, who develop non-volatile memory, at $500 million. At the last funding
round at the end of 2000, the company was valued at $400 million. The $50
million that Saifun has raised to date has come from investors such as Morgan
Stanley Dean Witter, Bank of America Ventures Fund, M-Systems Flash Disk
Pioneers, Clal Industries, Gemini Israel Funds and Concord Ventures.
According to the
agreement between the two, Saifun and AMD will work together with Fujitsu on
future flash memory technology. Saifun’s non-volatile memories store content
without the need for a continuous power source. Such memory is essential for
many portable devices such as mobile phones and laptop computers.
Saifun was founded in
1998 by Dr. Boaz Eitan. AMD, a Fortune 500 company, was founded in California in
1969. Today the company has annual revenues approaching $4 billion.
Siemens and
Lucent Spin-offs, Motorola Found New Company with Israel R&D Center
Motorola, together with Inifineon and Agere Systems (Siemens and
Lucent spin-offs respectively) have founded
a new company called StarCore LLC to develop and market digital signal
processor (DSP) core technologies. The three companies will own equal shares
in StarCore.
The new company, which will be based in Austin, Texas, will have an
R&D center in Tel Aviv where sixty of the company’s 100 employees will
work. Motorola executive, Thomas Lantzsch will be StarCore’s new CEO.
Infineon, founded in 1999 as a semiconductor spin-off of Siemens has a
second Israeli R&D center located in Netanya where components for VDSL
modems are developed. Agere was formerly Lucent Technologies’ microelectronics
division.
The Israel R&D center will integrate Motorola and Agere DSP
technologies using Infineon employees. DSP cores are considered critical when
developing wireless communications and semiconductor segments, including voice
and data compression and recognition on cellular telephones and communications
networks. The DSP market is estimated to be worth $12 billion.
Initially, StarCore will provide products to its three parent
companies before expanding to the provision of DSP core licenses to other
companies, including competitors such as Intel and Texas Instruments.
Life Science
Company ProCognia Raises $14.3m
Apax Partners Funds
has led a $14.3m second round of financing for ProCognia (formerly Glycodata),
an Israeli life sciences company. Other investors in the current round include
Koor Venture Capital, Discount Investments (both existing ProCognia investors)
as well as Evergreen Partners.
ProCognia has developed
technology that greatly simplifies the development of glycoprotein drugs. Such
drugs currently exceed $14 billion in yearly sales, and are expected to grow at
a rate of over 20% in the next ten years.
Dr. Yeshayahu Yakir
and Dr. Ofer Markman founded ProCognia, whose core technology platform consists
of a series of integrated complementary technologies including biochip,
algorithms and software. Ron Long, formerly CEO of Amersham Pharmacia BioTech
has been named as ProCognia’s new CEO.
The company has R&D
facilites in Israel and an office in the United Kingdom. ProCognia will use the
newly raised funds to finance further R&D as well as commercial activities
in Europe and North America.
Merck Places
Israel on “Will-Invest” List
US Pharmaceutical giant
Merck & Co. has placed Israel on its “will invest” list. Merck points to
advances in Israeli biotechnology and drug development in explaining its
recognition of the high potential in Israeli companies.
With a research budget
of $2.9 billion, Merck is willing to finance research conducted by Israeli
biotechnology companies. It has not set a limit on its Israeli investment.
To begin its search
for suitable projects, Merck has asked Israeli companies and universities to
apply for research collaborations. Of particular interest to the New Jersey
-based Merck are companies involved in R&D in the areas of immunology,
cancer, diabetes, osteoporosis and central nervous system studies.
In order to further
Merck’s involvement and investment in Israeli projects, the company held a
conference in Israel in May where it invited submissions. Around 150 Israeli
companies made proposals, which were sent to Merck for review. Thus far, 23 of
the original 150 Israeli companies have met with Merck for further discussions.
Following a round of
meetings with Israeli companies, Dr Lewis Mandel of Merck Research Laboratories
commented that the Israeli scientists he had met were “at the forefront of
basic science.” Mandel added that he was hopeful that the meetings would lead
to an “ultimate translation into new projects and product opportunities.”
Beyond the financial
investment that Merck will inject into Israeli companies, collaboration with
Merck will allow those companies to take advantage of Merck’s extensive experience
with regulatory issues as well as assisting them through the process of
clinical trials by making use of Merck’s well-synchronized clinical research
infrastructure.
Lucent,
FTVentures Invest in Banter’s Oversubscribed $18m Round.
Email
management company Banter has raised $18 million. The oversubscribed financing
round was led by Financial Technology Ventures (FTVentures). Other investors in
this round included Lucent Venture Partners, Mayfield, RBC Technology Ventures as well as
the corporate arm of RBC Financial Group.
The
current $18m round follows a $15m financing round in March and a $20m round in
January.
Banter,
an email management solutions provider, has created technology that is able to
interpret unstructured text such as email, web submission forms, instant
messaging and self-service inquiries. Banter’s technology allows its customers
to then automatically respond to, re-route, categorize or filter the incoming
communication.
The
company counts Wells Fargo, RBC Financial Group and ABN AMRO among its
principal clients. Banter has also worked with Nintendo, Tucows and VeriSign
and has partnerships with companies such as Siebel, Peregrine/Remedy and Avaya.
Banter’s clients use the company’s software for managing incoming email,
web-based customer service, call-centers and help-desks.
FTVentures general
partner Scott Wu commented, “Banter solves a key problem by allowing financial
institutions to better manage and understand the exploding volume of email and other
informal, written communication. Companies without such capabilities will be
overwhelmed by online customer communications, as online financial services
continue to grow.”
Commenting on Banter’s
success thus far, Wu also said that the company “has achieved a strong
leadership position as a result of its penetration in the email, CRM and
call-center marketplaces.”
Formerly, called
Aspect Software, Banter has offices in San Francisco, New York and Boston in
addition to its Jerusalem R&D center.
Veritas Leads UCG
Investment Round
UCG
Technologies, a Haifa-based medical imaging technology company has raised $2.2
million in seed capital financing. The amount is considered to be an especially
large amount for a seed-stage round, at a time when globally, almost no capital
is being invested in early stage projects.
Herzliya-based
Veritas Venture Partners, who have invested primarily in computing,
communications and medical devices, led the financing round, investing some
two-thirds of the funds raised. Giza Venture Capital as well as Israeli and US
private investors, also participated in the round.
UCG
CEO, Dr. Shuli Cohen Schwartz, formerly of Elscint, and Dr. Israel Ohana,
founded UCG in 2000 in the Haifa Technion Technology Incubator. The company is developing
a product line designed to improve existing medical imaging systems.
Veritas
founding partner Gideon Tolkowsky, who also manages the fund’s healthcare
investments explained that Veritas decided to lead the investment in UCG based
on many factors, but singled out the company’s experienced management team.
Sequoia, Kardan
and Challenge Fund Invest in BitBand
Bitband, an Israeli
start-up that manufactures video servers for IP networks has raised $6 million
in a second round of financing. The round was led by the Challenge Fund and
included exisiting investor Sequoia Capital Seed Fund as well as Kardan and the
Fantine Fund.
Bitband, founded in
1999, produces management services software packages as well as video servers
for IP networks. Bitband products include an audio-video server, the
Vision-On-Demand (VOD) system installed at network nodes, the Maestro Content
Distribution and Server Management Suite, also installed at the server
provider, as well as the Video Client end user software package, installed
within the converter in the customer’s home.
Sequoia Capital Seed Fund originally invested
$4 million in Bitband in May 2000. The Tel-Aviv based company now has millions of
dollars in annual sales and, according to Challenge Fund VP Yossi Vintski, “is
near to breaking even.”
First Israeli
Company Listed on Australian Stock Exchange
DenX, a Jerusalem
based start-up was sold to Australian Stock Exchange (ASX) shell company
Helm Corporation in a reverse merger. The deal, to be completed in November,
will result in DenX being listed on the ASX in Melbourne, effectively becoming
the first Israeli company to be traded on an Australian exchange. The company
value after the merger is estimated at $35 million, of which $8.2 million is
being injected in cash into the merged company.
A computerized
dentistry company, DenX has 65 employees and is based in Moshav Ora, just
outside Jerusalem. The company’s investors include Vitalife Life Sciences Fund,
Israel Seed Partners, Alon Technologies Fund, Lumenis and Teva.
DenX shareholders will
receive Helm shares. Employees will receive options worth $3 million, amounting
to tens of thousands of dollars for each employee.
Having developed computerized
dental training and implant systems, DenX is now looking to apply its
technology to other surgical uses, including neurosurgery and orthopedics.
DenX’s two main products for dentists are both based on patented computerized
monitoring and 3D imaging of dental drills inside a patient’s mouth.
Founded
in 1994, DenX plans to use the new funds to continue it’s sales and marketing
operations worldwide.
Israel-Singapore
Binational Incubator Launched
An Israel-Singapore
binational incubator has been established in Singapore with the support of the
Singapore Israel Industrial R&D Foundation (SIIRD).
The new incubator is a
joint venture of two private companies, one Israeli and one Singaporean. Dr.
Dalia Megiddo and Mrs. Dita Klein manage the Israeli company, TechMach. The
investment arm of Mil-Com, SME Techventure is the Singaporean partner.
The Singaporean
government has granted “business incubator” status to the new venture,
granting it certain tax, rent and other benefits. The new incubator will help
Israeli companies’ Asian operations throughout Singapore.
Singapore already has
four binational incubators with Germany, China, India and New Zealand.
Singapore has had an excellent
business, investment and research relationship with Israel for many years. A
large number of Israeli companies, particularly technology firms have set up
offices in Singapore. Despite a global downturn in trade, Israeli exports to
Singapore grew 7% during the first half of 2002.
Dune Networks
Raises $24m
Dune Networks, a
semiconductor company, has raised $24 million in a first round of financing.
The investment was co-led by Aurum-SBS Ventures, Jerusalem Venture Partners and
Pitango Venture Capital. Alta Berkeley Venture Partners and Elwin Capital
Partners also participated in the round.
Dune Networks, a
fabless provider of silicon solutions for communication platforms, will use the
funds to continue development and marketing of its first generation of
products.
The company, founded
in October 2000, has R&D facilities in the Yakum Industrial Park in Israel
as well as a head office in California.
New Investment
Group Raising $80-100m
Yuval Cohen, a former
partner at Jerusalem Venture Partners (JVP) is in the advanced stages of
raising $80-100 million for a new investment group he is founding. The fund
will be a new instrument for private equity investment and will invest in
private and public technology companies.
Cohen, who has ended
all of his commitments to JVP, claims that the new fund will be similar to a
US-type technology buyout fund but will focus on small and medium companies.
The new fund aims to
concentrate on companies with sound business and technology models that may
lack some of the business components necessary for success. Cohen will try to
provide a remedy for these problems by bringing in partners with rich operational
business experience and understanding.
Most of those
investing in the new fund are private investors from Silicon Valley.
IBM, BMC, British
VC Fund Invest in Aduva
Israeli software
start-up Aduva has raised $18 million in a third round of financing. British
venture capital fund Elwin Capital Partners, investing for their fourth time in
an Israeli company, has invested $4 million. Other investors included IBM, BMC
Software, Evergreen Partners, CAP Ventures and the Capital Group.
Aduva enables the
integration of new applications, upgrades and corrections on existing UNIX and
Linux servers with its provisioning and configuration management software.
Following a $1.8
million seed round, Aduva raised $6 million in July 2000. The third round of
$14 million was originally completed in January, but was expanded to $18
million with the $4 million British investment. Elwin Capital Partners have
previously invested in Congruency, Celltick Software Technologies and Dune
Networks, all Israeli technology companies.
Aduva, led by CEO Azi
Cohen, has an R&D center in Ramat Gan and offices in California.
Two New Israeli
Seed Funds Established
Two new funds, one
private, one government funded, have been established to invest in seed-stage
companies. The government fund has been set up by the Ministry of Industry and
Trade whilst the private sector fund, established by two venture capitalists,
will be known as Novation.
The Ministry of
Industry and Trade’s seed fund of 50m NIS (Shekels), aimed at boosting early
stage investments in local start-ups, will work by matching capital from
private investors.
The fund aims to
assist start-ups who are having difficulty in attracting investments. At
present, only 2% of Israeli investments are made in seed stage companies.
The new fund will
provide up to 5m NIS (around $1m) per company and will cover up to 50% of the
company’s expenses. In order to be eligible for funding, a start-up must be
engaged in research and development, have spent less than 800,000 NIS or be
less than six months old.
Private investors will
have the option of buying out the government’s stake up to five years from the
date of their initial investment. In return, they will have to pay the
government its initial investment plus interest.
The government will
make at least a further 50m NIS available to the fund next year. The new seed
fund is scheduled to operate until the end of 2003.
Amos Bar Shalev and
Uri Malikovsky are setting up the second seed fund, Novation. The new private
sector, $32 million fund, is expected to close its initial financing round
shortly, with $10 million. The remainder will be raised in the next nine
months. Novation hopes to work with the Ministry of Industry and Trade and
obtain some complementary financing.
Novation is also in
the process of acquiring the management company of the Nitzanim technology incubator
in Yavne. In addition, the company is investigating the possibility of
acquiring two other incubators.
