2. Dr. Eli Opper – Chief Scientist Ministry of Industry, Trade and Labor Early Stage Financing Strategies for High Tech in Israel January 2005

3.  We think we know the past  We hope we understand the present  We must plan for the future " There is no reason for any individual to have a computer in his home." Ken Olsen, Founder and CEO of Digital Equipment Corporation, 1977

4.  We think we know the past  We hope we understand the present  We must plan for the future “ Heavier-than-air flying machines are impossible" Lord Kelvin, 1895

5.  We think we know the past  We hope we understand the present  We must plan for the future “640 K Ought to be enough for anybody " Bill Gates, 1981

6. “It’s not the strongest of the species that survives, nor the most intelligent; it is the one that is most adaptable to change” Charles Darwin

7. Jaffa Oranges vs. Software (1992-2001) 0 500 1000 1500 2000 2500 3000 3500 1992199319941995199619971998199920002001 exports ($millions) Citrus Software

8. Source: Ministry of finance Expenditure on Civilian R&D as a percent of the GDP in Israel and in OECD Countries (2002) 4.2 3.6 3.2 3.0 2.7 2.42.4 2.3 2.2 2.1 2.02.0 1.9 1.8 1.61.61.6 1.41.4 1.3 1.1 1.0 0.9 0.8 0.70.7 0 1 2 3 4 5 Israel Sweden Finland Japan Switzerland Korea Germany Iceland USA Denmark France Belgium Netherlands Austria UK Norway Canada Ireland Australia Czech Republic New Zeland Italy Spain Portugal Greece Slovak Republic

9. Capital Raised By Israeli High-Tech Companies: 1999-2004 (in Million $) Source: IVC – Israel Venture Capital

11. Innovation = Economic Growth “ If you want real growth, you have to have new technologies ” Source: Business Week

12. Where does Israel excel? BBBBiotechnology EEEEncryption and data security SSSSoftware EEEElectronics AAAAgro-technology TTTTelecommunication MMMMedical equipment OOOOptics IIIInternet NNNNanotechnology

13. Chief Scientist Dr. Eli Opper Activities in Israel International Activities R&D Fund Bi-National Funds Magnet Programs U.S-Israel Science & Technology Commission Tnufa BI-National Agreements Technological Incubators EUREKA Seed Fund European Union Programs FP-6 Activities of the O.C.S. Generic R&D Research Institutes

14. Chief Scientist Dr. Eli Opper Activities in Israel Tnufa Technological Incubators Seed Fund Activities of the O.C.S. – Early Stage

15. OCS 2004 - Some Figures No. Of Applications: ~1700 Projects Total Request: ~ 6.2 Billion N.I.S Total Grants: ~1.3 Billion N.I.S

16. OCS Grants by Technological Sectors Other: 4% Communications: 36.5% Software: 17.3% Chemicals: 2.6% Electro-Optics: 8.1% Electronics: 9.1% Life Sciences: 22% 0320

17. OCS Grants by Technological Sectors Other: 7.8% Communications: 37.4% Software: 12% Chemicals: 1.9% Electro-Optics: 7% Electronics: 11.4% Life Sciences: 22.8% 0420

18. Nano-Tech? Other: 4% Communications: 36.5% Software: 17.3% Chemicals: 2.6% Electro-Optics: 8.1% Electronics: 9.1% Life Sciences: 22% OCS Grants by Technological Sectors - Forecast 0 1 3 4567890 201234

19. International Cooperation Ministry of Industry, Trade & Labor - The Office of the Chief Scientist

20. Bi-National Funds BIRDF-with U.S.A. USISTC/F SIIRD-with Singapore CIIRDF - with Canada BRITECH–with the UK KORIL-RDF - With S. Korea Int’l Corporation

21. FranceBelgiumChinaFinlandGermanyHolland Hong-KongItalyIndiaTaiwanPortugalSpain Sweden Bi-National Support Agreements Int’l Corporation

22. EUREKA The European FP6 Multi-National Agreements Int’l Corporation

23. Global Enterprises Countries States Provinces Municipalities MultiNational ? Change of Focus Partners for International Cooperation

24. Strategic Agreement Joint R&D Project The two companies should have the combined, proven capability and infrastructure to define, develop, manufacture, sell and support the Product defined by the Project. OCS support Finance 50% of the Israeli company’s R&D approved costs. OCS MNC Israeli Company The Global Enterprise R&D Cooperation Initiative

25. There is always room also for the small ones Before …

26. Global Network for Transfer of Knowledge

27. The Law For Encouragement of Industrial R&D Transfer of Know-How Exchange of Knowledge Promote the Establishment of Development Centers

28. Biotechnology Nanotechnology Preferred Sectors

29. Major Questions (Dilemmas) 1. 1. Should the Government take a more active role? 2. 2. Should preference be given to certain sectors? (Targeting) 3. 3. Should the O.C.S be more involved in Higher Education, Marketing & Management issues with respect to Industrial R&D? 4. 4. Should Academia and Industry Strengthen their cooperation ?

30. Some Answers 1. 1. The Government should take an active role in the TARGETING Policy. 2. 2. The Government is not an investment group: it must maintain a long - range perspective. 3. 3. Academia & Industry must strengthen their cooperation.

31. Some Answers 4. 4. Israel will continue to focus on high potential areas like ICT, and Life Sciences, including Nano – Tech. 5. 5. Increasing involvement in Education, Marketing and Management.

32. Export from Israel (forecast) 0 500 1000 1500 2000 2500 3000 3500 1992199319941995199619971998199920002001 exports ($millions) Citrus Software ?

33. 25

34. Excellence is a Key Success Factor