Showing posts with label Start-Ups. Show all posts
Showing posts with label Start-Ups. 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]

Monday, September 7, 2015

Givatay'im Library Garden & FinTech Exits

Memorial in Givatay'im Park (behind main library) 

Tel Aviv's Start-up Community Looking for Bigger Growth - Less Traction Than Predicted
FinTech start-up exits the last four years. Israeli entrepreneurs & investors are looking for a faster / bigger trend (statistica)
FinTech entrepreneurs & investors are a bit frustrated here these days. They are not sure why the start-up flow is slow. Israelis are looking at the global FinTech growth (especially in San Francisco) where investment in new start-ups is growint quickly. Some estimate more than 1,000 new start-ups the last 18 months. Moran Faibish in a recent meetup  talk, thinks the shortage of financial engineers, a new breed of  programmers, mathematicians, and financial market expertise is to blame. His take is focused around the need for moving hi-tech workers into the FinTech with an intensive training program. See article on Tel Aviv Living blog.


Tuesday, July 16, 2013

Start-up Attraction: ScaleIO and Alvarion: Two Different Tech Exits

ScaleIO was sold recently for $200 million, giving it's founders, owners of 30%, $60 million. Not a bad exit for a new start up. On the opposite side, Alvarion, a publicly traded wireless equipment company is breathing it's last gasps: a bank is taking the company into receivership. Exits in tech start-ups are like watching a slow baseball game. Sometimes they turn exciting, the rest of the time the game is slow and sleepy. ScaleIO is a software only company. This is the kind of bet most Israeli entrepreneurs like to make. Most of the effort is in the code and the marketing. Building real hardware takes more time and usually much more money. Selling something that requires samples and stock is also more complicated. Software is easier to sell from Israel, especially if the target markets are Europe and the US. To contrast, Alvarion is almost completely a hardware company. They are also in a highly competitive networking sector. To add to this, Alvarion put their effort into Wi/MAX, a new format of wireless networking supposedly covering a wide area and solving some problems in WiFi we use today. I don't want to go as far as saying that software only start-ups have a better chance of success than hardware only. It is much more complicated than this.

Saturday, July 6, 2013

Two Start-Ups, Different Fortunes (Money and Passion)

“The Globes” (Israel's Business Newspaper) ran a story about “Boxee”, a start-up purchase (see: Globes story ). In this case, Boxee has not returned any profit to it's investors or employees. It seems a little wasteful to work for six year (the company was founded in 2007) and in the end have value of the invested capital as the sale price. Yet in the world of high-technology start-ups, this is not the worst outcome. Actually, this is probably one of the good stories to be told. Since most start-ups do not produce more than one generation of product and close without selling their intellectual property or operations. Contrast this with the large, $1.1 Billion purchase of Waze to Google just a few weeks ago (see: Ha'aretz story or Time Story). Here, the $67 Million investment, returned 16 times to it's investors. These are the fortunes of Israeli start-ups. While the amount of ingenuity and industry ends up as unique and innovative products, their fortunes differ widely. Israeli entrepreneurs are well aware of the risk involved in starting a company and taking millions of dollars from investors, especially in the venture capital market.

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

Wednesday, September 15, 2010

Israel Start-Ups Need Change Again

If we can't make chips and iPod accessories, let's go to the beach! Tel Aviv beach with lots of skin and looks. End of summer 2010 / © 2010

In a recent article [here] Ha'aretz reports on failure of Israeli and American venture capital funds to keep the Israeli innovation engine going. To many this is shocking news. To the ones here "on the streets of Tel Aviv" or more accurately in and out of start-ups, this is not news. For a few years now, Israeli venture funds have stopped making investment in new start-ups. To some this is not such a bad turn of events. The attitude towards traditional venture capital has changed dramatically the last few years. From the 1980s to about 2005 American and Israel VC funds have been the most respected and adored organizations in business. But something happened from 2002 to 2007. From the investment perspective, VC funds suddenly "lost their magic dust". Suddenly, instead of making a great deal of money, they lost money. And LOTS OF IT! In a few meetings with small start-ups, most seem to think that Israeli venture funds are looking for safer, which means more mature start-ups. Today, it is harder to get funding for a company with a rough prototype and a good fresh team. Also, it seems like venture funds are avoiding the really new technologies until they are proven. So they miss the front edge of the technology cycle. This accounts for the very few WEB2.0, cloud computing, mobile devices (iPod/iPhone accessories) and display (LED, OLED) start-ups in Israel. The Israeli government, through innovation incubators and the office of the chief scientist have tried to get early stage start-ups going. They have programs for seed investment with almost no strings attached. As long as you have a good idea that you can get into a prototype form they will get you started.


