Showing posts with label Finance. Show all posts
Showing posts with label Finance. Show all posts

Tuesday, September 29, 2015

Ramat Gan Bursa vying for Tel Aviv's FinTechies

Ramat Gan, just east of Tel Aviv is chasing FinTech firms with new attractive construction @ DAVider 2015
While Tel Aviv is undisputedly the location for Israeli FinTech entrepreneurs, Ramat Gan is still chasing the big city technologists and finaciers for attention. Long considered the "orphan child" of the central region, construction at the business areas is moving at a faster clip than anywhere in Tel Aviv. Allegation of cutting lengthy and expensive construction approval processes have been buzzing for decades (actually have turned into a conviction of the last mayor). Yet, the smaller (and much less glitzy) and more affordable city, somehow manages to continue building at a fast pace. There is a new effort to turn the more traditional location, home to banks, insurance companies and financial institutions into a start-up hub. Yet, this illusive goal, of capturing the imagination of the Israeli entrepreneur (and investor) within one location, is still unattainable. But not for the lack of trying. [more on this in future posts]
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Wednesday, June 17, 2015

Tel Aviv's Hidden Business World: Financial Services

AIG is a large retail insurance in Israel, also runs financial operations unrelated to Israel

Would you be surprised to see a large American financial company with 200 employees in the middle of Tel Aviv? Would it be more surprising to hear what they do: the same work as similar workers are doing in New York, London, Shanghai or Berlin? Managing mutual fund portfolios, supporting customers in the US, researching markets (opportunities), analyzing and advising on economic trends, essentially whatever financial workers are doing anywhere. The trend to open a dedicated operation or a department in the financial sector is not new here. What is new is how people make the transition from Paris, London and Sidney to Tel Aviv. In the past a move to Israel was not advised to the faint of heart. Today Tel Aviv's status as a global city similar in character to most European ones is accepted by many. This change is what drives mostly American financial companies to open work centers here. 
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Sunday, June 15, 2014

From Tel Aviv Israel? Brain Darin is NOT ALWAYS BAD!

David Blatt, Maccabi Electra Tel Aviv's winning head coach, is heading for the NBA...
David Blatt just announced his departure as head coach of Maccabi Tel Aviv, AFTER winning the European basketball championship! This comes at a day when Stanley Fischer, Israel's former bank of Israel governor has been approved to the number two position in the US FED. It may not seem like big news anywhere else but here in Tel Aviv. For decades, Israel has seen a steady brain drain to the US. At first in low level science and business circles. But recently it has also been in the very top ranks. Israelis do not speak easily when it comes to "yordim" (literally in Hebrew: going down, like to Egypt, or as opposite from "olim" going up TO ISRAEL). In the last Nobel prize (2013) announcement, Arieh Washel and Michael Levitt, two former Israelis were trumpeted as big ISRAELI success stories, both originally from here, yet making their homes, and somewhat embarrassingly, their successful contribution, away from here. Prime minister Benyamin Netanyahu, was featured on news channels proudly congratulating one of the winners. But the other, chose not to be associated with his former state, saying simply that early in his career, after graduating from the Weizmann Institute of Science, he was not seen as a possible (i.e. good enough) candidate to stay and research in his field, and therefore not awarded a tenure track position. Both scientists clearly told the sad story of leaving Israel in order to research in a top rank university. Both were reluctant to leave Israel but essentially told the same old story: "we did not see the opportunity in Israel, so we went off to another place... ".
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Wednesday, July 24, 2013

Cleaning Up Financial Speculation Mess: Will It Affect Israel's Sound Business?

