Innovation Ecosystem of Israel. Opportunities for Russian


Innovation Ecosystem of Israel. Opportunities for Russian
Innovation Ecosystem
of Israel.
Opportunities for
Sources of Israeli innovation
Table of Contents
Executive Summary
Sources of Israeli innovation
Additional elements (mostly non-governmental) of Israeli Innovation
R&D centres of leading technology companies
Defence Forces
Cooperation between Russian and Israeli companies
Case Study: Joint Product development and marketing to Western
European and American markets
Case Study: Ray Q and Bee Pitron cooperating on Global defence and
aviation markets
Case Study: Israeli high-tech company performing a multimillion
project in Russia
Case Study: Israeli software developers outsourcing software
production to Ukraine
Analysis of Israeli venture capital industry
Sources of funding
Opportunities for Russian investors
Attitudes and experience in outward investment of Israeli institutional
investors and VC in particular
In conclusion
Appendix 1 –
Appendix 2 –
Appendix 3 –
Appendix 4 –
List of events in Israel sep13 – sep14
Intellectual property law firms in Israel
Small series producers, prototype and industrial design
Technology Transfer Companies of Israeli Academic
Charts and tables
Chart 1. Hebrew university budget
Chart 2. A comparison of R&D commercialization
Chart 3. Number of R&D employees in Israel
Chart 4. The world of R&D
Chart 5. Trend in Israel’s defence exports sales
Chart 6. Average salaries of programmers in Israel
Chart 7. Average salaries of programmers in Russia
Chart 8. Average salaries of programmers in Ukraine
Chart 9. World bank “Doing business” survey
Chart 10. Total venture capital raised by VC funds 2002-2012
Chart 11. Israeli High-Tech companies: capital raised investors vs.
proceeds from M&A and IPO
Chart 12. Israeli High-Tech capital raising Q1/2011-Q1/2013
Chart 13. Capital raised by Israeli High-Tech by stage
Table 1. A comparison of Yozma and Inbal
Table 2. A brief review of R&D centres in Israel (of Large multinational
Table 3. Most active VC funds in Israel
Table 4. List of possible consultants
Executive Summary
This paper is coming after series of quite diverse papers that
covered various aspects of innovation ecosystem in Israel. Due to the
supplementing nature and quite loosely connected content, it should be
reviewed as collection of separated themes.
Several elements of Israeli innovation ecosystem that were not
covered in previous papers are covered here like Universities, the army,
tech multinationals R&D centers. Each of them is playing its role and
contributing to the outcome. In each of the elements, we choose to
highlight the most relevant for RVC aspects.
Alternative routes of R&D funding by the universities and their
great effort to commercialize the research (through technology transfer
companies) received our attention. Obviously, Israeli universities are
participating in the ecosystem in many other ways but we decided to pick
two and to focus on them.
Same for the military. It’s a very little secret that the defence
related R&D could be considered the founding father of local ecosystem
and that defence R&D was always done in close cooperation with the
military; however we focused on recruitment process and the synergies it
creates between the army and the general society.
R&D centers of multinational tech companies are often overlooked
and not getting full credit for their role as management greenhouse. In
Israeli ecosystem, there is common consensus on their crucial
contribution to the development of today’s leaders of Israeli high tech
As a general trend, we can see that the market forces shape the
Israeli innovation ecosystem. Obviously, it took fair amount of
government support and intervention (with different degree of success as
can be seen in the first part of the analysis) but now, it is a part of the
global world, and thus affected by the trends that affect the global
When VC industry suffers elsewhere, VC industry in Israel feels the
pain. This global pressure on VC industry, combined with conservative
approach of local institutional investors negatively affects Israeli VC
industry, when only the best funds are managing to raise capital.
One of the main objectives of RVC in Israel is to support further
integration of Russian companies into global supply chains through
increase of trade and business connections with Israeli high tech
companies (that in any case are export oriented). Obviously, in order to
start, it’s important to learn existing cooperation stories. Currently the
cooperation exists on many levels and the case studies presented here
show the success stories and the issues arising from cooperation
attempts. The case studies were written after interviews with relevant
people, mostly CEO’s or business owners. Some stories, interesting and
educational were excluded in order to keep the size of the document
manageable and reasonable. The main lesson from the stories is
realization of great potential for cooperation where Israeli and Russian
tech companies can supplement each other and have a mutually
beneficial collaboration. This is the only way it will be sustainable.
Additional important task is to establish a relationship with people
who possess knowledge on specific subjects that might be of use for
technology companies in the RF. Due to the structure of Israeli labor
market, and particularly to the narrowing pyramids in the top
management of the technology companies, quite significant number of
good quality experts are engaged in consulting. They can create
important knowledge base that can be a great support for young
technology companies. With the Venture funds, the situation is quite
different. In several background conversations, managers of good quality
funds mentioned that they would be happy to share their knowledge but
could be able to do it if RVC became an investor.
The appendixes of this report are not trying to create a substitute
to yellow pages but to list several relevant service providers that support
Israeli technology ecosystem. All IP lawyers, engineering companies and
development subcontractors allow sustaining industrial scale of innovation
and based on preliminary conversations they will be happy to see
additional clients coming to them.
When we are coming to review an ecosystem, one thing leads to
another and without noticing we are finding ourselves “deep in the
woods”. We are well aware of the phenomenon however, we are not
completely sure we managed to avoid it entirely. The purpose of this
paper is to touch on many aspects that the combination of them creates
the famous “Israeli Innovation Ecosystem”. Many books and academic
papers were written about it, some accompanied with heated debates,
some widely accepted with long ovation. Nobody got a monopoly on what
is the definition of Israeli ecosystem. Moreover, as the term itself,
adopted from natural science, suggests, ecosystem is ever changing.
Whoever spend long enough time observing it, noticed the constant
change it undergoing. Not only the names of the leaders change, as it
should be in any market environment, but also some industries, that were
the dominant players in the Israeli ecosystem until very recently, are not
around anymore. Like dinosaurs, they disappeared and vacated the space
for new industries that emerged and are now attracting top talent.
Taking into account the ever-changing nature of the ecosystem, we
tried to cover some elements and tendencies that are not related to the
specific industry but rather characterize the relationship between parts of
ecosystem or highlight long term phenomena. Nobody should look on it as
“definitive description” or “full review” or worst of all “prescription”. We
are rather happy to offer the intelligent reader a view from within,
highlighting the aspects we perceive as important, ask questions, think
about applicability of some ideas and try to derive something useful from
them. There is something useful to learn from every well-functioning
system or company, however, in Russian–Israeli context, we believe that
there is much more to do. The amount of personal, business and cultural
connections between today’s Russia and Israel is mind-blowing. Free
movement of people, ideas and goods between the countries,
supplemented with approximately million Russian speakers in Israel
creates great opportunity for both countries. More importantly, in both
countries there is a growing understanding of big potential and willingness
to develop it. We believe that although unique, there is something to
learn and to adopt from Israeli experience, and will be happy to focus our
research on specific subjects based on the feedback we are hoping to
receive from the target audience of this report.
Sources of Israeli innovation
Sources of Israeli innovation
Very little argument can be about the origin of Israeli innovation.
First there was a need – the need to survive in a very complex
environment that mixed Middle Eastern (ME) conflict with global political
Before 1948, when the current territory of Israel was part of the UK
ME mandate (with Transjordan, Egypt, Iraq and most of the Arabian
Peninsula) and the UK was imposing military rule, Jewish underground
movement was craving for weapons. Small underground arm industry was
created. In kibbutz tractor shads, at night, young self-made experts were
making hand guns, grenades and explosives. The process escalated
together with the situation in the country when it became clear that
British mandate would come to an end. Interesting to mention that Stef
Wertheimer, who later built and subsequently sold ISCAR (producer of
high end cutting tools) to Warren Buffett for $6 bn dollars, started his
mechanical engineering activity by repairing guns for Hagana
(Underground Jewish Military Organization) in 1947. In order to fully
understand the challenges of the young state, we need to look back on
the world of early fifties. In 1950, UK, France and the USA signed an
agreement that materially limited their ability to supply weapons to the
Middle East. The idea was to prevent the arm race in the region. Nasser,
the president of Egypt, was trying to purchase weapons from the USA,
however Eisenhower refused. The same embargo was affecting Israel as
well and effort to build self-sustainable arms industry became one of the
top priorities of the young state. In 1955 Czechoslovakia sold $250 worth
of Soviet weapons to Egypt (organized by Khrushchev), which was not
only a milestone in the cold war but also further energized Israelis to build
and develop their own arms systems.
These are the years when emerged such important companies as
Rafael Advanced Defence Systems Ltd. (founded 1948), Soltam Systems
(founded 1950), IAI (Israel Aerospace Industries) (founded 1953), and
IMI (Israeli Military Industry) founded 1953.
The second round of advancement was done after French embargo
of 1967 was imposed. Israel needed more advanced systems in order to
deal with new threats and challenges. Soviet Union started to provide
massive supplies of advanced weapons (radar systems, SA-3 rockets,
Sager missiles etc.) to Egypt and Syria as part of their strategy in cold
war with the USA. This situation forced Israelis to act again. New wave of
companies, engaged in military electronics and sophisticated systems
Sources of Israeli innovation
(Elbit, TAT Technologies, Rada Electronics, Magal Security Systems) were
founded between 1967 and 1970.
The companies mentioned above and the army created strong
demand for professional workforce to produce and maintain the
equipment. Technical high schools affiliated with the army and the air
force were founded and trained technicians. The relevant departments in
Israeli universities (mechanical engineering, electronics, and aeronautics)
also grew quickly and trained young engineers who got access to the
modern systems and quickly gained relevant experience. When
international tech companies started to approach Israeli market in mid60s and early 70s, the qualified workforce they were counting on, were
exactly the people we mentioned – technically trained for the army
purposes and ready to take on any challenging mission.
These were also the years when Israeli aerospace industry was
becoming a serious player. With the increase of importance of aviation
and missiles on the modern battle field, the relative significance of the
entities engaged in development of these systems grew accordingly.
Through the 70s and 80s, RAFAEL and IAI, alongside Elbit and its
daughter companies, became more significant than Soltam and IMI that
were engaged in production of more traditional arms systems. One of the
highlights (followed by major disappointment) of Israeli aerospace
industry was the development of IAI Lavi, Israeli jet fighter that was
supposed to replace F-16 as a major fighter of Israeli air force. Despite
very successful test results the project was cancelled in 1987 after
building 3 planes only. The major reasons were high costs and pressure
from the USA, which saw Lavi as a dangerous competition for their own F16. The effort that was made in Lavi’s development paid off because
many technologies that were originally developed for Lavi, were
implemented in different projects of IAI. Moreover, 1500 engineers who
were working on the project, went to the civilian market and took leading
roles in high tech industry1. Even now many of them are leading Israeli
high tech companies in diverse fields like medical devices or advanced
mechatronics systems.
Start-up Nation: The Story of Israel's Economic Miracle
Sources of Israeli innovation
Today, Israel is one of the biggest defence exporters with more
than 150 defence companies operating and more than $7bn of annual
defence export in 20122. Approximately 50 thousand people are engaged
in defence related industry and new branches dealing with the latest
technology (cyber warfare, UAVs) are joining the club.
Not only had the defence needs shaped the industry. There are
several examples when one company in some field of endeavor became
so prominent that by its own right (obviously with all the “environmental
and infrastructural” parts of ecosystem in place) it created an industry
around it. Several examples for this phenomenon are:
Teva Pharmaceutical Industries Ltd. – It is the largest generic drug
manufacturer in the world and one of the 15 largest pharmaceutical
companies worldwide. The foundations of Teva were laid by Salomon,
Levin, and Elstein Ltd, beginning of the 20th century wholesaler of
medications in Jerusalem. Nothing exciting probably was coming out of it
if Hitler was not taking power in Germany. In early 30s, Germany was the
world most advanced pharmaceutical country. Traditionally, many
pharmacists were Jewish (like in every trade that not required land
ownership). Teva (Hebrew for “nature”) was founded in 1935 by Elsa
Kuver and Dr. Gunter Friedlander in Jerusalem3. In the same years two
Sources of Israeli innovation
additional and similar companies were created (Assia and Zori). After
Teva merger with Salomon, Levin, and Elstein Ltd and independent
growth and development, Assia and Zori merged and acquired controlling
stake in Teva (that meanwhile went public in 1951). All the 3 companies
finally merged creating Teva Pharmaceutical Industries Ltd.
Additional elements (mostly nongovernmental) of Israeli Innovation
As every ecosystem, this organism operates as a combination of all
its parts and elements that are feeding and influencing each other. It’s
very difficult to identify the pieces of the puzzle that are “the success
factors”. Having said that, we still believe that it will not be fair not to
mention several elements that either are carrying some lesson or can be
somehow implemented in Russian environment and where RVC can play a
significant role. The list below is partial but provides a brief observation of
the variety of success factors. Since this paper is following very
comprehensive report prepared by E&Y focused mostly on government
related factors, we are trying to cover some other angles. Israeli high tech
industry and VC scene are operating in an environment with very low
government involvement so we believe that other factors are essential in
an attempt to understand it better.
A Bit of Government involvement to start with – Tale of
two programs
As a classic proverb says, “success has many fathers while failure is
an orphan”. As much as people tend to remember and praise "Yozma"
(Enterprise) program, they tend to forget about “Inbal” that came before
and spectacularly failed albeit providing us with some important lessons.