Thursday, March 18, 2010

Northern Israel Entrepreneurs Active and Working - Technion Conference

While the venture capitalists in Israel have been concentrating on the big deals, investment in the range of US$10 million, entrepreneurs have been busy away from the spotlights. In Israel venture capital investment has gone down to pre-2005 levels. The consequence is very few large venture capital backed start-ups. There was a talk of this lucrative sector in the Israeli economy turning into different type of financing models. In Israel where high-tech start-ups is a big economic factor many are having a hard time dealing with the drop in companies and jobs. But contrary to predictions from two years ago, this does not mean people stoped innovating. Technologists have been developing new ideas some even building products. Some small teams have started marketing their products.

Yesterday, at the Technion (Israel Institute of Technology, equivalent to USA's MIT) about 250 start-up workers and managers gathered to discuss the state of affairs. It seemed to me that most of the attendees were from northern Israel. Haifa is situated in the southern edge of Israel's gallil. Some of Israel's known start-ups are situated in northern Israel. But central Israel (the Dan region) is better known for start-ups, venture capital and entrepreneur services. Nevertheless, the meeting was well attended and a lecture hall in the engineering building was filled to capacity.


Friday, March 12, 2010

Can Israeli Technologists Make THE Peace with Palestinians? (A Ghost Story)

If you are a follower of Israeli start-up scene you probably heard the story of Ghost. This is a virtual desktop start-up that just folded it's doors [start-up mania article] The idea was to offer the latest technology to replace the desktop in a cloud computing platform. The start-up was a collaboration of Israelis and Palestinians on a large scale. Large scale in terms of start-ups in Israel that is. For the first time Israeli investors and executives used Palestinian programmers. This was a big deal here. Most people were worried and suspicious. First of all, who has ever heard of successful Palestinian programmers? Actually, who ever heard of any Palestinian programmers??? This kind of thinking is what made the project such a anomaly to begin with. The company was in management and financial terms Israeli, but the work was "outsourced" to the west bank.


Saturday, November 7, 2009

Start-Up Nation: Book on Israel's Entrepreneurship

How does Israel innovate? How does Israel produce more start-ups that make it to the NASDAQ than whole of Europe? How does Israel use the technology (i.e. electronics) start-up model in agriculture, bio-tech and now clean-tech? These are questions people have been asking for as long as there has been Israel. Israelis first built guns, cannons and avionics when no one would sell them arms to defend themselves (in the 1940s.) Than came a period of building the state itself and Israel built housing, factories, roads and public buildings (in the 1950s and 60s.) If you look carefully from the air you see the famous green line, an outline of the state in green where Israelis planted trees and literally changed the landscape (and the environment - that took more than 50 years.) Now Israelis build and design Integrated Circuits for Intel and cell phones for Motorola. But more than that, Israelis build companies. Not just products and inventions. Organizations to create and compete in the world technology, bio-medical and other fields. This phenomenon is discussed in Start-Up Nation. From an Israeli perspective it seems like an old story, start-ups go back 30 plus years. Here we have lived the gradual change and every week see a new product or announcement or a company acquisition. But in reality it is a big deal. Building a company is hard enough, building a whole economy and culture to drive company building is phenomenal.


Sunday, October 25, 2009

Israeli Tech On Hold: VCS, Exits & Eggs

It is not a secret that the Israeli technology sector is taking a nap. A big component of Israel's success in the technology sector was start-ups. Israel's entrepreneurs and engineers got into the business of starting up companies and selling them to American companies. This business has been going for over 10 years until about 2005. American venture funds bring investment capital from Wall Street and American retirement funds. Israelis start companies and usually sell them to American companies. The return in this sector is usually higher than the stock market. Everyone is happy. Until something changed!

In 2006, 2007 and 2008 there have been very few "exits". 2009 is not much better. These are sales of companies or initial public offerings in the stock market. Exit(s) is a buzz word in the Israeli start-up sector. It is what Israeli entrepreneurs seek more than anything else: cash for a 5 to 10 year hard work. Selling a company brings good returns to the investors and does not involve the process of taking a company public. But the shift in technology from software and networking to Internet and software services has slowed down the investment-development-exit train. Established venture capital funds were dealt a blow, many small ones are completely gone. Entrepreneurs in many tech sub-sectors needed to reformulate their ideas and start working on new prototypes. What Israel can teach the world is how quickly change happens. In US and other large markets change does not have to happen as quickly. The market's momentum can hold up companies and financial pipelines. But then they eventually crash. In Israel small scale reveals quickly what changed and where the new developments are going.


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: