Hi-Tech in Israel. Venture-backed Investment trends

Hi-Tech in Israel

Venture-backed Investment

trends

22/11/00 3

Kesselman & Kesselman

0

100

200

300

400

500

600

700

800

900

1000

1100

($ million)

Total Investments 67 98 147 127 158 123 172 134 130 228 263 389 617 735 1034

Internet-Related 23 24 59 38 65 35 71 43 60 78 178 264 439 397 451

Q1-97 Q2-97 Q3-97 Q4-97 Q1-98 Q2-98 Q3-98 Q4-98 Q1-99 Q2-99 Q3-99 Q4-99 Q1-00 Q2-00 Q3-00

Venture Capital Investment Level SOURCE : Money Tree

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Average Investments by round SOURCE : Money Tree

$ million

# of deals

1999# of deals(Q1-Q3)00

53

61

78

93

35

62

85

81

84 58

0 1 2 3 4 5 6 7 8 9 10 11 12 13

Seed

First

Second

Third/Expansion

Bridge

(Q1-Q3)00 1.6 4.9 8.9 12.8 1.05

1999 1 2.3 4.2 4.6 0.9

1998 1.2 1.9 2.8 3.7 0.4

Seed First Second Third/Expansion Bridge

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Average deal size SOURCE : Money Tree

1999 Avg. YTD Q300 Avg.

U.S. Israel U.S. Israel

Seed 2.7 0.93 4.8 1.6 First 6.1 2.25 8.7 4.9

Second 10.8 4.16 15.5 8.9

Third/Expansion 14.6 4.63 23.2 12.88 Bridge 1.6 0.87 2.3 1.05

1999 Avg. YTD Q3 Avg.

Israel 2.9 5.96

US 8.9 13.2

Europe 1.9 N/A

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Kesselman & KesselmanAverage Investments by the

main Industries source: Money Tree

0 1 2 3 4 5 6 7 8 9

Software

Telecom

New Media

Networking

Medical devices

(Q1-Q3)00 5.155 7.986 5.63 7.56 2.98

1999 3.566 4.426 2.5 5.0 1.8

1998 2.02 3.118 1.18 1.9 2.2

Software Telecom New Media Networking Medical devices

$ million

# of deals

1999# of deals(Q1-Q3)00

31

27

63

50

10

59

87

92

64

79

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Average Deal Size - Total, Internet-Related

& Non-Internet-Related SOURCE : Money Tree

5.07

4.68

6.05

7.58

1.87

2.03

2.132.49

3.22

1.86

2.36 2.06

1.94

2.84

3.09

3.47

5.87

5.70

6.23

5.43

6.55

3.19

3.80

2.92

2.17

2.31

1.682.46

2.20

2.87

3.86

1.73

4.18

2.55

2.02

2.83

1.77

2.282.29

1.91

2.90

2.28

1.80

1.99

1.69

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

Q1 '97 Q2 '97 Q3 '97 Q4 '97 Q1 '98 Q2 '98 Q3 '98 Q4 '98 Q1 '99 Q2 '99 Q3 '99 Q4 '99 Q1 '00 Q2 '00 Q3' 00

Total Internet-Related Non-Internet-Related

$ million

22/11/00 8

Kesselman & KesselmanAverage Deal Size - Total , Software, Telecommunication-comparison SOURCE : Money Tree