The Inbal Program was the first attempt at implementing a targeted
ITP directed to the VC industry. It was launched in 1991, 1-2 years before
the implementation of Yozma. Its central idea was to stimulate VC funds
by guaranteeing the downside of their investments. The mechanism that
was used was a Government insurance company ("Inbal") that provided a
70% guarantee to VC funds traded on Israeli stock market (TASE). The
program imposed certain restrictions on the investments of the 'protected'
funds. Four funds were established within this program. It failed. Both
Sources of Israeli innovation
programs had almost similar goals, but different impacts due to a
different 'design'4.
Table 1. A comparison of Yozma and Inbal
Promoted by the Office of the Chief
Scientist and mostly structured as
Fund of Funds with a single objective
of promoting a VC industry.
Promoted by the Treasury and
structured, as a Government owned
Insurance company. Dual objective:
promoting TASE & VC industry.
Limited partnership form of VC – the
ideal form of organization according
to the US experience and to Agency
Publicity traded form of VC; no value
added; hard to leverage current
success to fundraising, low incentives
for managers and bureaucracy.
Leverage Incentives to the Upside.
Attracting professional VC teams.
Downside guarantees, which favour
the entry of non-professional VC firms.
No government intervention in the
day-by-day operation.
Government frequently intervened in
imposed bureaucratic requirements on
supported VCs.
incentives; and clear and easy way
out of the program.
incentives and complex way out of the
learning, to VC cooperation, and to
'learning from others' (through
requirement of having a reputable
foreign financial institution).
No such incentives (legal limitations to
Created a
Sub-critical mass of VC activity.
Most "Yozma" funds are among the
20 leading VCs in Israel.
None of the "Inbal" funds are among
the 20 leading VCs in Israel.
Follow-up funds & strong growth of
Very few secondary issues.
Avnimelech G "VC policy: Yozma program 15-years perspective", CBS - Copenhagen Business School,
Denmark, June 17 - 19, 2009.
Sources of Israeli innovation
According to the European Commission CORDIS (Community
Research and Development Information Service): some 30% of the total
R&D carried out in Israel (including the defense sector) and 45% of
civilian R&D take place at the country's universities, colleges and
academic R&D centers5. There is nothing particularly unusual about it
however, two important aspects of R&D are creatively treated by the
universities: financing of the research and its commercialization.
Israel's total expenditure on education as a percentage of GDP has
the highest rate (8.5%) in comparison with other OECD countries6.
The higher education portion of the state budget, amounted to $1.7
billion in 2010, and was set at $1.85 billion for 2011 and at $1.99 billion
for 20127.
According to the ministry of Education, 63% of the funds are
allocated for research in the fields of mathematics, natural sciences and
medicine; 16% for social sciences and law; 16% for engineering and
architecture; 3% for agriculture; and the remainder in undefined fields. In
total, almost 60% of the funding originated in Israel and the rest from
abroad8. This 40% percent are of particular interest. This allows the
Universities to maintain certain “academic freedom” in funding of the
research and to preserve the best talent in the system reducing the brain
drain. All Israeli Universities are actively engaged in fundraising activity,
with quite sizable endowments. Each of the Universities has a special unit
that purposely works on bringing money in from various sources. Most of
the donations from within Israel are coming from corporate sponsors
Israel's R&D Capacity - a Promising Land, CORDIS: <>
The Intellectual Capital of The State of Israel, Produced by the Office of the Chief Scientist,
Jerusalem, November 2007.
DEVELOPMENT IN ISRAEL, Prepared for the meeting of the Science and Technology Committee with
members of European Parliaments, February 6, 2011.
Siegel-Itzkovich J. "Israeli universities received NIS 1.5b. for R&D", The Jerusalem Post, 18/4/2012.
Sources of Israeli innovation
while the donations from abroad are collected through a very well
developed network of “Friends of ….” Associations that are very active
globally, mostly within Jewish communities. Hebrew University is widely
considered the best Academic institution of Israel so we would like to look
on its fundraising practices as an example.
Case study: The Hebrew University of Jerusalem
As of 2013, the university's budget is $714 mln. On average: 5565% is governmental money ($370 mln in 2013), around 10% is tuition
fee and the rest comes from donations9. Different kinds of fundraising
methods and techniques are applied. The main means was organizing
fundraising events for specific research groups (for example Brain
Sciences, Sustainable Agriculture, Medical Research) alongside appeals to
donate for new books, support for students from underprivileged
background, involvement in the community and future development of
the university.
The Hebrew University Friends associations worldwide create a very
good framework for collecting these donations and making various
appeals10. The following list shows what a broad and deep network the
University has established:
IFHU - Israeli Friends of the Hebrew University
AFHU - American Friends of the Hebrew University
CFHU - Canadian Friends of the Hebrew University
AUFHU - Australian Friends of the Hebrew University
BFHU - British Friends of the Hebrew University
BEAUH - European Friends of the Hebrew University
UHJ - France - French Friends of the Hebrew University
RFHU – Russian Friends of the Hebrew University
NVHU - Dutch Friends of the Hebrew University
Dattel L. “The Hebrew University is preparing for huge budget cuts due to a deficit of 200 million",
The Marker, 11.2.2013. <>
The Hebrew University of Jerusalem, How to give. <>
Sources of Israeli innovation
Those associations are responsible for another 5-8% of the
University’s annual budget11.
Additional layer of non-governmental funding of higher education
and research is provided by variety of funds. Some are relatively small
funds created by middle class families to honor their deceased family
members, some are substantial professionally managed funds where
Hebrew University is only one, although frequent, beneficiary.
One of the visible examples is the Edmond J. Safra Fund:
Edmond J. Safra, one of the 20th century’s most accomplished
bankers and a devoted philanthropist, established a major philanthropic
foundation to ensure that individuals and organizations in need would
continue to receive his assistance and encouragement for many years to
Following his passing in 1999, his wife Lily, continued to manage
the Edmond J. Safra Foundation. The Foundation has assisted hundreds of
organizations in over 40 countries around the world, and its work
encompasses four areas: Education; Science and Medicine; Religion; and
Humanitarian Assistance, Culture, and Social Welfare.
In 2009 the fund donated to the Hebrew University 50$ million for
building the Brain Research Centre. In 7.3.2013, the new building was
In total the funds are responsible for additional 5-8% of the
university's budget.
Special case of fundraising is to finance tangible projects that can
be named after donors. Here as well, there is a large variety and every
size of donation can give a donor an opportunity to put his or her name or
the name of the family member on everything starting from buildings and
ending up with audio equipment or furniture in the dorms. All the
openings are turned into big events which in turn are used for more
Bassok M. " Hebrew University President: Budget of 2.5 billion is not enough, we have an
existential threat", The Marker, 23.1.2010. <>
The Hebrew University of Jerusalem: <> <>
Sources of Israeli innovation
fundraising and the donors’ names are put on the wall of Benefactors
dedication or wall of Life Dedication.
