The JANVEST Technologies Blog

JANVEST's 2011 Year in Review and 2012 Outlook

2011-12-27T19:09:00.002+02:00

This year, JANVEST officially began its investment activity in Israel. The aim - to build a portfolio of 10-12 Israeli technologies under development while leveraging a U.S.-based Limited Partnership for access to important American markets. To date JANVEST has made three investments with a fourth and fifth expected in Q1 2012. Those three investments include:

1. An electronic procurement platform incorporating advanced game theory and with applications relevant to an array of verticals including, but not exclusive to real estate, debt and intellectual property.

2. A mobile advertising platform seen in the industry as a premium provider of hyper relevant, hyper local advertising to smart phone users.

3. An IT security company using behavioral biometrics as the basis for their product suite.

JANVEST expects to make another 1-2 investments in Israel each quarter in 2012 spanning the industries of telecommunications, software, internet and security/defense.

JANVEST Chairman, former Mossad Chief Danny Yatom, to Boston/Philadelphia in November

2011-11-01T21:06:00.001+02:00

In mid-November, JANVEST and Israel's Ministry of Foreign Affairs, will be co-sponsoring a trip to Philadelphia and Boston for JANVEST's Chairman, former Mossad Chief Major General Danny Yatom (Ret.). Throughout his time in the U.S., Major General Yatom will be speaking to various audiences on the impact of this year's Arab Spring on Israel's society, security and economy, with a heavy focus on the resilience and continued growth of the country's emerging technology sector.

Major General Yatom comes from an extensive military, political and private sector background. For 33 years he served in the Israel Defense Forces as commander of an armored division, head of the army's R&D unit, and Military Secretary to Yitzhak Rabin during his terms as Defense Minister and Prime Minister. Within Israel's intelligence community, Major General Yatom acted as the Director of the Mossad Intelligence Service, Chief of Staff to Ehud Barak during his terms as Defense Minister and Prime Minister, and one of the negotiators with Syria, Jordan and the Palestinians between 1993 and 2001.

As a politician, Mr. Yatom was elected to the 16th and 17th Knessets under the Labour Party, after which he transitioned into the private sector as Chairman of Koor-Metals, one of Israel's largest companies, and now Chairman of JANVEST Technologies.

Mr. Yatom holds degrees in mathematics, physics and computer science from The Hebrew University in Jerusalem.

For more information email Brian@JANVEST.com

JANVEST Makes Third Investment - A Start-Up from the IDF's Elite 8200 Unit

2011-09-02T16:36:00.000+03:00

JANVEST's third investment comes in the form of an internet-based data security company founded by former officers from the Israel Defense Force's elite 8200 intelligence unit. This technology under development acts as a master security platform for websites, software, computers and mobile devices by detecting unauthorized users through Behavioral Biometric measures. Whereas traditional biometric security revolves around biological identification through DNA, retina scanning or fingerprint analysis, Behavioral Biometrics recognizes unique behavioral patterns such as signature authentication or speech patterns.

This portfolio addition has taken Behavioral Biometrics one step further by identifying users according to the unique motion of their hand on a keyboard or mouse, a laptop's touchpad, or the screen of a mobile touchscreen device like an iPad or iPhone.

Technology of this sort is seen by many IT security experts as the next generation of data and identity protection.

JANVEST Enters into 'Red Hot' Mobile Advertising Market with Second Israeli Investment

2011-08-02T14:07:00.000+03:00

JANVEST is pleased to announce the execution of its second investment in an Israel-based emerging technology company operating in the growing mobile advertising market. With R&D in Israel and a strong sales presence in the U.S., this company is providing an innovative platform to more effectively distribute rich media advertisements to mobile phone users.

The U.S. mobile advertising market alone in 2010 was valued at $720M with projected growth of up to $2.3B by 2013. Through this company's extensive network, it has the ability to reach 70% of U.S. mobile audiences and is already generating substantial revenues from advertisers like Dell, Facebook, Nokia, Yahoo, and Fox Mobile.

Investing alongside JANVEST in this round is one of the Founders of Amdocs (one of Israel's largest tech companies), Chairman Emeritus of Bank Hapoalim (Israel's largest bank), and the former CTO of Cellcom (Israel's largest cellular service provider).

JANVEST Makes its First Investment in an Israeli Emerging Technology Company

2011-06-29T12:13:00.000+03:00

JANVEST is proud to announce the execution of its first investment in an Israeli emerging technology company. This investment represents the first of ten seed technologies in which JANVEST will invest over the next 12 to 18 months. Our focus is on companies in late stages of R&D or initial stages of commercialization in the telecommunications, software, Internet and security/defense sectors.

This capital allocation makes JANVEST the lead investor in this round and a majority shareholder in this Israel-based software start-up, which has a growing clientele of both Israeli and American conglomerates.

Partnering with JANVEST on this investment is the Israeli government's Chief Scientist Fund (CSF) in the amount of $250,000 USD. This cooperation represents Israel's efforts to encourage and incentivize direct foreign investment in the country's high-tech sector.

For more information, email Brian Rosenzweig at Brian@JANVEST.com

JANVEST Set to Officially Institutionalize Angel Investing in Israel for U.S. Investors

2011-04-26T18:45:00.001+03:00

While investing in Israeli technology is nothing new, for the average accredited U.S. investor, the concept of putting money into a pre-IPO start-up in the Middle East might be as foreign as the actual investment itself. For the last two decades the venture capitalists and individual investors in Israel have been the only ones with access to private emerging technology companies, and ultimately the only ones benefiting from lucrative buy-outs involving companies like Google, IBM, AOL and SanDisk.

Things are about to change.

JANVEST is set to execute its first investment in the coming weeks and in parallel become the first and only venture investment vehicle in the Israeli market to institutionalize Angel investing solely for non-Israeli investors. But what does that mean - Institutionalized Angel Investing?

1. Angel investors are individual investors that use private capital to fund, generally speaking, early stage businesses, or specifically in Israel, technology companies.

2. Institutionalizing those investors means creating a legal and compliance framework that allows for the grouping of these individual investors for the purpose of collecting a larger sum of money from multiple smaller investments.

The advantages of institutionalized Angel investing in Israel specifically for non-Israeli investors are numerous:

No single investor bears the entire risk of the investment
Individual investors can contribute much smaller amounts of capital to the group
The pooling of that group's money into $5-10M funds buys more equity in more companies than any single investor's commitment of $100-300K, or anything under $100K
The portfolio companies have more connections abroad (if you're using American capital for instance) to leverage for pilot programs, clients and acquisition opportunities
By spreading that $5-10M across a dozen companies at a time, the group is substantially mitigating the risk of the investment
For U.S. investors: The Israeli government will exempt foreign investment entities from tax obligations in Israel

Over the coming 18 months, JANVEST, backed only by private accredited non-Israeli investors, plans to allocate up to $500K to approximately 10-12 seed companies in Israel in four different tech sectors: Communications, Internet, Software and Security/Defense.

To learn more, contact Brian Rosenzweig at Brian@JANVEST.com

Israel's Retaliation to Terrorism -- Kick M&A Activity of its Technology into Overdrive

2011-03-27T18:19:00.086+02:00

Historically, Israel would respond to acts of terrorism, like the one carried out in Jerusalem last week, with brute military force. However, these days, the country has found a new method of retaliation and it involves its arsenal of high-tech start-ups.

While many Israelis are unfortunately living in fear of Gaza's rockets, and civilians in Jerusalem are exposed to exploding packages by bus stations, the economy, which happens to be the only stable one in the region, also happens to be the fastest growing in the West.

Just this past quarter, companies like Facebook, Broadcom and Intel's McAfee scooped up Israeli start-ups in an effort to adopt cutting edge innovation under development to keep them ahead of the competition in their respective sectors. This type of activity is not a 'trend' but rather a 'necessity' and is why Intel is investing $2.7B in its Israel operations, and why Barclays is building an R&D center in Israel, and why Groupon bought their Israeli competitor after its competition had just been around a few months.

The bottom line - the continued growth of Israel's technology sector and the influx of global conglomerates looking to get in on the 'acquisition scene' can be seen as the long-term retaliation which will strengthen the country further.

Below is a summary of some of the acquisitions of Israeli technology companies from the past 7-8 weeks:

1. Groupon purchased their Israeli competitor Grouper for $8MM. What's interesting here is that Grouper wasn't even a year old before being exited.