5.5

8.3

6.7

8.5

6.23

5.70

5.87

3.47

3.09

2.84

1.94

2.062.361.86

3.22

2.492.13

1.99

1.87

4.9

1.9

3.42.9

2.01.6

1.6

1.3

2.3 1.9

3.2

1.4

5.4

4.6

2.6

1.42.7

4.8

4.2

2.5

4.2

1.61.8

4.6

5.1

5.8

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

Q1 '97 Q2 '97 Q3 '97 Q4 '97 Q1 '98 Q2 '98 Q3 '98 Q4 '98 Q1 '99 Q2 '99 Q3 '99 Q4 '99 Q1 '00 Q2 '00 Q3' 00

Average Deal Size Software Telecommunication

$ million

VC FundsKesselman & Kesselman

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0

200

400

600

800

1000

1200

1400

1600

1800

2000

2200

Capital raised 58 160 342 374 156 397 727 688 1,617 2,000

1991 1992 1993 1994 1995 1996 1997 1998 1999 YTD Q3

$ million

Venture Capital RaisedSOURCE: Zinook research & data center

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0

100

200

300

400

500

600

700

800

900

1000

1100

$ m

illi

on

Through Israel VC's 22 27 47 35 72 62 77 51 67 90 99 140 176 226 308

Through other sources 45 71 100 92 86 61 95 83 63 138 164 249 441 509 726

Q1-97 Q2-97 Q3-97 Q4-97 Q1-98 Q2-98 Q3-98 Q4-98 Q1-99 Q2-99 Q3-99 Q4-99 Q1-00 Q2-00 Q3-00

Total Amount raised by Israeli Hi-Tech companies SOURCE: Money Tree

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Venture Capital fund SOURCE: Zinook research & data center

Initial analysis indicates that capital raisings by Israeli VC funds during 2000 exceeds $2 billion.

Total capital raised by venture capital funds from 1991-2000 exceeds $6.5 billion.

According to Zinook’s analysis, more than $3 billion are available for investment.

22/11/00 13


Leading Israeli VC fundsSOURCE: FACTS. (D&A)

Fund name Total capital managed ($ in M) # of investments # of exits % exits

Polaris Venture Capital 700 60 12 20%Star Venture Enterprises 594 124 44 35%Genesis Partners L.P. 349 37 9 24%Gemini Capital Fund 296 48 12 25%Formula Ventures Ltd. 290 17 1 6%Israel Seed L.P. 258 42 3 7%Concord Venture Management 255 33 4 12%Jerusalem Ventures Partners 255 30 9 30%Giza Venture Capital Fund 255 43 12 28%Tamir Fishman Ventures 225 The Challenge funds 195 47 1 2%Eurpean Venture Partners 150 10AIG Orion Venture Capital Advisors 110 10Zinook 100 2Acend Technology Ventures 85 8 1 12.5%Israel Infinity Venture Capital Fund 85 21

Total 4,202 532 108 20%

16.

Israel-comparison


22/11/00 15


Money Tree Total Investments1997 to Q300

Money Tree Line

0

200

400

600

800

1000

Q1-97

Q2-97

Q3-97

Q4-97

Q1-98

Q2-98

Q3-98

Q4-98

Q1-99

Q2-99

Q3-99

Q4-99

Q1-00

Q2-00

Q3-00

Isra

el

($ m

illi

on

s)

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

U.S

. ($

mil

lio

n)

Israel U.S.

NASDAQ Index

Israel

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Content Sites 14% 1% 3%

E-Commerce Sites:B-B 0% 3% 4%

E-Commerce Sites:B-C 1% 2% 0%

Serv ices 13% 15% 18%

Tools/Applications 47% 37% 37%

Access/Inf rastructure 25% 42% 38%

Q1-00 Q2-00 Q3-00

U.S.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Content Sites 12% 10% 7%

