Eran Wagner Copyright © 2016 IoT Israeli Conference. All rights reserved.

Average Financing Series Size Israeli Tech 2016 H1 2014 H1 2015 H1 2016 Capital Raised $1.6B in 334 deals $2.1B in 327 deals $2.8B in 359 deals Average Financing Series Size $4.8M $6.5M $7.9M VC backed deals $991M in 184 deals $1.4B in 182 deals $1.9B in 214 deals Average VC backed deal $5.4m $7.5M $8.7M 2014 2015 H1 2016 Total Exits proceeds $7.78B $8.04B $3.32B Average Exit size $65M $72M $74M 3

Israel at a Glance 13, 715 Miles ² Jerusalem 4.9% 8,522,000 Capital: Population Growth 2.8% Capital: Jerusalem 13, 715 Miles ² 4.9% Current Unemployment Rate GDP 305.7$ Billion 37,200$ Per capita

A Unique Innovation Ecosystem Over 350 MNC have a local presence Highest # of engineers per Capita “Israel is the most promising Investment hub outside of the U.S.” 1400 start-ups formed in 2015 OECD’s second highest (after South-Korea ) R&D spending as % of GDP (4.3%) Warren Buffet (The Tower Magazine)

Israeli High-Tech Capital Raising Israeli high-tech capital raising soars to $4.43B in 2015; 30% above 2014’s previous record VC-backed deals capture majority of investments in 2015, with $3.2B – up 36% from 2014 Number of large deals of $20M or more - up 62% in 2015

Israeli High-Tech Exits 2015 2015 Israeli high-tech exits hit $9.02 billion - up 16% from 2014 VC-backed exits reached $4.98B – highest in 10 years M&A deals below $1 billion strongest in 10 years – at $7.2 billion

A Unique Innovation System Unique Society high quality and low cost educational system- among the most educated societies in the world Highly adaptive, motivated and creative environment- leads many entrepreneurs to establish cutting-edge startups. Israel is a relatively young state- requires it to be hedge, nimble and disruptive. Part of the Israeli culture is taking risks- people know that failure is a decent option. Market Lack of natural resources that led to scientific-technological innovation system to ensure Israel quality of life The country’s small size and geographical isolation from its neighbors enhanced domestic dynamics and “Global-First” approach. Military service Young people already receive a high technical training during their military services During the service they get equipped with a high sense of responsibility and success orientation (highest per capita ration of engineers in the world).

A Unique Innovation System Government fostering innovation R&D Support The Office of the Chief Scientist at the Ministry of Economics, Trade and Labor provides a variety of support programs on an annual budget of about $400 million. 4.3% of Israel’s GDP accounts for R&D spending. Investment Support The Investment Law enables foreign companies to benefit from a company tax rate of only 10%, and investment grants of up to 24%.

Office of the Chief Scientist (OCS) Funding framework Hundreds of projects funded annually, across the start-up and industrial lifecycles. Support focuses upon the development of novel products based on new and innovative technologies. OCS and the Ministry of Economy provide R&D funding under the jurisdiction of The Law for the Encouragement of Industrial Research & Development (1984). 10

Supporting Entrepreneurs Target: Pre-seed and seed companies Special benefits: Fixed rate of support: 50% Perennial approvals Recognition of commercialization and marketing expenses Total support for a project: Up to NIS 5M for a period of up to 24 months Six months for the company to find investors .