2. Broadcom acquired Israeli chip manufacturer, Provigent, for $313MM. Provigent's technology is expected to help Broadcom improve the speed of wireless networks bogged down by heavy smart phone usage.

3. Sapiens, in a single deal, bought two Israeli companies - FIS Solutions and Idit Technologies for a combined $80MM.

4. Intercall, the U.S.-based web conferencing company, purchased Israel's Unisfair for $35MM.

5. McAfee, just a month after being acquired by Intel for $7.8B, picked up database security software company, Sentrigo for an undisclosed amount.

6. We've all heard of this small company, Facebook - well, they made their first Israeli acquisition a week or so ago, purchasing Snaptu for $65-70MM. Snaptu was founded in 2007 and will provide Facebook with a way for simpler mobile phones to access more complex mobile applications.

This is the world in which JANVEST operates - except the money these companies use to get off the ground is money we put in - money from individual accredited U.S. investors. If you're interested in learning more, email Brian Rosenzweig at brian@janvest.com.

Mideast Instability and Investing in Israel's 'Tech-conomy'

2011-02-22T18:30:00.002+02:00

While conflict is unfortunately nothing new to Israel, the recent unrest in Egypt, Tunisia and Libya have Israelis and Americans alike concerned about the possible impact Arab regime changes would have on the Jewish State. And while analysts around the globe are dealing with the various political and military implications for Israel, those invested in, or considering investment in The Start-Up Nation, are looking at the amplified risk for their portfolio of emerging technology companies.

Assessing the potentially 'amplified risk' associated with the regional unrest, one can assume the same frame of mind as if he/she were doing their standard due diligence on an investment opportunity.

1. Is the technology patented and what type of IP protection does the company have in Israel, as well as in target markets such as the United States?

Thankfully, the IP and its legal protection is not going to be put at risk even if Israel is drawn into violent conflict with its neighbors in the region. Even if the company needs to relocate, the IP is virtual and will not be endangered.

2. What if one or more of the company's Founders is removed from its operations, for any number of reasons - can the business continue?

Making investments in companies where most of the value is in the capabilities and know-how of the Founders, it is important to ensure that a system of 'checks and balances' is in place to protect the business even if one or more of the Founders are removed from its operations. Never invest in a company with one founder, that's the first thing. Secondly, make sure that all of the Founders have some familiarity with the innovation under development.

3. How scalable is the technology?

Technology, by nature, should be scalable. Investing in technology that is only applicable to one market or one integrator would be the equivalent of throwing money away. If the market in which the technology is being developed is under threat, the viability of that technology in a different market is key. This is why it is imperative that start-ups use their investors for their personal and professional network abroad - to open doors and gain traction outside of Israel's borders.

4. What type of infrastructure does the company have and what will be its infrastructural needs moving forward?

If we're talking about mid to late stage technology companies with 50+ employees, the integrity of its infrastructure in the form of office space and communications systems is vital. However, for pre-seed or seed companies in Israel developing software or Internet-based solutions, infrastructure is not necessarily of such great importance. Operating on shoestring budgets does not provide the luxury of large, fancy offices and dozens of employees. Instead, a handful of employees should be able to take a few laptops to any number of locations to work effectively with the technology intact.

CONCLUSION

The risk associated with investing in early stage technology companies in Israel can be as mitigated as investing in a company outside of Wilmington, Delaware, Sydney, Australia or Beijing, China - the investor just has to make sure the answers to questions like those mentioned above, are correct.

The Implications of Under-Financing Seed Stage Start-Ups in Israel

2011-01-25T18:29:00.002+02:00

In 2010, 45 seed companies in Israel attracted $38 million - the smallest amount raised by seed stage firms since 2004 (despite being the most populous start-up stage). The seed share of total capital raised was just 3% compared to an average of 7% over the previous seven year period. While this 4% may not seem like a huge deal, when we're talking about financing rounds of $500K-$1M in a market that attracts between $1.1 and $1.5 billion a year, this represents a huge chunk of capital missing from the high-tech sector. The approximately $50M not going to seed stage companies this year means that many emerging technology companies in Israel had to look to alternative funding sources, which are in extreme shortage as well.

So what does this mean for a high-tech sector with a lack of seed stage capital?

First and foremost, this creates a lack of companies able to make it to growth or revenue generation stages, which will ultimately mean a shortage of growing emerging technology companies. Without a pipeline of promising technologies under development and in early commercialization phases, global technology conglomerates that have for so long kept a close eye on Israel for acquisition opportunities, will begin to look elsewhere.

With 43% of industrial output in Israel belonging to the high-tech sector, the country's economy cannot afford to lose its technological edge, and by not supporting its entrepreneurs at their earliest stages - that is exactly what is set to happen.

Secondary implications are a rise in unemployment and the possibility of a 'brain drain' where Israel's brightest minds take their talents elsewhere for cultivation and funding.

For seed stage technology investors -

The time has never been better to invest in and profit from seed stage technologies in Israel. Competition for deal flow is almost non-existent, buy-in is relatively low, equity stakes are high and many acquisitions in Israel are being executed even before the VCs have an opportunity to participate.

Interested in looking further at seed stage technology companies in Israel - contact Brian Rosenzweig at Brian@JANVEST.com

Simple Question: Are You Ready to Invest in Israeli Technology?

2010-12-21T18:29:00.000+02:00

If you're reading this article, there's a good chance that this isn't the first time you've paid attention to something Israel-related. In fact, you probably read about Israel in the news on a regular basis, donate to Israel-related philanthropies, attend AIPAC or Israel Bonds events, take your family to Jerusalem, Tel Aviv, the Dead Sea and the Golan Heights for vacation, and read books like Start-Up Nation.

In parallel, you've known about Israel as a top technology producer for quite some time through any one of these aforementioned activities. And despite knowing that Israel is a hotbed for technology investments there has always been something keeping you from moving ahead with investing. Whether you've found a venture capital fund and the minimum was too high, or you came across a deal through a friend and the risk wasn't something you wanted to stomach, or you were nervous about sending capital abroad, you never quite pulled the trigger on allocating some capital to Israel's booming high-tech sector.

There's no need to go into why Israel is a fantastic market in which to invest because you know it is. There's also no reason to look at why excellent, small cap U.S.-based investment opportunities are few and far between. What is worthwhile is asking the very simple question - if the right investment vehicle came along, would you be ready to invest in Israeli technology?

What if you could do the following:

Invest in early stage technology start-ups in Israel through an American company and U.S.-based fund
Get equity and diversify your portfolio in up to ten emerging technology companies in Israel by meeting the fund minimum of $100,000 USD
Have no legal or tax exposure in Israel - being only accountable to U.S. tax laws
Be part of a fund with only a 3 to 5 year holding period
Participate with only private accredited U.S. investors from across the country
Receive access to the fund's deal flow - being able to see promising start-ups in Israel before the investment is actually executed
Work directly with a management team consisting of both American and Israeli technology and investment professionals

If you're intrigued and you've thought about investing in Israel - let's talk.

Email - Brian@JANVEST.com

Happy New Year from JANVEST Technologies

Israeli Technology Review 2010

2010-12-21T12:03:00.001+02:00

This year has proven to be one of the hottest years for mergers and acquisitions of Israeli emerging technology companies in over a decade despite a continued decline in venture capital fund activity. JANVEST has mapped out some of the trends, facts and highlights from this year:

TRENDS IN ISRAEL'S HIGH-TECH SECTOR

Smaller acquisitions (under $100M)
A wider array of global technology conglomerates looking to acquire Israeli technology
Earlier stage acquisitions - incubation period for acquisition 3-5 years
Venture capital funds investing more money in later stage companies
Diminishing number of early stage investment partners and funding sources
China/East Asian investments in Israel are growing

TECHNOLOGY FINANCING SUMMARY (through early Q4)

Total Capital Raised by Israeli Technology Companies: $918M (up 8% from 2009)
Average Financing Round: $3.55M (compared to $2.8M in 2009)
57 companies attracted more than $1M each

2 raised more than $20M
8 raised $10M-$20M
13 raised $5M-$10M

Israeli venture capital funds invested $278M in Israeli companies or 30% of all tech investments in Israel (a 10% decrease from 2009)

Percentage of Capital Raised by Technology Sector (% of all capital raised)

Life Science (Biotech) - 27% ($249M)
Communications - 21% ($189M)
Internet - 16% ($151M)

Capital Raised by Stage (% of all capital raised)

Seed Stage Companies: 3% (most populous start-up stage and receives least amount of capital)
Early Stage Companies: 33%
Mid-Stage Companies: 48%
Late Stage Companies - 16%

Source: Israel Venture Capital Research Center

ISRAELI TECHNOLOGY ACQUISITION HIGHLIGHTS

1. Google purchased its first Israeli start-up, LabPixies (founded in 2008), for $25M, only to purchase a second within six months, Quiksee, for which it paid $10M.

LabPixies is a widget and games web company that Google uses to create personalized iGoogle pages

Quiksee allows users to upload videos of locations to Google Maps

2. AOL acquired its 5th Israeli technology company, 5MinMedia (founded in 2006), for $65M

5MinMedia produces instructional video content for the web and has over 20 million monthly visitors to their website.

3. IBM buys its 8th Israeli start-up, Storwize (founded in 2004), for $140M - investors triple their money

Storwize provides data compression technology to help clients reduce physical storage requirements.

4. Yifang, a leading Chinese consumer electronics company, purchases Pegasus Technologies for $60M

Pegasus Technologies is a developer of digital pens which translate handwriting into digital formats

5. Digital Sky Technologies, the largest Russian internet company, acquires ICQ for $187.5M

ICQ is the leading instant messaging service in Russia and Eastern Europe

6. Broadcom acquires its 7th Israeli company, Sightic Vista, for $10-$20M

Sightic Vista develops software and hardware image processing and enhancement solutions for digital cameras and video applications

7. GE Healthcare buys Orbotech Medical Solutions for $14M

Orbotech develops nuclear medicine technology (cadmium zinc telluride detectors)

Putting your 401K to Work in Israeli Technology

2010-11-23T22:20:00.004+02:00

Despite many accredited investors having substantial funds in their 401K, most individuals stick strictly to the varied, but still limited investment options associated with their employer-sponsored retirement plan.

Over the last decade however, more participants have been pushing for a wider range of choices, which has resulted in the option of self-directed brokerage accounts. By opening up an account with a brokerage firm of their choosing through the plan, the participants are offered a much wider universe of investment selections. Of course, there are usually limitations to how much of the 401K can be allocated to a self-directed account, but this is a window for self-directing participants to find and invest in better performing funds or buy individual securities.

A second hurdle to using your 401K in a self-directed account is making sure that investment is not seen as a 'plan asset'. Through a standard and widely used 'Management Right's Letter', which every portfolio investment will sign (if you're going through a Venture Capital Operating Company or VCOC), you can do away with this issue quickly and effectively.

On a weekly basis, we at JANVEST get asked the question, "Well, can I invest through my 401K?" In trying to be as flexible with accredited investors as possible, we went to work with plan managers and legal counsel to make sure the answer to this question, in many cases, would be "YES".

If you're interested in learning how to put your 401K to work in Israel's high-tech sector, email Brian Rosenzweig at Brian@JANVEST.com.

Younger, Smaller and Cheaper: A Closer Look at Israeli Technology Acquisitions

2010-11-22T14:04:00.003+02:00

M&A activity in Israel being at a decade high beckons a closer look at the country's 2010 acquisition summary to date, which reveals some very interesting trends that are changing the way investors from around the globe are looking at this booming technology market:

YOUNGER

Israeli start-ups are not sitting around for 7-10 years to be contenders for acquisition, but rather are being bought, in many cases, even before Series A venture capital fund financing rounds. What was a decade of incubation for these technology companies has turned into two, three, maybe five years of operation in order for a successful exit to take place.

Let's look at a few examples from this year:

5Min Media - Founded in 2006 and acquired by AOL
LabPixies - Founded in 2008 and acquired by Google (Google's first Israeli acquisition)
DroidSecurity - Founded in 2009 and acquired by AVG Internet Security

For the seed investors, which in a lot of cases ends up being Israeli Angels, these earlier stage acquisitions represent substantial returns.

SMALLER

A lack of venture capital in the Israeli market is causing start-ups here to really focus on significantly reducing their burn rate, streamlining operations and putting every Dollar or Shekel to use in the most effective way possible. The first place to start is to ensure your team is compact, talented and capable of wearing many different hats from R&D to HR to operations, marketing and business development. Companies being acquired have just a handful of employees working out of small offices in Tel Aviv's periphery.

CHEAPER

Social Times, a prominent blog covering Internet and social media technology, compiled a list of The 10 Biggest Acquisitions of Israeli Companies This Year (2010). Here are some interesting numbers from that article related to the nine companies with their exit prices listed:

6 out of 9 companies were bought for under $70M
3 out of 9 companies were acquired for $10M or less

While these numbers are on the smaller side for traditional venture capital funds, 'Super Seed Funds' and Angel investors, which participate at earlier stages are reaping the benefits in a big way. More and more individuals in Israel are getting involved in technology investing. These private investors understand that getting in early with multiple companies, using more modest capital at an excellent valuation and getting out within a few years is a more rewarding, mitigated risk and effective way of investing in and profiting from tomorrow's technology.

Kevin Ryan - Former CEO of DoubleClick (Sold to Google for $3B) Speaks in Israel

2010-10-27T11:36:00.002+02:00

This week Ernst & Young held its annual 'Journey' conference in Israel – a conference that has been known as one of Israel's premier business gatherings for more than a decade.

As the keynote speaker at the event, E&Y invited one of the most successful technology entrepreneurs of the decade – Mr. Kevin Ryan – former CEO of DoubleClick, a company providing online advertising services and which was sold to Google for $3B. Mr. Ryan started his speech by saying that he rarely, if ever, accepts public speaking engagements outside of the U.S. given his time constraint; however, he accepted this particular invitation because of the message he wanted to deliver to the audience and that was: Israel is the epicenter for innovation, human and intellectual capital.

Mr. Ryan went on to laud the emergence of Angel investor networks as a great alternative funding option for companies, specifically those in the Internet and telecommunications space. Venture investing is back, he claimed, through the bundling of smaller capital from multiple Angel investors (private LPs) and acquiring larger chunks of equity in earlier stage companies.

In addition, Mr. Ryan placed significant emphasis on how important people are to a business. "Good people can make a mediocre idea profitable while bad people cannot even make the best idea break even." He continued to share with the group some of his due diligence strategies on entrepreneurs and how vital it is to be on the ground cultivating relationships with and interacting on multiple levels with start-up founders before actually moving forward with an investment.

A final point Mr. Ryan made was that a very strategic approach has to be taken to successfully invest in early stage technology companies. While investing in the 'flavor of the month' will not get you to where you want be, investing in companies that will continue to meet market demands five years down the road are in the proverbial 'sweet spot'.

The concluding component of the conference was focused on entrepreneurs. There were sessions for investors to meet Founders/CEOs of start-up companies as well as seminars about exit options lead by representatives from the NASDAQ, NYSE, Toronto Stock Exchange, the SVP and Head of M&A for SAP amongst others. Here, the overarching theme was that investors today can purchase a disproportionate share of companies, due in part to capital scarcity, and as a result, experts expect the global economy to be back on track by the time these companies are ready for an exit. The leading indicator of this is the number of technology IPOs. In Israel, 2010 has seen a return to pre-financial crisis levels with a total of 44 IPOs expected by the end of the year.

Overall, this event was inspiring because it underscored the relevance of JANVEST in the Israeli market and also brought together many of Israel's best and brightest, solely focused on building companies and creating investment opportunities.

M&A Activity in Israel is at a Decade High

2010-10-26T11:08:00.006+02:00

Don't take our word for it - just read the news ..... daily. Opening up news sites online these days has consistently been met with updates on yet another Israeli start-up being acquired. Despite a global economic downturn, technology companies around the world have and continue to be on an Israeli start-up shopping spree. What used to be a minimum 7 to 10 year incubation period for technology companies to grow to acquisition size is now typically no more than 3-5 years, at least in the Israeli market. These early stage acquisitions are not being met, generally speaking, with $100m+ exits, but rather $20-$60M buy-outs, which is a good day for the handful of investors and the dozen or so company employees.

Here is just a tiny sampling of M&A activity in Israel from the last two months:

Yahoo acquires Dapper for $50m (Dapper was founded in 2006)
Qualcomm acquires iSkoot for undisclosed amount (iSkoot was founded in 2005)
Google buys Quisksee for $10m (Quiksee was founded in 2002)
AOL acquires 5MinMedia for $65m (5MinMedia was founded in 2007)

On top of these acquisitions, a number of IPOs are being planned on NASDAQ, as well as foreign exchanges. Global investment bank, Roth Capital, is expecting an Israeli revival on Wall Street with six Israeli companies planning IPOs in the coming year. PeerTV, an Israel-based start-up, has filed for a London IPO where it expects to raise around $9.5m USD.

On top of all this - the Israeli government is creating new incentives to usher in foreign investments into the country's high-tech sector. JANVEST has taken advantage of a number of these incentives and is passing them along to our U.S.-based Limited Partners.

To learn more - contact Brian Rosenzweig at Brian@JANVEST.com

Deloitte’s 2010 Israel Venture Capital Indicator Survey

2010-10-04T15:22:00.000+02:00

Every two quarters Deloitte Touche in Israel produces a Venture Capital and Private Equity survey. The survey constitutes an attempt to identify trends within the venture capital arena and give a summary of VC expectations of the Israeli VC community for the next six to twelve months. This is the survey’s 33rd instalment and is based upon responses collected in June 2010.

Here are JANVEST’s highlights from the most recent VC indicator survey:

77% of venture capitalists believe the gap is in Seed and First Round. 13% of respondents believe this gap to be in Mezzanine financing and no venture capitalist believes that there is no investment gap. The dearth of seed-stage capital means that willing investors will find ample opportunity to bargain and secure deals at terms unlikely to be found anywhere else.

38% of venture capitalists believe that their focus should be on updating the technological incubators program. Indeed of the $1.0B raised by 450 Israeli high-tech companies in 2009, only $24M of that went to seed stage companies.

Dovetailing nicely with the above point, 76% of respondents believe that the Treasury Department’s “Competitive Advantage” program to encourage the high-tech industry should focus on encouraging Seed investments.

A striking 77% of respondents claim that venture capital fund raising will become more difficult; whereas only 23% claim that venture capital fund raising will remain the same. The general sense that VC fund raising will become more competitive serves to reinforce the strong bargaining position of potential investors.

53% of venture capitalists expect a drop in assets under management (AUM), whereas, only 14% of respondents expect an increase in AUM. Nevertheless, there was a significant increase in optimism pertaining to Israel embarking on its first IPO on the NASDAQ since July 2007 (Voltaire). This was easily understood by an impressive 72% of respondents believing for this to occur by the end of this year.

A New Year's Note

2010-08-31T15:03:00.003+03:00

With the coming of every Jewish holiday season, we take time to reflect on years past and to prepare for what we hope will be a positive and fulfilling year to come. This is especially true in Israel where the last decade has brought us reflections of a less positive nature; wars, political and regional instability, and general uncertainty. However, as we reflect on 5770 (2009-2010) and focus on 5771 (2010-2011), there is an entirely different picture from Israel –

Israel has defined itself, specifically throughout this recession period, as a destination for global business, research and development, and ultimately investment. 5770 saw Israel officially become a fully developed, first world nation through its acceptance by the Organization for Economic Cooperation & Development (OECD) into its consortium of 34 of the world's most powerful economies. Israel's Central Bank was ranked #1 internationally for its efficient functioning, contributing greatly to what was only a minor contraction of the economy in 2009 when many nations were reeling from much larger economic damage.

The country's high-tech sector is being stewarded along and promoted by the best 'high-tech parliament' in Israel's history - a government creating an environment more conducive than ever for foreign and domestic investment. Unparalleled laws and incentives are being put in place to encourage more individuals and institutions to get involved with the country's high-tech sector.

We have much to be thankful for during these Jewish holidays and as we look forward to 5771, we feel fortunate to be a part of a vital movement bringing economic support to Israel and to her most dynamic technology start-ups

May you have a sweet and successful new year!

Shana Tova/ שנה טובה,

The JANVEST Management Team

Top Reasons Americans Give for Investing in Israeli Technology

2010-08-29T17:20:00.002+03:00

As JANVEST's management team makes its way from Atlanta to San Francisco and many places in between, individuals choosing to invest in Israeli technology have given reasons why they've opened their proverbial checkbooks to fund dynamic high-tech start-ups in Israel.

Below is a collection of that feedback in no specific order:

1. If there's one thing I've learned over the past three years, its that I need to diversify my portfolio.

2. Over the last 30 years, I've supported Israel politically, spiritually, socially and culturally - but never economically. It's time for me to invest in the backbone of the country's economy - its' high-tech entrepreneurs.

3. I've got zero exposure to investments abroad - it's very attractive for me to start in Israel's fast-paced high-tech market.

4. My risk appetite is low but my interest in Israeli technology is high, and I like that I can get equity in multiple start-ups without significantly impacting my liquidity.

5. Nobody does technology like Israel. It's a no-brainer if somebody is offering me the ability to get in on the ground floor with a few of the country's most dynamic start-ups.

6. When I look at the stock ticker, I see the highest priced and fastest growing stocks belong to technology companies. Technology is the present and future of business.

7. It's important to me that the U.S. and Israel continue to be trading partners, which means Israeli entrepreneurs need to continue developing innovative products and services. Funding this innovation is key to making sure Israel remains relevant to presidential administrations.

8. Israeli start-ups have and continue to outperform technology start-ups from around the world. My investment is going to the very best technology in development today from telecommunications and Internet businesses to the latest and greatest in security and defense. These industries are here to stay.

9. Economically, Israel has been very resilient to this recession, contracting only slightly during the worst of it and rebounding quickly. Resilience and growth - two components that will work towards protecting my investment.

10. The Israeli market is simply presenting the best investment opportunities for my capital in today's global economy.

For more information on how you can invest in Israeli technology - contact Brian@JANVEST.com

Angel Investing: The Most Satisfying Experience You’ll Ever Have

2010-08-11T09:52:00.000+03:00

REPOSTED from XConomy

[Editor's Note: On July 29, leading Silicon Valley angel investor Ron Conway, the founder of SV Angel, gave the opening talk at AngelConf, an afternoon conference for budding angel investors sponsored by the Y Combinator startup incubator program in Mountain View, CA. The following is an edited transcript of Conway's talk, published by permission.]

I’m going to spend my seven minutes talking to the people in the room who have never angel invested before. I have invested in over 500 companies as an angel over the last 12 years, and it’s definitely been the best 12 years of my life. I’m delighted that after dabbling in angel investing for about five years prior, when I was investing in about three new companies a year in the early 1990s, I decided “Hey, I like this angel investing, even though I haven’t had time to do a lot of it.”

I had sold a company that I had acquired to a NASDAQ-listed, publicly held company, so I had a chance to change my career. I went home and told my wife, “Guess what my new job is going to be? Angel investor, full-time.” I teamed up with Ben Rosen. He lives in New York, but we made most of our investments out here in Silicon Valley. In 1994, Ben and I decided we would only invest in this thing called the Internet. In 1994, Netscape had not even been founded yet. The Internet has now become a massive, huge sector. But I absolutely love doing it.

Why do I angel invest? After the Google IPO, frankly, I could have stopped investing. But you know, it’s not about the money. For me, it’s one simple word: Because it’s interesting. Angel investing is the most interesting thing you will ever do. If I could, I would convince you in seven minutes to take the leap and start angel investing. Because if you talk to an entrepreneur, and they are starting a company—usually, there are about four cofounders in each new company—you get to listen to those entrepreneurs tell you what is going to happen in the future. Entrepreneurs are a crystal ball telling the technology industry where it’s going to be in four to five years. There cannot be anything more exciting and interesting than being part of that. I’m just completely addicted to it. There is no way I’m going to stop.

Six years ago, Mark Zuckerberg sat down at the University Cafe and told me that “I will have 300 million users” and had complete conviction about that. And he was “wrong”—Facebook has 500 million users, going to a billion. Just having that conversation is very exciting—experiencing his passion and conviction.

Some of these companies go out of business, but if you take a portfolio approach the way I do, which is fairly aggressive because I make a lot of investments, in that portfolio you will usually, over the course of a couple of years, have a hit that will pay for all the future angel investments that you make. So you won’t have to be nervous about “Am I overinvesting?” If you hang in there, usually angel investing will self-fund for you.

There is nothing complicated about this. Don’t over-analyze it. It’s writing a check and mentoring and adding value. All the documents today are pretty standard. You don’t need to get involved in “what are the terms?” That doesn’t happen anymore—the business is mature enough.

Go find an entrepreneur you think is a great team-builder. We invest in the entrepreneur first, not the idea. The idea morphs too much. We invest in people we like. Write a check and get going. The Black Eyed Peas have a great song called “Let’s Get It Started.” Use that as your theme song.

There is a little controversy over whether there are too many angels or too many super-angels or too many “boutique angels.” I hope that every entrepreneur with the guts to start a company gets funded. The more angels we have in Silicon Valley, the better. The more ideas get funded, the more innovation happens. There are thousands of entrepreneurs who need us. We are funding innovation. We are funding the next Google and Twitter—it could be in this Y Combinator class.

It’s interesting and coincidental that we are meeting at Y Combinator, because when you come to Demo Day, you are going to see 36 companies that are very heavily pre-screened. Y Combinator is basically the MIT, the Harvard, or the Stanford of incubators. I spoke to the class this week and I told them, “You guys have a leg up—you are highly pedigreed already,” having been selected by Y Combinator. You’ve got to find one or two out of this class and make the leap and write that check. Get to know the entrepreneur, mentor the entrepreneur, and it will be the most satisfying experience you’ll ever have.

I started Altos Computer and took it public, and that was exciting, but not as exciting as investing in these startups, and the sense of accomplishment you get. How do you think I feel when I see Mark Zuckerberg now? I say “Hey, do you realize that when I met you, you were basically a kid in shorts and flip-flops?” A few months ago, I told him that I’d told a reporter that, and I was worried that he was going to quote it. And he goes, “Why would I be pissed, it’s true!” Meeting humble people like this, who are building the future of Silicon Valley, is the best thing you could ever do.

The other sense of satisfaction you get is that we are contributing back to technology when we do these startups. A lot of them go out of business, but if you help an entrepreneur learn how to wind down a company successfully, there is an art to that too. It’s a very satisfying experience. And believe me, quite a few of these companies do go out of business.

I have one minute left, so I am going to rattle off the personal characteristics that we look for when we talk to an entrepreneur. This is after 15 years of investing in 500 companies and talking to thousands of entrepreneurs. First of all, we look at the individual themselves. Are we going to have good chemistry? Do we think this is a good person? That is number one.

The other characteristic is a clear vision. Can the entrepreneur build a team? Is he or she passionate? Are they flexible? They are going to have to morph their idea. Are they decisive? Are they good listeners? Do they move fast? Do they believe execution is everything? Do they trust their gut? In the end, these entrepreneurs make lots of hard decisions, and they’ve got to trust their gut, make a decision, and move ahead.

Are they being reliable? Do they communicate with their team and their investors? Do they hire ahead of needs? Do they lead by example? The entrepreneur has to understand that if they aren’t working 24/7 the team is not going to. And 24/7 is what startups are about.

The other thing I tell entrepreneurs we invest in is that “Your reputation is your biggest asset.” Whenever you operate, make sure you don’t impinge your reputation.

With that, welcome to the angel investing world! Get your checkbooks out. “Let’s Get It Started.”

Ronald Conway, an active angel investor, was the Founder and Managing Partner of the Angel Investors LP funds (1998-2005) whose investments included: Google, Ask Jeeves, Paypal, Good Technology, Opsware, and Brightmail.

JANVEST to Kick Off U.S. Road Show in August with D.C., Atlanta and San Francisco

2010-07-25T14:19:00.001+03:00

From August through October, members of JANVEST's Management Team will be making their way through cities across the U.S. to generate awareness of the investment gap within Israel's high-tech sector and the investment opportunities this gap presents to accredited American investors.

With venture investing at a decade low in Israel, early stage high-tech start-ups are starving for the vital capital they need to continue the development of their innovative technologies and grow into thriving businesses. As a result, U.S. Angel investors have the opportunity to get fantastic deals on ground breaking technology at a fraction of the capital required just 2-3 years ago.

JANVEST is increasing access to the Israeli high-tech sector for Americans interested in start-up investment opportunities; offering a one-of-a-kind channel to get in on the ground floor with some of Israel's most dynamic early stage companies. To get this message out to both groups and individuals alike, JANVEST will be making appearances in the following cities:

Virginia Beach, VA - August 5th

Washington, D.C. - August 9th

San Francisco, CA - August 16-19

Atlanta, GA - August 21 - 29, September 1-12, and October 1-4

Presenting August 26th at the America Israel Chamber of Commerce Professional Seminar. Click here for more information.

Birmingham, AL - August 31 - September 1

Savannah, GA - September 12-13

Jacksonville, FL - September 14 - 15

Baltimore, MD - September 23 - 28

Philadelphia, PA - September 28 -29

Pittsburgh, PA - Early October - Dates TBD

Boston, MA - Mid-October - Dates TBD

For more information on meetings at these locations, please email Brian Rosenzweig at brian@janvest.com.

Israeli government initiatives supporting investment into Israel

2010-07-19T09:49:00.000+03:00

AUTHOR: Daniel Scott - JANVEST Guest Blogger

Whilst it remains to be seen whether Israel’s high-tech industry has finally emerged from the knock-on effects of the global economic crisis, what has become abundantly clear, is the Israeli government’s commitment to the industry’s regeneration.

Certainly the Israeli economy weathered the global turmoil better than many other national economies. However, it was still dealt a blow by the general meltdown. Above all, this translated into a decrease in the level of capital available for start-ups and venture capital funds. Start-ups were forced to work with smaller investments, and in 2009 only one venture capital fund – Sequoia – was able to raise a new fund. Moreover, at one point in 2009 the amount of new money flowing into start-ups was at its lowest point in a decade.

As Janvest highlighted in an interview with VC Café earlier this month, of the $1.0B raised by 450 Israeli high-tech companies in 2009, only $24M of that went to seed stage companies. This was despite the disproportionately large number of early stage start-ups as compared to start-ups in initial revenue or growth stages. Nevertheless at the same time, the dearth of seed-stage capital in Israel also means that willing investors will find ample opportunity to bargain and secure deals at terms unlikely to found anywhere else.

Dovetailing with this capital vacuum has been the plans unveiled over the past month by Prime Minister Netanyahu and Finance Minister Steinitz aimed at revitalising the high-tech sector. A number of measures have thus been outlined:

Encouraging investment in start-ups and venture capital funds by providing a financial safety net. This is coupled with the “Angel Law” – more formally known as the Law for the Encouragement of Capital Investment – which provide tax benefits and breaks for investors in seed-stage companies.
Encouraging Israeli companies to grow instead of selling themselves out early. The idea is to provide tax incentives for medium and large-sized high-tech companies to acquire smaller tech companies and in this way to establish themselves as large growing concerns.
Establishing Israel as a leading centre for the development of financial technology, in the same way that over the past 15-years Israel became a leading player in communications technology.
Creating additional exit opportunities by encouraging companies to go public on the Tel Aviv Stock Exchange
Improving the quality of science and technology teaching at the high-school levels by creating programs to train teachers in these subjects, re-training ex-high tech employees as teachers, and encouraging current high-tech employees to teach on a part-time basis in the schools.
Encouraging Israeli academics abroad to return to Israel by providing tax breaks from future earnings based on technology they develop.
Encouraging additional sectors of society such as the ultra-Orthodox and Israeli-Palestinian communities to participate in the high-tech economy by subsidising part of their salaries.

Essentially, the plan addresses almost all of the problems facing the Israeli high-tech sector. Of course, announcing a plan is one thing, implementing it is another. Yet if the initiatives are able to avoid the traps of bureaucracy then they stand well to introduce greater flexibility to the Israeli high-tech market. Moreover, at this early stage what remains important for prospective investors is that the State has made a commitment to offer a wide rage of incentives and benefits, with special emphasis given to high-tech companies and R&D endeavours.

Israeli VC firms' share in local funding hits 10-year low

2010-07-15T10:27:00.000+03:00

An Israel Venture Capital Research Center - IVC quarterly report on venture capital fund raising shows that while Israeli funds invested more in the second quarter than they did in the first quarter, their overall share of local fundraising fell to its lowest level in ten years.

IVC Research Center CEO Koby Simana said, “We are seeing what may be the seeds of recovery in capital raising by Israeli high-tech companies. However, the share of Israeli VC fund activity continues to drop - declining in the second quarter to its lowest level in ten years. In the meanwhile, some of the impetus can be explained by non-Israeli VC funds stepping up. It still remains to be seen if the increase in amounts raised is a one time event or a bona fide change in the trend.”

In the second quarter, 104 Israeli high-tech companies raised $343 million from venture capital funds and other venture investors both local and foreign. The amount was up 47 % from the $234 million raised by 91 companies in the first quarter of 2010, and 23% above the $279 million raised by 122 companies in the second quarter of 2009.

The average high-tech financing round was $3.3 million, compared to $2.57 million in the previous quarter and $2.29 million in the second quarter of 2009.

Sixty-three companies attracted more than $1 million each. Of these, two companies raised more than $20 million each, seven companies raised $10 million to $20 million each and 15 companies raised $5 million to $10 million each.

In the second quarter of 2010, Israeli VC funds invested $91 million in Israeli companies, 17% more than the $78 million in the first quarter, but 19% below the $113 million invested in the corresponding quarter of 2009.

Israeli VC funds accounted for 26% of the total amount invested in Israeli high-tech, compared to 33% in the previous quarter and 40% in the corresponding quarter of 2009. The remainder of capital came from foreign investors as well as from non-VC Israeli investors.

Israeli VC funds invested $12 million in foreign companies during the second quarter.

The life sciences sector continued to lead capital raising both in the second quarter, with $109 million (32%), and in the first half, with $195 million (34%). The Internet sector followed with $70 million (20%)) in the second quarter.

Published by Globes [online], Israel business news - www.globes-online.com - on July 14, 2010

JANVEST Interview with VC Cafe

2010-07-05T19:44:00.001+03:00

As venture funds struggle to raise money in Israel, seed capital, one of the earliest and riskiest stages of investment, is becoming harder and harder to secure. Janvest, a new seed fund of $5 million backed by American angel investors and chaired by the former head of the Mossad (Danny Yatom), saw an opportunity to fill the gap by making offering US-based angel investors the opportunity to tap into the Israeli startup industry. To learn more, VC Cafe interviewed Brian Rosenzweig, one of the managing partners in the new fund and the former marketing director at 21Ventures.

VC Cafe: What is the premise of Janvest and how large is the fund?

Janvest: The premise of JANVEST is to give a wider base of U.S. investors the opportunity to participate in the Israeli high-tech market. Our aim is to connect U.S.-based Angel capital with early stage technology companies in Israel, and do so in a way that substantially mitigates the risk of seed stage investing. In addition, we are working with more modest capital, for example, the current fund we are putting together (first of many), is $5.0M, which will be used to invest up to $500K in approximately 10 seed stage companies in the Internet, software, telecom, security/defense and alternative energy sectors.

VC Cafe: How is Janvest different than other angel funds or VC funds?

Janvest: First, JANVEST is a combination of best practices from leading Angel networks and VC funds. The funds are comprised exclusively of independent, individual investors, who are being given the opportunity to take an active, but not decisive role in the due diligence process on interesting start-ups. Ultimately it is up to the Management Team, Advisory Board and Board of Directors to make the investment decisions, manage the capital investments and oversee portfolio company development. I should mention that JANVEST’s team is comprised almost entirely of ex-technology executives – individuals in the Israeli high-tech sector that have spent the last 25-30 years managing and growing small to mid-size high-tech companies. Each member of the team specializes in one of the aforementioned technology sectors and will play an active part in the management of companies falling within their area of expertise.

Secondly, we are selling a fixed investment product – a fixed number of investors, a fixed buy-in and a fixed number of portfolio companies. Essentially, investors are receiving equal shares of 10 Israeli seed stage start-ups for relatively small capital.
Which brings me to my third difference and that is that we are working with more modest capital – both in terms of our fund buy-in, the amount to be invested and ultimately the exits we are expecting. Our objective is to double, triple or quadruple the valuations of these companies and get them ready for larger investments from VCs or other funding sources. In short, we don’t need the massive exits to repay our investors and we’ve got roughly 10 companies to do it with, which obviously increases our chances for multiple profitable exits.

VC Cafe: What’s your time frame for exists?

Janvest: We are looking at an average holding period of 3-5 years. In this time, as I said previously, we are looking to improve the valuations of our companies and get them ready for either a VC investment round (and an equity buy-out for us), or a strategic acquisition, such as Google’s acquisition of LabPixies back in April after 2 years of operating with just Angel capital.

VC Cafe: Do you make any performance guarantees to your LPs? What are the expectations?

Janvest: We cannot make performance guarantees – no. But we do tell them that we are aiming for a 3X-5X return on each portfolio company. Now inevitably some will fail, but if we can break even at a 10X return on the portfolio, that is still outperforming most VCs in the market, and with 10 companies in the portfolio, the chances of a profitable portfolio exit is good.

VC Cafe: There has been a drastic rise in the number of funds offering seed (or super seed) capital in recent months, especially in the valley. Do you see a crash coming?

Janvest: In 2009, roughly 450 Israeli high-tech companies raised a little over $1.0B. Only $24M of that went to seed stage companies in Israel despite the disproportionately large number of early stage start-ups as compared to start-ups in initial revenue or growth stages. There is a major lack of capital in the Israeli market for seed stage companies and very few, if any, funds are doing what we are attempting to do at the scale we are attempting to do it at. You can get fantastic deals in the Israeli market because of this capital vacuum for early stage start-ups. So while a crash could be on the horizon in the States, I don’t see the same problem in Israel.

VC Cafe: How do you plan to source new deals in Israel given how crowded the market is?

Janvest: To my previous answer – the market for seed stage companies is not crowded at all in Israel. VCs are investing in later stage companies. The Chief Scientist Fund is overextended (to what degree this could be seen as investment competition). In fact, Israel is about to pass this new Angel’s Law, which is going to incentivize local investors in Israel to put money into early stage start-ups rather than dumping cash into shopping centers in Romania or Bulgaria. The government needs more funding to hit seed stage companies in Israel – its a good situation for us.

VC Cafe: In comparison to single super-angels like Yossi Vardi, a lot of the angel funds are characterized by meritocratic submission and due diligence processes. How will Janvest’s investment committee make its decisions?

Janvest: There is a very organized and precise decision-making process that involves up to 3 months of due diligence on any given company. The Management Team and Advisory Board work together to execute this process, which has a built-in checks and balances system to make sure that when it comes time to decision making, all eyes on the project are in agreement one way or the other.

VC Cafe: What Internet areas do you consider particularly attractive for investment at the moment?

Janvest: As long as the company has a new concept and is not just another application, we will look closer.

VC Cafe: Do you have any minimum criteria for investment? (pre-revenue/no prototype/mobile app only, etc)

Janvest: Yes. The companies need to have at least a proof of concept or beta version of their technology. And in most cases, they will have already received or put in some capital from either the founders themselves or local Angels.

***
On one hand, too little capital available for Israeli startups may dry up the VC pond completely, causing funds to exit too early (if they can), talented entrepreneurs to leave the country in search for greener fields (the valley), and shrinking the entire industry. On the the other hand, too much money available for investments isn’t good for the industry as valuations get inflated and exit expectations become irrational.
With the current level and frequency of exits, there are hard questions for the venture asset class in Israel as a whole. No wonder that the most recent VC Indicator survey by Deloitte Israel (Q1 2010) shows that 61% of respondents
claim that fund raising will become more difficult. Is a foreign fund of $5 million going to solve the problem, or is a more extensive government bail out needed?

Read more: http://www.vccafe.com/2010/07/05/janvest-wants-to-fill-the-seed-funding-gap-in-israel/#ixzz0spL1cLqK

Israel’s natural gas discovery and the implication for Israel’s high-tech start-ups

2010-06-24T12:32:00.001+03:00

Author: Daniel Scott - JANVEST Guest Blogger

With much of the world captivated by coverage of the BP oil spill, the discovery of a 500 billion cubic meter natural gas field off the coast of Israel earlier this month went somewhat unnoticed. Indeed, a deposit of natural gas – aptly called Leviathan – was found within Israel's extended territorial waters. Analysts from Israel’s National Gas Authority have already suggested that the volume of gas discovered has the capacity to:

- Turn Israel into an important natural gas exporter

- Provide an estimated $300 billion to the Israeli economy

- Supply all the electricity needs of the Israeli economy for 35 years

To understand the magnitude of the Leviathan field, consider this; the previous biggest gas discovery of 238 billion cubic meters, was made in 2009 at a site called Tamar, 60 miles off the coast of Haifa. The nearby Leviathan field is estimated to be at least twice that size.