All Israeli Universities are engaged in active fund raising either to
fund research or to free money for research by funding capital needs with
alternative sources.
In total, The Hebrew University of Jerusalem received $113.5
million in 2009, from different kinds of donations, trustees and etc. Tel
Aviv University’s funds totalled $91 mln. The Weizmann Institute of
Science in Rehovot received $69.5 mln, followed by Haifa’s TechnionInstitute of Technology with $64.3 mln, and Ben-Gurion University of the
Negev in Beersheba with $55 mln.
Chart 1. Hebrew University budget
R&D commercialization
R&D commercialization is one of the Israel's universities strengths.
All the universities work closely with the industry, mostly on a grass root
level. University researchers have a good awareness of market needs and
hands-on industrial experience. Many of them participate in start-ups
either as founders or as consultants alongside with their academic
activity. At the same time scientists and engineers in Israeli industry
maintain strong connection with the academic “mother ship”, have
various arrangements to use university laboratories (crucial for small
technology companies that are not able to purchase expensive equipment
for their needs) and maintaining strong connection with their academic
Sources of Israeli innovation
All seven universities have their own technology transfer
companies, which take out thousands of new international patents each
year. According to the IMD survey, Israel was ranked 4th out of 61
countries in terms of knowledge transfer13. (See the chart below)
Chart 2. A comparison of R&D commercialization
Below there are a few reviews of major aspects of their activity with
examples of successful projects.
"Yissum" - the technology transfer company of the
Hebrew University of Jerusalem
Founded in 1964 to protect and commercialize the Hebrew
University’s intellectual property, Yissum has registered over 8,300
patents covering 2,337 inventions; has licensed out 700 technologies and
has spun-off 72 companies, including Mobileye, Keryx, Nasvax, and
Novagali. Products that are based on Hebrew University technologies and
The Intellectual Capital of The State of Israel, Produced by the Office of the Chief Scientist,
Jerusalem, November 2007.
Sources of Israeli innovation
were commercialized by Yissum generate today over $2 Billion in annual
Success story - Cherry tomatoes and long shelf-life tomatoes:
The world’s most popular cocktail hybrids for greenhouse
production with improved shelf-life, yield, and quality, which
revolutionized the fresh market industry, both indoors and in open fields.
The Daniela variety is only one example of the novel developments.
More than 15 years after its first release, Daniela and related cultivars are
considered today to be among the world’s leading greenhouse varieties.
In Europe they have become an industry standard.
“Yeda” - the Technology Transfer Company of the
Weizmann Institute of Science
Yeda Research and Development Company Ltd. is the commercial
arm of the Weizmann Institute of Science (WIS). Yeda initiates and
promotes the transfer to the global marketplace of research findings and
innovative technologies developed by WIS scientists.
Yeda Statistics for 2010-2011:
Over 2500 introductions & presentations of WIS Technologies to
companies. Over 130 presentations of confidential information to
interested companies (under signed NDA agreements). Over 65 new
license and option agreements signed. Over 70 research projects at WIS
were funded through Yeda by companies, by the chief scientist of the
Ministry of industry and trade and by Yeda itself, including through joint
funds with companies such as Johnson & Johnson. Over 160 patent
disclosures submitted by WIS scientists15.
Success story – Copaxone:
The first innovative drug to be developed in Israel and to receive
FDA approval, Copaxone is a unique multiple sclerosis immunomodulator:
the first and only non-interferon agent for the treatment of relapsing-
Yissum Research Development Company of the Hebrew University of Jerusalem Ltd:
Yeda Research and Development Company Ltd: <>
Sources of Israeli innovation
remitting multiple sclerosis. Copaxone is licensed to Teva Pharmaceuticals
"Ramot" - Tel Aviv University's technology transfer
Ramot is Tel Aviv University's (TAU) technology transfer company.
The company provides legal and commercial frameworks for inventions
made by TAU faculty, students and researchers, protecting discoveries
with patents and working jointly with industry to bring scientific
innovations to the market.
In keeping with TAU's goals, Ramot seeks to promote the
university's developments in applications that make a positive impact on
One of the main efforts of Ramot is to attract external funding
(from the industry and other sources) for promising research with high
commercialization potential. Ramot creates various funding opportunities
for the researches.
Funding Opportunities
Industry-Sponsored Applied Research Funds Program Premium Access to Marketable Discoveries
In conjunction with TAU, Ramot runs an Industry-Sponsored
Applied Research Funds program. Companies in various industries
become Corporate Partners by funding research in their fields of interest.
This allows them to get a direct access to world-class research, the results
of which can be transformed into marketable products. Corporate Partners
benefit by expanding their innovation pipeline via exposure to academic
research while reducing their risk through strategic allocation of their
Ramot- Tel Aviv University's Technology Transfer Company: <>
Sources of Israeli innovation
The Technology Innovation Momentum Fund
Ramot is currently raising its second dedicated technology
development fund. Known as the “Momentum Fund” its core objective is
to generate more partnership-ready technologies and accelerate the
translation of promising new discoveries and inventions into significant
commercial applications with the potential to positively impact society.
Investment in the $20 million Fund, a portion of which has already been
raised, will enjoy special tax exemptions, as ruled by the Israeli tax
authorities. Investment will be in TAU clean-tech, life sciences and
medicine, engineering and communications, medical devices, and cybersecurity discoveries and inventions at advanced stages of development.
The Colton Family Next Generation Technologies
Based on a donation from the Colton family, with partial matching
funds from Johnson & Johnson (J&J), this plan has funded nine projects to
date, with additional projects under funding consideration.
The Miles Nadal Institute for Technological
This new fund will support promising research that holds the
potential for discovering novel processes or technologies that can lead to
valuable, marketable products.
Tel Aviv University Future Technology Partnership
Initiated in 2003 with $8.5 M invested in pre-selected technologies,
this is a first-of-its-kind partnership between a major Israeli university
and global private equity investors. To date seven technologies in the
biotechnology, medical device, and energy domains have been funded
and three license agreements have been executed with additional
agreements in process.
Tel Aviv University Fund for Applied Research
Based on a philanthropic donation, this plan was set up for a six
year period and has funded 43 projects. Thу selected projects have great
potential with regard to their intellectual property position and
commercialization paths, as well as well-defined development plans. To
Sources of Israeli innovation
date, these highly promising projects have achieved the prototype stage
or proof-of-concept stage at a standard acceptable by the industry. Some
of these projects have already been partnered, while others form a
significant part of Ramot’s commercialization pipeline.
Success story – SanDisk:
SanDisk pioneered the removable flash memory storage industry
since the company's inception in 1988. The company continues to lead
the industry with advancements in MLC and controller technology with the
development of 2-bit, 3-bit and 4-bit-per-cell and 3D technologies.
