Israel Entrepreneurial Ecosystem Model - *VC Yigal Erlich Yozma Israel Entrepreneurial Ecosystem Model - *VC

Government Involvement Market Failure (1985-1992): - Early stage, high risk, innovative technological enterprises can not raise money from the private sector. only. Government response: - Chief scientist grants Technological Incubators Program VC

Government role in investments vs. VC Government Involvement  Risk sharing  Market failure conditions  Government as a catalyst  Predetermined exit conditions  No government control  Indirect investments (funds) Professional VC funds  Capable to raise funds Choosing the right investments Managing the investments Building value for exit

The Role of VC in early stage companies Board level Assist/support management with strategic partners & customers Assist/support in recruitment of senior management Build/Approve Business Plan Help raise additional capital (Equity/Debt) Entice EXIT Step-in at crises.

Yozma I Venture Capital (1993-98) Mission: To create a venture capital market in Israel 1 Establish a $ 100M government investment company 2 Create a professionally managed Funds 3 Entice VC investments in Israeli early stage companies Create and invest in new VC funds together with experienced partners (from abroad) Make direct investments in startup companies together with professional investors

RESULTS 8 out of 10 funds returned bet. 2x to 14x the investment; Government return ~135% ; Direct investments portfolio return more than twice; Unexpected strong result: The creation of a global network

Select Multinationals Presence in Israel Actively Seeking Technology Innovation All grow by accusations US & EU, but also more and more SEA, Japan and now Chinese co’s Source: IVC Research Center 9

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The Israeli VC Ecosystem - Exits 10-year total: $51b M&As: $47b, 93% of Total VC-Backed: $22b, 43% of Total

Leveraging Israel’s Defense R&D -Selected List- Companies Application Technology Commercial Defense Amdocs, M-systems, Saifun Storage Database management storage Data storage and management Libit, DSPC, DSPG Communications Signal processing Digital signal processing Alvarion, Gilat Satellite, Wisair, Altair, Butterfly, Wilocity, Siklu Wireless communications WiMax, RF Check Point, Actimize, NICE, Verint, Comverse, Safend, Mintigo, Imperva Inspection, Secured transactions Security, Intelligence Data and transaction analysis Given Imaging, MediGuide Tracking Missile guidance systems Optics Navotek, IceCure, Sensible Cryotherapy, Navigation, Diagnostic kits Missiles and Radars Missiles and Radar technology Orbotech, Oplus LCD-TVs Intelligence Visual processing Source: IVC Research Center

Venture Capital Management Company VC raises money from financial investors (& institutional investors) Invest it and expect to realize capital gains. VC provides equity based capital to fund technology companies. VCs invest in one or all stages (seed to mez/lbo) and with or without tech./market focus VCs take an active role in building the company, do not want to control Ready to take Risk Seek to invest in Management more than in Technology Expect high return on investment (IRR>20%)