Nochi Dankner is today's financial shenanigan villain
If you follow the Israeli business papers, it seems like every week, some banker or fund manager is accused of some wrongdoing. There was a case of the “Israeli Madoff”, a broker who swindled about a hundred investors of millions. There is a case of Bank Leumi, Israel's oldest bank, announcing a write-down of a three billion shekel loan to Nochi Dankner's IDB companies. There are questions of sudden loss of value in the most conservative private retirement accounts in most Israel's biggest companies. In general, it seems like strange things are happening, yet regulators and senior executives are vague about what exactly happened. Israelis react in a wide range of responses. There are the angry and vindictive type, asking to prosecute finance executives as common criminals. Others are more philosophical, essentially accepting the losses as part of the risk of investing in any retirement fund involves in market speculation.
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Saturday, October 30, 2010

Israeli Economic Shift: Less Start-Ups, Bigger Investments (Globes™ top 10)

New Motorola building in the Airport City industrial complex. The new shopping complex which opened a year ago is bringing new life to this large office and warehouse complex. / © 2010

Israel's economy is going through a tectonic shift. Small start-ups and small venture capital firms are disappearing. Big start-ups (US$ 10 million) and big venture firms are holding on. Darwinian survival of the fittest is hitting hard the Israeli start-up world, the lucky few survive, but many are dead or dying. In a recent article picking the top ten start-ups The Globes™ newspaper picked the year's most promising candidates. This is their sixth year of picking the top 10 start-ups and their past record is pretty good. The shift from many small start-ups to few big ones is driven by outside factors. Mostly the collapse of the American venture capital industry which brought a sharp drop in technology investments. As the old saying goes: "when the American venture capital industry catches a cold, Israeli start-ups catches pneumonia". Most of Israel's smaller venture capital firms have closed in the last four years. Investments in small start-ups has dropped to a trickle.

The Globes™ 2010 ten most promising start-ups*:


Rank Company CEO Funding [US$]
1 Provigent Dan Charash 55
2 Prime Sense Inon Beracha 29.4
3 WIX Avishai Abrahami 20
4 Waze Noam Baradin 12
5 Panaya Yosi Cohen 22
6 Solar Edge Guy Sela 60
7 Broad Light Raanan Gewirtzman 30
8 Work Light Shahar Kaminitz 17
9 Life Bond Ishay Attar 9.5
10 Aero Scout Yuval Bar-Gil 70
* from printed Globes article, 25-25 October, 2010
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Wednesday, November 11, 2009

Simple Economic Models: Cars, Water or Real Life

When the economy changes drastically government officials and economists try to tell stories about it. They give us a model like a lesson in high school science class, sometimes they even give draw a diagram. A car is a good model for the economy, it has been used by senators and governors, we have a car but no fuel so we can't go anywhere. This model works great in the US, running out of fuel is a real emotional issue for Americans. There is a model of water, when it stops flowing we need to "prime the pump" (famous quote from depression era economists.) Water model is good, there are pipes and pumps, reservoirs and leaks, all kind of elements in a water system. Do we need simplified models to understand what is going on in the worlds economy? Do we need models for local economies? Why don't we deal with the economy as it is? When a bank collapses we should talk about the risk the bank investment managers took. When the US sub-prime Real Estate fiasco was going on, even Warren Buffet wrote about it in his eloquent yearly report to stock holders.

Models are good for certain things. But making an analogy for the world economy using a car and fuel is an over simplification. So is the use of water in a pump for the flow of money in any economy even a small one. Why don't we have accurate explanations from economists and government leaders on the economic situation? Why do we need to wait for a book to be written a year from now telling us how demand for durable goods (cars, refrigerators, diamond rings) goes down forcing less manufacturing of these goods to stop manufacturing, which means factories have less money for worker's salaries. Or demand for old technology like big cars running on gas goes down but there are still not enough new designs and not enough electric engine production capability to make hybrid and electric cars which would be more in demand if we had them. Or that in the last fifteen years American car companies has not produced a single low cost model so Hyundai a Korean car company or Sang Yang a Chinese company are becoming an attractive alternative? Demand, competition, trade advantages, import tariffs, these are not such hard concepts to grasp.

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Tuesday, October 27, 2009

Israel's Business Moral Weakness: Are We Learning ?