Tel Aviv University (TAU) had provided a significant contribution to
the X4 advanced error correcting and digital signal processing technology,
which was licensed exclusively to SanDisk by Ramot at Tel Aviv University
Ltd., TAU's technology transfer company. "X4 took five years of
development at SanDisk, and the finished product is a testament to the
hard work and collaboration of the parties involved," said Dr. Ze'ev
Weinfeld, Ramot's CEO. "Once we created the basic approach, SanDisk
brought this to fruition by developing its advanced X4 controller and
matching it with its advanced 43nm, 64 GB X 4 memory thus making full
X4 product implementation possible. This highlights the benefit
commercial companies may gain from cooperation with TAU, building on
our pool of talent and expertise17.
"T3" - Technion Research and Development Foundation
T3 is the commercialization arm of the Technion Research and
Development Foundation, T3 has vast expertise in IP development rights,
patenting and licensing inventions, as well as forming win-win business
agreements, bringing together ground-breaking ideas with investors and
Success story – Azilect:
Parkinson’s disease is characterized by the death of cells that use
dopamine to transmit their signals. By inhibiting the breakdown of
dopamine in the synapse, rasagiline permits the signalling neurons to
Sources of Israeli innovation
reabsorb more of it for reuse later, somewhat compensating for the death
of cells.
R&D centres of leading technology
It is difficult to exaggerate the importance of multinational
technology companies, including giants like Intel, Google, Apple and
Microsoft, to the Israeli economy. These companies operate over 250
Israeli development centres and employ altogether about 24 thousand18
employees. Their development centres are scattered throughout the
entire country: many of them are located in the central part of the
country, but they have representation in the periphery (which are often
poorer and less developed areas of Israel) - in Kiryat Gat, Beer Sheva,
Ness Ziona, Ehud, Yokneam, Haifa, Carmiel and Tirat Ha Carmel. These
centres are usually leaded by Israeli managers, who in most cases gained
their experience in corporate's headquarters overseas. The map below
demonstrates the number and geographic spread of development centres
and speaks for itself. It also shows in the colour codes the segments of
high technology that are presented there.
How it all started?
An important aspect of Israel's integration into the world economy
has been increasing foreign investment, particularly in the high-tech
industry. Companies like Cisco Systems, Motorola, Intel, IBM, Nortel,
Microsoft, Mitsubishi, Deutsche Telekom, aviation and space companies,
to mention just a few, have recognised that Israel is a fount of high-tech
innovation they cannot afford to ignore. They have set up subsidiaries and
research centres here, invested in Israeli companies, technology
incubators, and venture capital funds, or have found Israeli strategic
Annual foreign investment in Israel grew from $400 million in 1992,
to peak at $5.0 billion in 2000. Since then foreign investment has
Orpaz I. “6 Reasons to Love the Multinational Hi - Tech Companies”, The marker, 6.3.2013.
Sources of Israeli innovation
subsequently contracted, due to the high-tech crisis, the global economic
slowdown and political tensions in the Middle East, but is still substantial.
Foreign venture capital investment grew apace, rising from $587 million
in 1998, peaking at $3.1 billion in 2000, before falling to $982 million in
2002, still higher than the level of five years before. Investment by Israeli
venture capital funds followed the same pattern: peaking at $1.27 billion
in 2000, but totaling only $481 million in 2002, including $62 million in
foreign companies. (Sources: Money Tree and IVC). The Bank of Israel
reported that total foreign investment in Israel amounted to $2.6 billion in
2002, including $1.2 billion in direct foreign investment19.
The contribution of the foreign sector development centres can be
described using macroeconomic indicators: in 2009 the multinational
companies accounted for 63% of expenditure on R&D of the civil-business
of Israel - according to CBS data. Total R&D expenditure of these firms in
the same year (primarily the cost of employing workers) was 12.4 billion.
Total exports of civil R&D of foreign-controlled companies in 2007 was
10.5 billion - 86% of the total R&D Export from Israel that year, according
to the CBS. In 2007 development centres of international companies in
Israel employed about 27 thousand employees, about 45% of total R&D
workers in Israel.
In 2012 Intel, the largest employer and the largest private investor
in Israeli high tech, recruited 760 employees, with total number of Intel
employees in Israel amounting to 8,500 people. That year Intel exported
$ 4.6 billion - about 10% of total Israel's exports and 20% of high-tech
exports - and has reciprocal procurement from local suppliers for about
737 million. During all years of its presence in Israel, Intel has invested $
10.5 billion in local activities, especially in setting up manufacturing plants
and upgrading them ($ 3.1 billion of this amount was given by
government grants). Intel's procurement in Israel in 2006-2012
amounted to $ 5.2 billion20.
Although Israel is often described as a global leader in sophisticated
technologies, there are areas of technological activity requiring resources
“How Israeli High-Tech Happened”, Globes Online, 2012:
“How Israeli High-Tech Happened”, Globes Online, 2012:
Sources of Israeli innovation
that just aren't available for the local companies. The great advantage of
multinational companies is their immunity to the business cycles of local
Chart 3. Number of R&D employees in Israel
In the bottom line, in spite all the innovation happening here,
formally Israel is an importer of R&D, because so much of it done in
companies headquartered in the US and other countries (as it can be seen
in the chart below prepared by Booz Hamilton).
Sources of Israeli innovation
Also, the presence of multinational companies in Israel brings
advantage for local workers. Once multinational companies are present in
the market, workers have some safety net. If some company needs to
decrease their staff, strong multinational company may be willing to
recruit these employees.
This was especially relevant last year in the chip companies. AMD
absorbed employees laid off from Freescale, Apple absorbed workers from
Texas Instruments and Huawei those from LSI Logic. Each of the
companies had large scale layoffs resulting from the decisions of the joint
chiefs of global strategies that didn't concern Israel directly, but did affect
Israeli workers.
Employees moving from one work place to another have an
environmental influences. They create a flow of information to
surrounding organizations – knowledge spill-over. This knowledge stays in
Israel and contributes also to start-ups and patents, and eventually new
jobs are created. Intel Israel is a great example of this: since its
establishment in 1974, with an initial staff of five employees, more than
10,000 employees have left the firm about 300 people a year on average,
who then moved to other place of work (according to an internal study
made in the company)21.
Orpaz I. “6 Reasons to Love the Multinational Hi - Tech Companies”, The marker, 6.3.2013.
Sources of Israeli innovation
Chart 4. The world of R&D
Sources of Israeli innovation
Since 2006, on average, 30 new companies have been established
every year by former Intel workers. These companies annually produce
about 250 new jobs. These companies raised $ 700 million since 2006.
Some of the companies were sold and became development centres for
other multinational companies like Broadcom. Mellanox – one of the few
major Israeli companies established in Israel in the last decade, was also
established by former Intel employees.
Most foreign development centres in Israel were established on the
basis of local start-ups purchased by foreign companies. And then their
operations were expanded. It is, in fact, the most popular exit route in
Israeli high tech.
The contribution of foreign companies is also evident in the Israeli
management and organizational culture. The Israelis are considered to be
very good at creative work, thinking outside the box and not being afraid
of failure, however, in all process related activities, the Israelis are much
weaker. Multinational firms enable their employees to learn how to
manage things across different environments. The experience acquired in
multinational companies by executives is sprouting new generation of
managers who have capabilities in areas traditionally not associated with
Israel (such as a marketing and sales).
As of 2010, more than 35,000 professionals are employed in
multinationals' R&D centres in Israel. Some of the most notable are:
(*) Please note that the numbers employees given in this chapter might
be quite different from those on the map on page 23 because of the different
measurement methodologies.
Sorces of Israeli innovation
Table 2. A brief review of R&D centres in Israel (of large
multinational companies)
in Israel
No of
in Israel
Ubique, I-Logix, XIV, Guardium,
Diligent Technologies, Storwize,
Terayon, Bitband
DSPC Envara, Comsys, InVision
Biometrics, Telmap
Maximal,Peach Networks,Whale
Communications, Gteko,YaData,3DV
Orbot Instruments, Opal
Technologies, Oramir Semiconductor
Major acquisitions in Israel
Systems, HyNEX, Seagull
Semiconductor, PentaCom, PCube,Riverhead
Networks, Intucel, Sheer
Networks, NDS_Group
Indigo Digital Press, Scitex Vision,
Nur Macroprints, Mercury Interactive
OFEK-Tech, TopTier Software,
TopManage, A2i
LANNET, Chromatis
Networks, Mobilitec
Nuclear and MR businesses
of Elscint, Diasonics Vingmed
New Dimension Software, Identify
Security-7, Abirnet, XOSoft, Oblicore
Elscint, Veon, CDP Medical
Sources of Israeli innovation
in Israel
No of
in Israel
Major acquisitions in Israel
VisionTech, M-Stream, Siliquent
Technologies, Dune Networks,
Percello, Provigent, SC Square
Galileo Technology
eship-4u, Tecnomatix
Technologies, Solel Solar Systems
Kashya, nLayers, proActivity,
Illuminator, ZettaPoint, Cyota,
400, Fraud Sciences, The
Gift Project
LabPixies, Quiksee, modu (patents
B-Hive networks, nlayers, Digital
Fuel, Wanova
Acquired Numonyx, a joint venture
by Intel
Corporation andSTMicroelectronics
Apple Inc.
Oridion Systems, superDimension,
Sorces of Israeli innovation
Defence Forces
For most part of its short history, Israel has been devoting a large
share of its resources to defence purposes, putting a high priority on the
development of modern armed forces with sophisticated military
technologies and equipment. Various political influences (for example
French embargo on shipment of weapons to Israel in 1968) proved again
and again that the emphasis should be on the ability to develop and
supply these capabilities by its own means. Nowadays, Israel is
considered as a major worldwide player in some areas of the defence
industry. When viewed in historical perspective, there can be little doubt
that the defence sector in Israel had a fundamental impact on the
development of this country’s technological and industrial capabilities. ('2)
The defence industries in Israel led its industrial sector in R&D and
high tech intensity through most of the first 4 decades of its existence. It
was estimated that during the 80’s, 65% of the national expenditure on
R&D were defence related, while only 13% were oriented towards civilian
According to some measures, Israel stands out in its emphasis on
defence related R&D, which consumed 3.1% of GDP in the 80s, versus
0.84% of GDP in the US, 0.58% in Britain, and 0.43% in France.
Beyond preparing the ground for the growth of civilian R&D
industry and developing substantial cadre of qualified engineers and
technicians, Israeli defence industries are major exporter and employer.
(see chart below). Army is also playing crucial role by feeding the high
tech industry every year with thousands highly qualified employees
discharged from the active military service.
Orpaz I. “6 Reasons to Love the Multinational Hi - Tech Companies”, The marker, 6.3.2013.
Sources of Israeli innovation
The army plays critical role in supplying fresh and well trained
workforce for the industry. Through their army service, young people
getting exposed to high end technology and using the knowledge they
obtained in the army in their civilian employment.
Chart 5. Trend in Israel’s defense exports sales
The problem-solving and improvising nature of addressing urgent
military needs has produced a workforce with valuable qualifications.
Many scientists and engineers served as army officers and are used to
real-time decision making under pressure, team coordination and
flexible thinking.
Large number of “graduates” of elite technological units in the IDF
has been recruited by and/or initiated many technological start-ups in
36% of respondents who work in start-ups indicated that they
served in a technological unit, 10% were from "Unit 8200" (it is an
Israeli Intelligence Corps unit responsible for collecting signal
intelligence and code decryption)23. This unit got especially famous for
Hirschauge O. “A profile of the Israeli Hi-Tech worker: University graduate, who served in combat
or a technology army unit”, The Marker, 10.3.2013:
Sorces of Israeli innovation
“producing” such graduates”. Numerous corporations such as Verint and
Nice and start-ups like Mintigo and Aqwise were started by people who
previously served in 8200. It is difficult to estimate exactly how many
start-ups were created by unit 8200 "graduates", but it seems there are
hundreds if not thousands.
The initial screening and recruitment process in these units are
considered to be challenging and very competitive. These units are top
target for many new recruits and candidates for the army service. As a
result the army gets the very best talent, and later industry benefits
from the experience accumulated in the IDF and the IDF classification
IDF screening and recruitment
Potential recruits are identified prior to reporting for national
service at age of 18, based on factors such as high grades in school and
social status (the army gets access to all the high school students in the
country). Subsequently, physical condition, analytical capabilities and
high technical aptitude are tested. Those who meet these and other
criteria are invited to participate in different types of screening tests.
The selection phase includes physical, mental, and social challenges,
interviews and others tests (such as math exams, programming etc).
Recruits are evaluated based not only on their ability to perform the
tasks assigned, but on their attitude while performing them: such as
how well they take hardships and unexpected difficulties, how well they
work in groups and how they approach problem solving and disaster
management situations. Eventually, only the most qualified are chosen
to the "elite" units according to the military's priorities.
The Army has unprecedented access to the details of all the 15year-olds in the country and the ability to cherry pick the best
candidates from hundreds of thousands through sophisticated screening
scheme. This arrangement works well because all involved are
benefiting from it: the Army gets the best people, new recruits are
happy to jump through all the hoops to make it to the top units,
because they know that after they finish the service, headhunters will
Sources of Israeli innovation
be waiting near the army base gate with fat offers (it actually happens)
and finally, the country is benefiting twice, first time by receiving good
security (product delivered by the army) and second time when these
people enter the job market and start to pay high taxes on high salaries
from day one of their civilian life, releasing the state from the duty to
find them jobs or to spend a penny on them.