Tech Incubators Target: Individual entrepreneurs and start-up companies Support: OCS – 85%, Incubator – 15% Projects of 1 – 2 years, budget frame of up to NIS 3M Equity: Entrepreneur: 50% – 70% Incubator licensee: at least 20%

Fortune 500 Capitalizing on Israel Over 320 MNC R&D Centers, incubators, accelerators, etc. were established in Israel 80+ Fortune Global 500 companies have a research and development centers in Israel. The companies accelerate business with unique IP and unique technologies that are developed in Israel leveraging a business friendly ecosystem GF500 companies benefit from the quick, can-do-attitude of Israelis that focuses on breaking down barriers to get new products out-to-market very quickly Select Companies

Israel is attractive for MNCs Innovation and disruptive technologies Proven success stories Strong Human Capital Onboarding through startup acquisitions Advanced manufacturing facilities A Strong and Resilient Economy Comprehensive governmental incentives

Accelerators Corporate NGOs and Associations VCs and Investors Municipality Hubs VCs and Investors Academic Institutes For Israelis abroad

Incubators

Israel vs Silicon Valley $535B Metropolitan GDP 45% Foreign Employees $132B 27% Founder Age 36.2 118K Software Engineer Salary 33.6 61K Startups with at least 1 tech founder 85% 36% Foreign Costumers 74% 100% Source : Compass

A B C D E+ Israel vs Silicon Valley 23% 25% 20% 44% 28% 12% 14% 18% 11% 5% Source : Shibolet

Israel vs Silicon Valley Average Seed Round Rounds With Local Only Investors Dilution Average Series A Round $900K 61% 19% $7M Silicon Valley 53% 21% $700K $5M Israel Source : Compass

Expected $1.5 billion when completed The Israeli Venture Capital Market 18 new venture capital funds closed capital in 2015 $1.02B Expected $1.5 billion when completed funds raised by Israeli VCs in 2015 4 $2B available for investments by Israeli venture capital in 2016 VC funds raised more than $100 million each 166 48% of first investments 51% Investments made by Israeli funds in 2015 Of Israeli VC funds Investments were in Seed round

Capital Raised by Israeli VC Funds

Most Active Israeli Funds 2015

Most Active Israeli Micro-VC Funds 2015

$3.4B $2.0B $841M ↑19% $300M $2.2B The Israeli Private Equity Market Private equity investments in Israel in 2015 $2.0B 48 deals Technology sector PE deal-making (58% of the total PE investments in 2015 $841M ↑19% from 2014 private equity deals in Q4/2015 – twice as much as in Q3/2015 Israeli PE funds investments in 2015 $300M investment in Bioenergy Infrastructure Group The most prominent deal in Q4/2015 $2.2B Foreign private equity investments in 2015 (64 percent of the total capital)

Private Equity Deals by Year ($m)

Private Equity Investments by Sector (%)

Thank you Eran Wagner Managing Partner – i3 Equity Partners Wrap up slide – this has 3 slides in the section 6c – Thank you Slide with speaker contact info

The Global Startup Ecosystem Ranking (2015) The Deloitte VC Confidence Israel in the World Over 7,000 Companies operating in Israel The Global Startup Ecosystem Ranking (2015) The Deloitte VC Confidence Survey (2015) The City of Tel-Aviv is ranked 1st in the world outside the US (5th globally) and Jerusalem is ranked in the top 50 Israel is the 2nd Most trusted market in the world Source: The 2015 Global Startup Ecosystem Ranking by Startup Compass Inc. (previously Startup Genome)

Israel in the World Country of Origin : Immigrant Founders of Billion Dollar Startup Companies in the US Source : National Foundation of American History

Internet of Things Startups http://www.tlv.partners/home Copyright © 2016 IoT Israeli Conference. All rights reserved.

Israel’s Tech Ecosystem is Evolving 1980-1989 1990-1999 2000-2009 2010… Copyright © 2016 IoT Israeli Conference. All rights reserved. All rights reserved to XXXX 31

IoT Israel Summit Past Sponsors include: The main IoT Conference in Israel, one of the largest in the world 3nd annual IoT Israel conference held Nov. 10th, 2016 with 1,000 attendees including: Speakers from major industry players as well as selected local startups * Entrepreneurs * Investors * Multinational corporations * Government * Local service providers Copyright © 2016 IoT Israeli Conference. All rights reserved.