Coinciding with the announcement of the Leviathan discovery, the Knesset announced a plan to support high-tech investment and retain innovative Israeli start-ups. In particular, two aims of the high-tech support plan are worth highlighting:

- To renew the flow of capital to the high-tech industry - primarily by encouraging Israeli institutional investors to invest in Israeli venture capital funds. Today, most of the LPs for Israeli funds are foreign investors. To that end, the state will bear a portion of the risk, by allocating NIS 200 million as part of the state budget.

- To provide Tax incentives for investors in early stage Israeli high-tech companies. Investors in start-ups will receive tax write-offs on investments for high-tech companies who spend at least 70% of their salaries in Israel.

Put simply, the Knesset program will prove an important step in ensuring that the next generation of Israeli high-tech start-ups receive grassroots funding early on. Tying the natural gas discovery along with the Knesset support plan allows for an optimistic assessment of the future for Israeli start-ups. Indeed, given that the major implication of the Leviathan discovery is that Israel will become a natural gas exporter, a number of areas for Israeli start-ups have already emerged:

- The development of technology to most safely store and transport natural gas and liquefied natural gas, in a politically unstable region.

- The development of technology allowing for a retrofit of the existing 150-mile Ashkelon-Eilat oil pipeline so that it can also transport gas.

- The development of technology to enable the most efficient use of natural gas in major industrial production. This area could prove particularly fruitful as Israel’s use of natural gas is expected to rise by 30% over the next decade.

- The development of technology to use natural gas as an alternative to gasoline and diesel in public transport. Given the determination to lessen Israel’s oil dependence, Israel has already taken a lead in this area. Indeed Israel has long taken the lead in a number of alternative energy fields aimed at reducing CO2 emissions.

Finally, as this blog has already noted, Israel was accepted by the Organization for Economic Cooperation and Development (OECD) to be a part of its consortium; changing Israel's status from that of a developing economy to that of a fully developed, first world economy - a change which will drive nearly $1 billion in additional capital into the Israeli market. With OECD acceptance serving as recognition of the Israeli economy’s robustness, the high-tech support plan, and the discovery of Leviathan and Tamar gas field will thus witness additional capital pumped into the Israeli start-up market as investors scramble to identify those companies most likely to develop the technology needed to capitalise upon Israel newborn natural gas industry.

Conditions for Early Stage Investing in Israel Changing in Favor of JANVEST

2010-06-14T10:58:00.005+03:00

For investors looking to invest in early stage technology companies in Israel, the time is now. Conditions for early stage investing in Israel have improved considerably over the past few weeks despite venture investing being at a decade low as a result of the global economic downturn. Let's look at a few of the factors contributing to an improved climate for start-up investments:

1. Israel was accepted by the Organization for Economic Cooperation and Development (OECD) to be a part of its consortium; changing Israel's status from that of a developing economy to that of a fully developed, first world economy - a change which will drive nearly $1B in additional capital into this market.

2. Israel's law has changed for Israeli Angel investors which will allow for local investors to write-off their investments as a loss from the start. This is a huge incentive for Israeli investors and will generate more investments at the crucial friends and family, pre-seed level (ultimately preparing those companies and their technology for larger investments) .

3. A number of large conglomerates such as Google and IBM have stated a growing interest in Israeli technology companies and will look to increase their investments in and acquisition of complimentary start-ups.

4. The Incubators Technology Forum predicts an increase in investment in 2010 by incubators in early-stage ventures. The assessment is based on a survey of incubators' managers, which found that they intend to expand activity this year.

5. Early stage technology companies are offering substantially better valuations for investors than were being offered a year or two ago. Out of the $1.02B that went to high-tech start-ups in 2009, only $24M was invested in seed stage companies (the stage which JANVEST is targeting).

In short, with more capital in the market specifically for high-tech start-ups, early stage technology investors are able to find more co and follow-on investment partners, as well as local exit opportunities for those portfolio investments.

Globes Online -- Silicon Valley Bank's Israel head lauds small VC funds

2010-06-02T12:45:00.000+03:00

AUTHOR: Batya Feldman

Size is not important for venture capital funds, the characteristics of small funds are, Silicon Valley Bank director of Israel operations Naomi Herman told "Globes". "Small funds tend to be more focused and have expertise in a particular field or specific growth stage of companies. Their expertise gives them a better high quality transactions flow than at large funds that invest in a range of industries."

Herman added, "Small funds also can supplement the abilities of large funds, rather than compete against them. Small funds can set up investment syndicates. Because of their small size, management fees are low and their partners appear to focus on fostering and the success of the portfolio companies."

"Globes": Is the venture capital model broken or not?

Herman: "I don’t have a crystal ball to tell me what will happen. SVB, as an institution, doesn’t think that the model is broken. If it were, we'd be in trouble. The industry is still developing and changing, and the funds that survive are the very strong ones."

What will the industry look like in three years?

"We're still consolidating. There won't be the money that there used to be, but the contraction will bring the industry to its proper and normal size."

Herman spoke at the College of Management CEOs conference earlier this week. Her co-panelists on the "Venture Capital - is the model broken?" were Genesis Partners managing partner Eddy Shalev and Aviv Venture Capital managing partner Yoav Chelouche. She presented a study by her colleague at Silicon Valley Bank, Sven Webber, which found that small venture capital funds are more profitable than large funds. The study defined a small venture capital funds as managing less than $250 million.

Although most Israeli venture capital funds fall into this category, they do not appear to be particularly successful.

Silicon Valley Bank is the venture capital arm of SVB Financial Group Inc. (Nasdaq: SIVB), which has been active in Israel since the 1990s and opened a local office three years ago. Herman, who has been with SVB for 12 years, was recently appointed to the post in Israel.

Published by Globes [online], Israel business news - www.globes-online.com - on June 1, 2010

JANVEST Plans for Plenty of Collaboration with the AICC

2010-05-23T19:36:00.001+03:00

Earlier this month, JANVEST Technologies, LLC joined the American-Israel Chamber of Commerce, Southeast Region (AICC), and with it, an outstanding network of professionals, investors and businesses tuned into Israel's business environment. As a new type of investment vehicle aimed at connecting U.S.-based Angel capital with early stage technology companies in Israel, JANVEST sees our association with the AICC as mutually-beneficial on two primary fronts:

Marketing & Business Development. JANVEST sees its peer members of the AICC as a perfect group in which to develop continued interest in Israeli technology investments. Through our involvement in the various committees, events and networking functions, JANVEST aims to generate ongoing awareness of the unique investment opportunities surrounding Israel's most promising seed stage start-ups. In parallel, we will look to provide the AICC with a network of early stage start-ups in Israel that will ultimately focus on the U.S. for business development and expansion.

Local News & Insights. Just as the AICC will act as an information provider for JANVEST; giving us access to the business climate in the Southeast, so too will JANVEST look to drive information revolving around Israeli seed stage technology start-ups to the Chamber. This two-way flow of information will allow both groups to react accordingly and potentially find new ways for the organization and its members to collaborate.

Tom Glaser, President of the AICC, and Felix Zilberstein, CEO and Managing Partner of JANVEST Technologies, share a few words on our new association with the AICC -

Over the last few years, I've definitely heard the AICC come up more amongst start-ups looking to expand into the U.S. market. I'm thrilled that we now have the opportunity to work with Tom Glaser and his team, both in terms of paving the way for new types of cross-border collaboration, but also as a channel to get more people invested in Israel's start-up market.

- Felix Zilberstein - CEO & Managing Partner / JANVEST Technologies, LLC

We’re excited to have JANVEST Technologies as a member and look forward to working with them and their portfolio companies as they seek to enter the US market. We anticipate developing a very constructive relationship with them.

- Tom Glaser – President/AICC, Southeast Region

For more information on this posting, please send inquiries to Brian Rosenzweig, Managing Partner – brian@janvest.com.

The Widening Gap in Israel's Start-Up Market

2010-05-23T13:19:00.007+03:00

Over the last 50 years, as developing countries have turned into growth markets, substantial wealth has been accumulated by individuals who have identified and invested in high-growth sectors having real investment deficits.

Today, in perhaps the most dynamic technology market in the world – Israel, a major investment deficit, made worse by the current recession, is quietly being marketed to global investors.

Venture capitalists, who have positioned themselves as a primary funding source for Israeli start-ups over the past decade are turning their attention to later stage companies where the investments are larger, the risk is more mitigated, and the reward potential is higher.

Traditionally, Israeli entrepreneurs have been able to scrape together smaller investments from friends and family between $50,000 and $200,000 to get them to the point where the VCs would start paying attention. However, with the VCs moving further away from pre-revenue technologies, many seed stage start-ups are finding themselves without a financing partner.

Despite the best efforts of local and foreign Angel investors, Angel networks and Israel's Chief Scientist Fund to try and fill this capital void, the number of promising companies at this stage seeking capital is still disproportionately greater than the funding available.

On the bright side – the companies that are receiving this mid-range or 'Momentum' capital are finding a new, shortened 'Idea to Exit' lifecycle. The traditional 7-10 years associated with this process is looking more like 3-5 years today, with a recent Israeli exit to Google as a prime example. LabPixies, an Israeli start-up that received $1M in Angel capital in 2008, was acquired in April 2010 by Google (the company's first Israeli acquisition) for $25M.

Angel investors entering into this market are finding a 'Perfect Storm Scenario' whereby they can invest smaller amounts of capital, diversify their portfolio across multiple technology sectors, experience shorter company lifecycles and ultimately be on the "receiving end" of a more modest, but yet still rewarding exit.

The message is clear - for foreign investors considering the idea of investing in Israel, there is no better time than now.

JANVEST is offering U.S.-based investors the ability to take advantage of the immense opportunities in the Israeli technology market. For more information – send inquiries to Brian Rosenzweig, Managing Partner, at brian@janvest.com.

Israel Voted into Exclusive OECD Consortium

2010-05-11T12:55:00.000+03:00

Israel's acceptance this week into the 34 nation consortium that is the Organization for Economic Cooperation and Development (OECD) is further proof that the country has and continues to be a significant contributor to our global economy. While the exclusive acceptance into the Paris-based OECD is newsworthy enough, the inevitable, resounding and positive effects for Israel are even more impressive.

JANVEST has compiled a list of, what we believe, to be the most beneficial and impactful effects on Israel's technology market from its association with the OECD:

1. Influx of investment – The secret's out – Israel's economy is a worthwhile and lucrative landing pad for international investments seeking opportunities in developed, OECD-associated countries

2. More Cleantech innovations- With Israel's need to conform to OECD air pollution and waste management standards, more cleantech entrepreneurs in Israel will focus on developing solutions mandated by the Israeli government, as well as the other 33 countries in the OECD consortium.

3. A larger percentage of the population entering the workforce - The OECD will assist Israel in creating a better, vocationally-oriented education system for the ultra-Orthodox, which represent a substantial portion of the unemployed and poverty-stricken. Putting this sector of the population to work will further strengthen Israel's economy.

4. Increased trade and improved business relations – OECD membership will act as a stamp of approval for countries with no, or very limited, trade relations to begin doing more business with Israel. For Israel's start-up, this is an excellent opportunity to develop early stage partnerships and develop business in new markets.

Technologist Gerry Sapir talks about Israel's Technology Market in Today's Global Economy

2010-04-25T22:33:00.004+03:00

Gerry Sapir, Managing Partner and Co-Founder of JANVEST Technologies, as well as a Partner at AfterDox, one of Israel’s most prestigious Angel networks, has spent the last two decades immersed in the country’s tech-centric ‘start-up market’. During this time, and through his involvement in numerous IT, software and Internet companies, Gerry has witnessed first-hand the obstacles that Israeli entrepreneurs have faced, and why success has and still seems to find its way to this part of the world.

While we’ve all read Dan Senor’s fantastic book, ‘Start-Up Nation’, can you tell us in your own words why Israel’s technology economy has really taken off?

I’d have to say that flexibility, persistence and an unconventional way of thinking are the main ingredients to the success of

Israel

’s technology market. Let’s take a look at ‘Flexibility’ – whether its dealing with our less than cordial neighbors, trying to sustain an economy with no major natural resources to speak of, or simply trying to adapt and stay ahead of a globalizing economy, Israelis have become incredibly improvisational. Second, ‘Persistence’ – there’s a saying in

Israel

that ‘no’ is not an option. This has and continues to be true in my opinion. Despite just trying to expand our businesses to global markets, Israeli products and services always come with a political undertone unfortunately, and persistence is what pushes through those boundaries many times. Finally, our unconventional way of thinking, specifically when we’re talking about technology, has been the key to some of

Israel

’s most innovative developments. Thinking about problems in a different light, or coming up with a less than obvious application or market for a product or service, is a driving force behind the creation of tomorrow’s technology.

It is obvious Israelis are incredible technologists, resulting in this technology-driven economy, but what are some of the pitfalls for Israeli entrepreneurs?

While we’re great at developing technology, generally speaking, we lack some of themarketing and business management. After many years of evaluating early stage start-ups, I’ve seen it time and again where a company’s founders, as brilliant as they may be, run to their technical solutions to drive the company neglecting the importance of strategic planning, budgeting and global marketing. Even with capital raised, it is very easy to run a company into the ground if you don’t have the right management skills or team of advisors guiding you along the way.

ow howae How has Israel’s start-up market been affected by the global recession?

The main issue in the Israeli market is that the capital, specifically from the venture capitalists, is not as available as it was pre-2008. In 2009, roughly 450 Israeli high tech companies raised around $1B, almost half of what was raised in 2008. The Israel Venture Capital Research Center shows that 2010 is going to be even worse than 2009 if investment trends seen in Q1 continue. Without this capital, these start-ups cannot get off the ground.

Where do you see Israel’s economy over the course of the next year, five years, ten years?

Back to persistence – I am a great believer in the Israeli entrepreneur and in their ability to develop disruptive technologies despite significant barriers. Over the next decade, be sure of it, Israelis will continue to churn out market changing products in all fields related to science and technology. Assuming we can continue to support these entrepreneurs with financial and intellectual capital, you’ll see the next Google or Nokia.

What role do you see the U.S. playing in the technology market in Israel during this time?

The combination of Israeli ingenuity and start-up spirit with American financial resources and real business know-how allows for substantial, unparalleled momentum when it comes to developing and commercializing innovation. We've seen American investors take a sincere interest in Israel , and as long as that interest can be nurtured and cultivated into investments, we'll continue seeing some real successes come out of the country.

We've heard the word 'Co-Opetition' used in reference to the Israeli technology market – what exactly is meant with this term?

"Co-Opetition" is a great word representing one of the major advantages Israel has over other tech-centric economies. Due to the small size of the Israeli market, and the isolated regional environment, start-ups in the country have created a type of cooperative, supporting one another and testing out various technologies, while still being in direct competition. This can only happen in an informal society with a culture like that which has been created and embraced by Israelis.

On a final note – tell us about an amazing start-up that you’ve seen or been involved with over the last three decades.

Three years ago I was checking out a company, PlanPlatform, which enables web-based drawing, viewing and editing of CAD/CAM designs, while giving users the ability to share and review drawings without any software or files copied, even enabling co-editing of designs together in real-time. The product was developed in Israel over the last four years and was recently sold to AutoDesk for $25M and made part of their Project Butterfly.

Welcome to the JANVEST blog

2010-04-22T16:31:00.001+03:00

Let me start by welcoming you all to JANVEST's new blog. JANVEST is at the forefront of the Israeli technology market; connecting U.S.-based Angel capital with early stage technology companies in Israel. While the idea of investing in Israeli start-ups is nothing new, our approach and investment methodology is absolutely unique.

Our blog will be a place where we can give our constituents; i.e. investors, potential investors, technologists, Israel advocates, entrepreneurs and investment professionals a look at the Israeli technology market from our eyes - the eyes of JANVEST's Israel-based Management Team, Advisory Board and Board of Directors.

Today's global economy is certainly presenting challenges to start-up companies seeking the financial resources needed to grow into thriving conglomerates. Israel and the fledgling companies part of her 'Start-Up Economy' are no exception to the rule. The venture capitalists, which have been the primary channel for start-up funding in Israel, are suffering immensely. In Q1 2010, the Israel Venture Capital Research Center reported that Israeli venture capital funding has hit a decade low. However, despite the lack of capital in the market, Israeli entrepreneurs are still developing disruptive, market changing technologies for tomorrow.

JANVEST's aim is to soften the blow of this recession for Israeli entrepreneurs, establish ourselves as a premier funding source for emerging technology companies, all the while giving foreign investors, primarily in the U.S., the opportunity to actively participate in the economic development of this country and benefit from lucrative exit returns.

We hope you'll read, respond to, interact with, and share our blog.

For more information on JANVEST, contact Brian Rosenzweig at brian@janvest.com or visit our website at www.JANVEST.com.