Reading the business papers the last few months in Israel and there are disproportionate number of articles reporting immoral executive behavior. I am worried about two moral issues: greed and fraud. Greed is a new accusation in Israeli business circles. Until this generation the country's businesses had a small fraction of the money we see today. Greed without the ability to "get the money" simply does not work. Fraud is also related to the amount of money involved but goes even deeper into the psyche and moral history of Israel. Let's look at greed in this article and cover fraud later.

Israel's incredible economic growth has brought a whole new class of problems. The first noticeable trend is a concentration of the money in a small group of people. Like the proverbial south America banana republic, Israel is made up of a few individuals and families who own a majority stake in companies and Real Estate. This is the first nouveau riche group in our long history as people. This new group now wants to live like the rich in the US and Europe. With life of luxury comes desire for more. As few succeed, many want to follow them. A race for more and to beat the "guy next door" results. Greed is the driving emotion to other forms of financial corruption.

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Wednesday, September 30, 2009

Shift Your Image of Tel Aviv: Buzzing & Financial ?

The last few posts' feedback bring up again the gap between image and reality of Tel Aviv. The main reason I write about this has nothing to do with "righting the wrong" in our world. There is no reason to prove CNN or NBC wrong about their reporting emphasis on the Israeli-Palestinian fighting. Mainstream media highlight of military skirmishes, storm casualties and political meetings among world leaders is their version of the news. Blogging specifically and the Internet in general has validated a whole different view of the news. One that is much more relevant to most people most of the time. There are so many other important issues to deal with on a daily basis. To most people the traditional news content has almost become irrelevant. I say almost because the older population and the consumers of TV news are not going to replace their cable TV with a laptop connected to the Internet. Commuters on the way to work are not going to turn off the radio and listen to podcasts on their iPods (MP3 players.) As radio survived all these years in the shadow of TV, so will TV continue in the shadow of the blogging, Internet sites, podcasts, video clips on YouTube, networking with FaceBook, Twitter and Linked-In... add your own favorite Internet format here.

Tel Aviv and Israel in general has never been treated fairly in the mainstream press. That is the average Israeli's opinion at least. In my opinion this issue has more to do with the openness of Israel to foreign media plus the ongoing skirmishes between Palestinians and Israelis. The Palestinians are simply stuck in limbo and have had bad luck with their leadership. It does not seem like this will change. The Israelis are simply strong militarily and have absolutely no place to go. So CNN TV reporters and London Times photographers are having a field day here. Israelis only see this part of the equation and are as mad as hell. OK, enough with the bad news... here comes the good news. (PLEASE do not write comments on the Israeli/Palestinian conflict, there are plenty of other blogs to do that.)

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Sunday, July 12, 2009

Israel Economy - Independent, American Ties, Worldwide Ambition

Dead Sea cosmetics store in Dizengoff center: Israeli firms learned to depend less on the USA and develop customer demand all over the world, see article.

With the global economic downturn spreading into many smaller economies everyone wonders what will happen in Israel. The Israeli Economy has been dependent much more on the US economy and the strength of the dollar in the past. Economic downturns due to this dependence has sent many Israeli companies looking for customers all over the world, specially during the last ten years. This is not a sign of Israelis retreating from US markets, just more emphasis on expansion in other places. Take the Israeli Dead Sea cosmetics company. A relative newcomer to the retail sector in Israel they were known as strong marketers to the US starting to sell there in 1999. Today their products ship to the whole world and have loyal customers in places like central Asia and Africa. This focus on selling globally is unique and still not seen in most Israeli consumer product companies.

On larger end of the spectrum Teva Pharmaceuticals is one of Israel's largest company. It has expanded in the last ten years to become a truly international company with many more plants and distribution centers in Europe than anywhere else in the world. This trend to serve new markets is also seen in construction and engineering. Israeli architects, building construction and real estate investors have focused their efforts in Europe and Asia for more than fifteen years.

Let's get back to the Israeli economy. Israel has been distancing itself from the US dollar since the drop of the dollar to shekel from around 4 to 3.2 two years ago. Real estate transactions which were all quoted in dollars are now quoted in shekels. The US financial downturn, started with the sub-prime credit crash events and moving to mainstream financial institutions, than the credit markets and finally hitting US automakers did not influence Israeli companies and investors directly. Also, what the American managers were doing in the US was not duplicated in Israel. This isolation in financial and managerial behavior is probably the single most crucial difference between the economies now suffering and Israel's economy. On the positive side, stronger Euro and Asian denominations are strengthening the economy here while there is drop in business from the US. Some would like to think that government or the private sector planned in some way a cushion from the global financial downturn. This is not the case. Israel has been in a slow economic period for the last few years (some say ten years or even longer). The high-tech bubbles of 2001 and 2005 hit the job market hard. This has slowed down foreign investment and the local real estate sectors. So while US, Europe and China were celebrating strong economies and high consumer demand through the 1990s, Israelis were spending less and getting used to living at a lower economic standard.

While the dollar has weaken against other denominations, the Israeli shekel has held well in the 2008/2009

A brief history of what makes the Israeli economy so unique and independent. The Israeli economy is an anomaly among countries. One of the only country to advance steadily over the last 60 years. As a Jewish community emigrating from Europe, private Jewish agencies started organizing economic institutions such as banks, insurance companies and mortgage programs. The Jewish agency backed by individuals and communities realized the need to duplicate economic structure of Europe as far back as the 1880's. The British mandate in Palestine from 1917 to 1948 brought further economic structure in the forms of legal and financial organization and professional structure. Up to the 1980's banking and accounting standards in Israel have been tightly based on British laws and practices. On the ground Isarel's economy has been isolated from the Arab world since the founding of the country in 1948. This with a combination of few resources and small internal markets has forced the economy to develop foreign markets for it's goods and services. The Israeli economy goes through a change in character every twenty to thirty years. From the 1930's to the 1960's the local economy was based on agricultural exports and internal real estate development. In the 1950's to the 1990's the diamond polishing industry was the main engine of growth. Since the 1970's technology companies, both foreign and domestic have been the strongest contributor to the economy.

Today the Israeli economy is certainly feeling the American and global financial downturn. But unlike other economies there are no rioting workers and no food lines (Israel does have a strong socialist support system, this also helps in bad economic times). Why? Simply because the sectors making up the economy, agriculture, technology, services are not on the brink of collapse. The financial sector is also not suffering from dept or bad credit problems. Israelis like to live a little beyond their means but the average Israeli has not taken credit in the amounts seen in the US. Finally, Israeli companies have gone through the ups and downs of dependence on a single market and a single financial partner. In the mid 1980s Israel suffered from hyper-inflation and everyone remembers what happened. This has given them the insight not to put all their eggs in one basket. It also gives people the drive to succeed especially in hard times.

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Monday, May 4, 2009

Israeli Venture Capital Report - Start-Ups Still Starting

The international accounting firm Price-Waterhouse-Coopers releases a venture capital investment report every quarter. The report for the Israel venture capital report for the fourth quarter of 2008 is interesting. Essentially investment in the start-up sector is flat. It has been this way since mid 2004. The other interesting fact is the contribution of the state to start ups through the chief scientists office. The report says:
"The domestic venture capital funds invested approximately $142 million, this sum representing approximately 49% of total investment for the final quarter of 2008."
- as far as the contribution from the state of Israel:
"20 companies, representing 25% of all companies raising capital in the final quarter of 2008, have received grants from the Office of the Chief Scientist. About $94 million of total investment funds has flowed into these companies. The data for 2008 reveal that 101 companies raising capital during the course of 2008 received grants from the Office of the Chief Scientist and that approximately $494 million of total investment funds flowed into these companies."