E-Commerce Sites:B-C 13% 13% 8%

E-Commerce Sites:B-B 17% 15% 10%

Access/Inf rastructure 16% 16% 24%

Tools/Applications 20% 22% 29%

Serv ices 22% 24% 22%

Q1-00 Q2-00 Q3-00

Internet-Related Investments by Sub-Category % of Total

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11,062

1,392

1,425

1,512

1,747

2,041

2,386

2,655

2,883

5,94023,737

Other

Illinois

Washington

Virginia

Georgia

Colorado

Israel

New York

Texas

Massachusetts

California

With U.S. States - (Q1-Q3) 00 ($ Million)SOURCE: Money Tree

$ million 1999

16,873

1,306

1,206

777

6,913

1,852

1,010

1,520

3,657

740

Total U.S. Investment= $54,394 Billion

751

22/11/00 18

Kesselman & KesselmanWith U.S. States - (Q1-Q3) 00 (#

Deals)SOURCE: Money Tree

1,012

116

144

147

157

163

232

253

400

412

1,501

Other

Illinois

Washington

Virginia

Georgia

Pennsilvenia

Texas

New York

Israel

Massachusetts

California

1999 OF DEALS #

1525

135

138

99

896

111

211

228

347

443

Total U.S.= 4,137 Deals

95

22/11/00 19

Kesselman & KesselmanEurope - Investments by Country 1999

($ Million) SOURCE: Money Tree

134

176

211

305

361

388

575

1,001

1,116

1,266

2,325

9

17

9

21

31

66

94

Iceland

Greece

Austria

Portugal

Denmark

Ireland

Finland

Spain

Switzerland

Norway

Italy

Sweden

Belgium

Nethelands

Israel

France

Germany

United Kingdom $ million 1998

1,988

122

124

108

270

189

567

756

112

161

544

45

38

27

6

15

100

Mergers &

Acquisitions


Israeli CompanyIsraeli Company Acquiring CompanyAcquiring Company Details Details of Acquisitionof Acquisition

20002000

Chromatis ( PwC ) Lucent Valued at $4,800 million

MMC (PwC ) AMCC Valued at $4,500 million

Galileo Marvell Valued at $2,700 Million

Scitex (PwC ) Creo Valued at $500 million

Tradum VerticalNet Valued at $480 million

InfoGear Cisco Systems Valued at $301 million

HyNex Cisco Systems Valued at $127 million

PentaCom Cisco Systems Valued at $118 million

Indigo (PwC ) HP Valued at $100 million

19991999

DSP Communications (PwC ) Intel Valued at $1,600 million

New Dimension BMC Valued at $650 million

Libit (PwC ) Texas Instruments Valued at $357 million

Oshap SunGard Data Systems Valued at $210 million

Telegate Terayon Valued at $100 million

Butterfly Texas Instruments Valued at $50 million

Acquisitions of Israeli related Hi-Tech Companies Acquisitions of Israeli related Hi-Tech Companies by foreignby foreign

Investors, 1998-QInvestors, 1998-Q3300 - selected list 00 - selected list SOURCE : SOURCE : Zinook research & data center

Acquisitions of Israeli related Hi-Tech Companies Acquisitions of Israeli related Hi-Tech Companies by foreignby foreign

(Investors, 1998-QInvestors, 1998-Q3300 - selected list 00 - selected list (CONTINUED(CONTINUED

Israeli CompanyIsraeli Company Acquiring CompanyAcquiring Company Details Details of Acquisitionof Acquisition

19981998

Memco Platinum /(CA) 100% for $412 million

Mirabilis (PwC ) America Online 100% for $407 million

Elbit Ultrasound GE Medical Systems Valued at $230 million

Teledata Telecom ADC Telecom 100% for $200 million

Lannet (PwC ) Lucent 100% for $117 million

Elscint GE Medical Systems Valued at $100 million

Wave Access Lucent 100% for $56 million

CLASS Data Systems ((PwC ) Cisco Systems 100% for $50 million

Picture Vision Eastman Kodak 51%

1998 1999 (Q1-Q3)00

Total amount: 1.57 billion 2.967 billion 13.626 billion

# 0f deals 9 6 9

Average deal size 0.17 billion 0.495 billion 1.514 billion

22/11/00 23


0

200

400

600

800

1000

1200

1400

1600

1800

2000

2200

2400

Capital raised in U.S. 529 336 608 982 743 505 2,016 2,328

Cpital raised in Europe 6 44 28 123 438 588

1993 1994 1995 1996 1997 1998 1999 (Q1-Q3)00

Capital raised in public offering of Israeli companies in the U.S. & Europe (1993-Q300) SOURCE: 1993-1999, Zinook research & data center$ million

IPO,Follow on Offerings (of Venture Capital- backed companies), M&A-comparisonSOURCE: 1995-1999, Zinook research & data center

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

M&A 52% 76% 88.6% 75.4% 83%

Follow on 21% 8% 5% 11.3% 7%

IPO 27% 16% 6.4% 13.3% 10%

1996 1997 1998 1999 YTD Q3

Kesselman & KesselmanThe land of Milk and Honey has The land of Milk and Honey has

becomebecome

the land of Tech and Moneythe land of Tech and Money

Joseph FellusSenior Partner and High-Tech Practice LeaderPricewaterhouseCoopers Israel

Documents

Hi-Tech in Israel. Venture-backed Investment trends