Cooperation between Russian and
Israeli companies
The cooperation between Russian and Israeli companies is an
existing reality. The world is becoming more global and the integration
between the two economies follows the same route, but alongside the
global trend, there are several unique features.
Immigrants from the former Soviet Union became one of the
leading forces in Israeli tech industry and this alone creates fertile ground
for cooperation. This cooperation is based on not only “cultural proximity”
and lack of language barriers but also on mutual understanding of each
party strengths and weaknesses. Not everything is working smoothly in
this cooperation as can be seen in one of the following stories however
there is a big potential for further increase of volume and quality of
cooperation in tech sector. The following case studies are based on
interviews with senior Israeli executives who were directly engaged in day
to day interaction with Russian technology companies. Some important
lessons and examples of successful cooperation hopefully will help others
to cooperate successfully.
Case Study: Joint Product
development and marketing to
Western European and American
RIT Technologies LTD (NASDAQ RITT) is a leading provider of
intelligent infrastructure solutions for data centers and enterprise
Cooperation between Russian and Israeli companies
environment. The company was founded in 1989 and went public on
Nasdaq in 1997. RIT has its headquarters in Tel-Aviv and representative
offices around the globe: Russia, USA, China, UK, Italy, India, South
Africa, Brazil. The majority of shares belongs to Russian IT group Stins
Coman, one of the veterans of Russian IT scene. RIT is focused on
providing big organizations with tools for infrastructure management. The
company serves big organizations with complex networks architecture and
high demand for reliability. Their clients are big banks and financial
institutions (e.g. Standard Bank, Old Mutual, Bank of Russia, Reuters) big
multinational enterprises like Daewoo, O2, Fujitsu and international and
government organizations like Interpol or the US Army.
Alongside with these very stable and solid solutions, the company
all the time develops and searches for new growth directions, builds
impressive pipeline of innovation products and makes use of its great IP
One of these products presents great example of Russian–Israeli
cooperation and can be used as a successful model for additional projects.
Acculize – Advanced speed enforcement camera. Speed deterrence has
always been one of the top priorities of any police force but also very time
consuming and cumbersome. Especially when the drivers manage to call
in question the proper functioning of the camera in the court of law. There
is an obvious need for trustworthy and reliable instrument with superior
measurement and recording capabilities.
Acculize core technology was developed in Russia, based on a mill
standard technology and it presents superior performance comparing to
existing solution. It can measure and video record the traffic violations
from the distance of 700 meters and to provide clear license plate reading
from the distance of 250 meters. Despite very solid and impressive core
technology, when RIT received the device from the Russian partners,
some crucial elements were missing. The packaging, user interfaces,
management software and the general design, all required an upgrade.
RIT engaged with the Russian team, and both sides provided their
expertise. The result was a great looking device with unique technical
No moving parts
Based on laser beam technology and able to pick a specific vehicle from
multi-lane traffic
Flexible in terms of power feeding and management (one device can be
used by a number of officers and keep the results separately)
Cooperation between Russian and Israeli companies
User friendly interface
Complaint with all the international standards
In addition to real engineering challenges that brings the
development of such a complex new device, the chances of the Russian
company to successfully present this product to the police force in
Western Europe were slim. Since Israel is well known supplier of military
and law enforcement technology in Western Europe (4th globally by
military related export) it was only natural that after fixing all the
interface, software and manufacturability issues, RIT took responsibility
for marketing and presented the device as RIT’s product. As of today the
device is being successfully tested by number of law enforcement
agencies in the West.
Case Study: Ray Q and Bee Pitron
cooperating on Global defence and
aviation market
Ray Q was established in 1969. The partnership with the customers
in the design and supply of high Quality electrical interconnect solutions
has earned the company a leading status in the industry with its military,
aerospace and other high reliability products. Ray Q was incorporated in
2000, as a representative, consultant and distributor of Tyco Electronics,
Raychem Division, on the territory of Israel, Turkey, Eastern & parts
of Central Europe, and India. Over last 30+ years Ray Q has worked with
the leading manufactures in the Aerospace, Military Marine, Military
Ground vehicle & medical and industrial fields or practically everybody
Reliable supply of components, from either local inventory or directly
from the manufacturer
Cooperation between Russian and Israeli companies
Electrical Harnesses testing & qualification facilities
Electronic quoting and ordering
Extensive inventory and distribution facilities
On site Customer training and installations
Prototype assembly line
Design and documentation services, electrical wiring and harnessing
Bee Pitron is one of the oldest companies in Engineering and
technology field in Russia. It was one of the first companies that started
to import, install and support modern manufacturing software systems
(PDM/CAD/CAE/CAM). In 1995 the company entered into importing
electro technical components and in 2000 it started to design and produce
electro technical components of its own. The combination of good
understanding of local market and its needs and rich experience in
implementation and adjustment of imported solutions provided Вee Pitron
with unique competitive advantage and allowed to take on board the most
challenging projects. Joint projects between Bee Pitron and Ray Q led to
closer cooperation and eventually to partnership where RayQ became a
shareholder of Bee Pitron. The companies are now cooperating on many
levels both on domestic markets and abroad. One of the most interesting
examples that can be a model for future cooperation is the example
where the partnership between Russian and Israeli company has helped
the Russian company to maintain and develop their sales in India.
As it was previously described, Bee Pitron has developed significant
expertise in complicated electric systems. These sophisticated electric
systems are widely used in aviation and defence industries. Among other
things, Bee Pitron supplies on board cabling systems for Su-30 (Sukhoi
multirole fighter jet). India is one of the countries that purchases Su-30,
and traditionally, as in many other countries, local MOD (Ministry of
defence) requires that the defence systems include a local element –
certain proportion of the cost of the purchased product should be coming
from a purchasing country side.
This policy is widely used by many purchasing organizations (MOD)
and represents constant challenge for defence products suppliers. One of
the ways to deal with the “Indian component” requirement is to establish
some local production for bits and pieces of the relevant equipment.
However, in case of such a complicated product as a new jet, some
sophisticated solutions are required. Since Ray Q has its own production
facility and an operating company in India, it was able to produce some
parts of the Bee Pitron’s on board cable systems there, and helped Bee
Pitron’s Su-30 to qualify for supply to Indian Air force.
Cooperation between Russian and Israeli companies
This case is not an esoteric example. India holds huge amount of
old Soviet military equipment and local content requirement will be
applied to it as well. By being able to produce locally (in its multiple
branches worldwide) Ray Q can successfully meet the requirements of the
most strict clients. The companies are currently considering implementing
this business model on additional markets.
Case Study: Israeli high tech
company performing a multimillion
project in Russia
(*) The story is real, some circumstances and details have been changed
in order to protect the identity of the person who disclosed the information.