Canadian Pension
Fund Invests $15m in Tower Semiconductor
A Canadian pension
fund has invested $15 million in Tower Semiconductors, buying 2.7 million
Tower shares at $5.60 per share. The fund, the Ontario Teachers’ Pension Plan
(OTPP), will receive four year warrants to purchase another 1.2 million Tower
shares at an exercise price per share of $7.50.
Tower sees OTPP’s
investment as a vote of confidence in the company’s Fab 2 facility. Tower
chairman Idan Ofer said the new investment “reflects the ability of the company
to attract highly qualified institutional investors.”
Tower, based in Migdal
Ha’emek, is building a new, state-of-the-art semiconductor fab. The company
recently completed the first phase of the Fab 2 facility having successfully
implemented 0.18-micron technology while keeping to the project’s planned time
schedule.
Inktomi Buys
Quiver for $12m
US company Inktomi has
aquired Israeli start-up Quiver for $12 million in cash and shares.
Avi Segal and Ofer
Mendelevitch founded Quiver, a knowledge management company, in 1998. The
start-up developed a search engine that ranked sites’ popularity based on
users’ bookmarks. During 2000, the company changed its business model and began
to concentrate on developing Internet management and content cataloguing
software.
Quiver attracted a
seed funding round in 1999 and has to date raised over $22 million. The most
recent financing round was held in March 2002.
Inktomi
provides information retrieval solutions. The company is now traded at a market value of
$120 million, having reached a peak of $25 billion two years ago.
IBM Signs New
Cooperation Agreements with 19 Israeli Companies
IBM’s Global
Technology Unit (GTU) has signed 19 new cooperation agreements with Israeli
start-ups and technology companies.
According to the
recently signed agreements, IBM will assist the global marketing of the Israeli
companies and their solutions. In addition, IBM will present the companies and
their products to IBM’s customers and will integrate them into IBM’s solutions.
Israeli companies with
IBM cooperation agreements include Retalix, Satsmart TV, Regisoft, SintecMedia
and Cash-U Mobile Technologies. Israeli media reported that IBM has not ruled
out additional investments in Israeli technology companies this year.
IBM’s GTU finds
technology companies and start-ups that are operating in fields considered to
be synergetic with IBM’s activities. The Israeli arm of IBM’s GTU has been
active for several months.
Other Israel
Investment News in Brief
·
Microsoft
is expanding its Israel presence, moving into 25% larger office space.
- Lapid Biotechnologies is raising
$16m to invest in Israeli biotechnology start-ups.
- Advanced Metal Technologies
(AMT) has raised $10m
- Etagon, who develop solutions
for data centers, has raised $10m.
- Start-up SintecMedia, a
provider of broadcast management systems for television networks, has
completed a $10 million financing round.
- Itamar Medical, developers of
non-invasive medical technologies, has raised $8m.
- Cancer therapy start-up
Can-Fite has raised $10m in second round financing.
- Communications company Axerra
Networks raised $10 million.
- ForeScout Technologies,
provider of intrusion prevention solutions, has raised $10m.
- Mobile networks systems
start-up CellGlide raised $10 million.
- Network security company Finjan
Software raised $8.5 million.
- RFWaves, who develop
short-range wireless communications models, has raised $8m in a round led
by Sequoia Capital.
- Audio Codes has formed a
strategic alliance with Oki Electric of Japan.
- The Chief Scientist of the
Ministry of Industry and Trade has published a tender for a third
biotechnology incubator.
GE Presents Award
to GE Medical Systems Employee in Israel
GE, one of the major
multinationals with a significant presence in Israel, has awarded the
prestigious Phillippe Award to GE Israel employee, Michele Assis.
Selected from 42,000
employees, Assis, who was chosen for outstanding commitment to community
service, was one of only four GE employees worldwide to receive the award.
GE is one of the
longest operating multinationals in Israel. From its work on turbines and
aircraft engines in Israel in the 1950s to the breakthrough development of
medical imaging technologies today, GE has continued to invest significant
amounts in Israeli companies and projects.
Since the 1990s, GE
has made a large number of strategic investments and acquisitions of Israeli
companies, contributing significantly to the rapid development of the country’s
high-tech industry. Knesset Speaker Avraham Burg presented the Israel Hi-Tech
Award to GE Israel in 2001. Today, the company employees around 360 people in
Israel.
Israel Investment News
Published by
Ministry of Industry & Trade
Investment Promotion Center
30 Agron St., Jerusalem
Israel
Tel. +972-2-622-0661
Fax. +972-2-622-2412
Email: dani@moital.gov.il
URL: http://www.moit.gov.il/ipc.htm
Director
Max Livnat
Writer and Editor
Dani Wassner