While most people consider Israel to have a free enterprise economic system, the support of Israeli start-ups with $94 million in the quarter makes it 34% of the total start-up investment. In any form of economic structure this would be a high component of government involvement. While venture capital investment is a risky business, the state sees this as a crucial factor in the economic strength of the state. Israel has been a technology start-up leader for many years. Both local entrepreneurs and foreign ones (mostly from USA) contributed to the Israeli technology sector with new companies which remained independent and many companies which were acquired by bigger companies (also mostly from the USA). This may account for the high level of Israel's government contribution to new companies. The other element here is the high level of innovation. No financial incentive would have lasted this long without the natural drive built into the Israeli personality. Engineers, scientists, business managers and tinkerers are driven by the desire to create something new. The drive to own your creation and to control the destiny of a company is what pushes many entrepreneurs. This is still true in the down economic times and after the second downturn in investment in the last decade. Actually, as some technology products heat up, more people come up with ideas for better products. Maybe this is the computer age version of what the Jewish pioneers did here 120 years ago. Let's see where the start-up investment goes in the next year and how much the technology market and the economic situation has over investors and creators. STAY TUNED...



Credit: נוסח הקרדיט: הארכיון לתולדות פתח תקוה ע"ש עודד ירקוני Jewish guard on horse (date unknown circa 1930 to 1948) Petach Tikva.


see the report at:
http://www.pwc.com/extweb/ncsurvres.nsf/docid/98033724DA2E5C368025721E00314441 Read More...


Friday, November 14, 2008

Huldai reelected in Tel Aviv: city goes local

Huldai on his blog lays out his views and experience [HE]

With all the turmoil in the world and an economic tsunami about to hit our fragile shores, Tel Aviv reelected Ron Huldai on a purely local message: Tel Aviv is for everyone and not just the big businesses and the high price restaurants (Ha'aretz quotes Huldai's campaign manager saying: "Tel Aviv is not just [the bohemian] Rothschild Boulevard"). Ha'aretz's article on the results [http://www.haaretz.com/hasen/spages/1036997.html] mentioned the opposition's mix on the city council. It seems like Tel Avivians are turning inward. This happens to most people who are beaten up by outside forces. Israel is just starting to feel the shock waves of the world's financial explosions. There are reports of lay-offs in the services and hi-tech sectors.

Tel Aviv went on a repair spree, I guess some of it had to do with the elections. Once in five years the street talks goes, we get a few new sidewalks and streets. But more than that, the downturn in the financial services sector is not hitting Tel Aviv anywhere as bad as probably London, New York, or even Hong Kong. Partly because the Israeli economy has been in a slow recovery from 2002. Partly because the building industry as a whole has not followed US banks and investment institutions with the sub-prime to bond scheme.

Tel Aviv 100 index down 50% in 12 months


The Israeli hi-tech sector is still very dependent on the American financial world for seed start-up investment. Some of the smaller and weaker American venture capital firms have closed their operations in Israel. The large American companies with factories or development centers in Israel are also closing or at least laying off people. It is much easier for a company with headquarters in Cleveland or San Jose to cut costs in Israel and keep their image intact. But Israelis are not crying over this situation. The people who work for American companies have known for years that with the benefits of higher salaries and better work comes the risk of a fall in the US costing their jobs. Don't get me wrong, nobody is really happy about it, but you don't see food riots either. Just a gloomy mood all around and slightly emptier restaurants and cafes.

But there is a good news here too. With the slowdown in financial and hi-tech sectors there is more local focus. This is what the Huldai vote says. Tel Aviv can still look and feel good for the locals. There is still so much to fix, build, and enjoy without the glitzy American attitude. Let's hope that this is not going to take too long to "fix". Just like everyone around the world, Tel Avivians are looking to see what Obama and the new democratic congress is going to do about the American financial excesses (or should I say over-exuberance Dr. Greenspan?), maybe we will be wiser and less greedy in the long run? What do you think ? ? ? Read More...