Despite doing so, we believe that this case study can delivers useful insights and
conclusions to our readers.
In the following case study we will analyze a real engineering
project performed by a Russian Technological Company (“RTC”) for an
Israeli Technological Company (“ITC”). The project’s result can be
described as partially successful, a working system was delivered to the
client and installed by the RTC and related companies. However ITC
seems to be reluctant to renew the contract with RTC and will seek for a
different contractor for its future projects.
Industry Dynamics
There are several factors characterizing the industry and reviewing
them will provide the reader with better understanding of our case study.
The Industry is very concentrated with a limited number of very large
players and big visibility of every commercial contract. One of the main
features of this specific industry is that access to market is crucial. It
means that cost and quality of the system are not the only factors that
determine the choice of partner. What is also important is his ability to
deliver and install the system. Price, not only for the system but also for
an installation is a very important factor as well.
Cooperation between Russian and Israeli companies
Initial Engagement
ITC was looking for access to a new market. Russian companies
had traditional access to it and for a long while have been considered
leaders both in a specific technology and on the market in general.
Although since then, Russian companies have become less prominent in
the specific technological area and significant competition has emerged,
Russian companies managed to preserve their leadership in installation of
the systems on the target market having their experienced “boots on the
ground”. RTC was introduced to ITC by a reputable market participant
and was presented as able to provide access to the market. The parties
met and discussed a joint project where the Russian company would build
the equipment and perform the installation, while Israeli company would
operate and maintain the equipment over long period of time. ITC was
concerned with RTC’s lack of experience in certain areas. Last time RTC
built a similar system for a foreign client 14 years ago. ITC found out
that the equipment built by RTC had substantially shorter life span than
similar systems built by Western competitors but RTC’s ability to market
access and offered price played an important role in choosing RTC as a
Project Execution
ITC built a strong project team in order to cooperate with RTC. The
team was 24 people strong and included a Russian speaking head of the
project, system engineer, and permanent representative that was in
charge of resolving issues on the spot and facilitating the process in
Russia. The main issues started to arise on this stage. The issues can be
divided into two major groups, technical/professional and cultural. Both
kinds are not unique to RTC and exist in many companies. The technical
issues were:
Lack of knowledge in electronics and insistence on producing
everything in house. For example, PCBs were manufactured in house
which affected the quality and the timeline. Nobody in the world is
producing their PCBs in house
Lack of quality control. In place on paper only, in fact quality control
was completely missing
Lack of system engineering. In such a complex project, the role of a
system engineer who is able to have a whole picture and to coordinate
properly between different functional teams is crucial. The situations
when two different teams were working on interconnected parts
without being coordinated were a commonplace.
Cooperation between Russian and Israeli companies
Even more challenging were the cultural issues that the project’s
team was facing. The most serious were:
Transparency, people were lying about test results and when there was
a failure, people were afraid to report to their superiors. Sometimes,
the Israelis knew about the problem, while some bosses were not
aware. The failure in engineering work should be used to learn and
analyze, but not blamed on a specific employee. If it does, he or she
will be hiding next failures and the result can be disastrous.
No open discussion. One of the key elements of R&D type engineering
process (and building a sophisticated system should be considered as
R&D work) is the ability to have open discussion when people are not
afraid to voice their views, even if they contradict the opinions of their
superiors. This approach helps to raise and reveal issues and allows for
unrestricted info flow.
Head of the project. In matrix system, the heads of various units who
were more senior than the head of the project did not take him
seriously. The teams should be guided professionally by their units’
managers and managed by the head of the project. It is hard to define
if it was personal or structural problem. The head of the project was
not shown any respect from the units’ managers and eventually was
reassigned due to their personal attitude or the lack of experience in
project environment.
The Results
The project was accomplished by RTC within 36 month, instead of
originally planned 24. The budget turned out to be substantially higher
and tens of millions of dollars were paid as fines according to the original
agreement between the companies. The system was built and installed
and as of today is in full operation by ITC. While it is quite common for
the projects of such a large scale to exceed the time line and the budget,
not only in Russia but elsewhere, some of the issues outlined above,
especially the technical ones can be easily resolved. The cultural issues of
a similar nature can be seen in every big organization. Great example can
be found in Harvard business school case study on Columbia space shuttle
disaster in 2003 (Columbia's Final Mission, Harvard Business School 2004)
where lack of ability of junior team members to openly raise their
concerns lead to space shuttle disaster.
Cooperation between Russian and Israeli companies
Case Study: Israeli software
developers outsourcing software
production to Ukraine
Software industry is one of the most mobile and flexible industries.
The very nature of it dictates this. No infrastructure beyond basic
electricity and internet connection is required, developers from all over
the world are able to communicate on professional subjects using basic
English and professional jargon, teams can cooperate distantly and the
skill set is standard and universal. That’s why the software development is
spearheading other high technology entries in every emerging (or reemerging in our case) technology market. There are plenty successful
software companies in Russia and many of them are off shore subsidiaries
of international companies. The purpose of this case study is to review the
dynamics of emergence of an IT cluster for outsourcing software
development companies and to review the factors that supported the
process. Though it happened spontaneously, we believe this process,
however, can be initiated and replicated.
Company development
Nowadays Web technologies (the real name is changed on request
of the company’s owner), like many other companies in software segment
started as a technological start-up in 2006. The company started to build
a system for web advertising optimization and management. This
business idea failed, however, the developed technology proved very
successful in a completely different field – bank trading systems. The
company built and installed trading systems for leading Israeli banks.
Meanwhile, the founder was mentoring two start-ups that were engaged
in games development. At some point, all the 3 areas of activity were
gathered under single roof of Web Technologies. The company employed
7 software developers and very quickly, new orders overgrew the
capacity. The company found itself on a strategic crossroad. The owners
made a decision to check a possibility of outsourcing the development
abroad due to very high level of software developer’s salary in Israel
(Please see the chart below).
Cooperation between Russian and Israeli companies
Dollars (USD)
Chart 6. Average salaries of programmers in Israel24
Dollars (USD)
Chart 7. Average salaries of programmers in Russia25
24 <>
“Salary Survey of Java / C + + / C # / Delphi Programmers”,, July 16, 2012:
Cooperation between Russian and Israeli companies
Dollars (USD)
Dollars (USD)
Chart 8. Average salaries of programmers in Ukraine26:
Karpenko O. “How much earn Ukrainian programmers- Data for December”, 01.02.2013:
Cooperation between Russian and Israeli companies
Choosing the destination
There is a solid empiric support to the view that cultural proximity
(language as a first and dominant factor) matters when a decision where
to outsource is made. It’s enough just to compare the prominence of
software development outsourcing businesses in China and in India in
order to see that due to the English language skills, the Western world
largely preferred India for this purpose. Since the founder of Nowadays
Web technologies was born in the Soviet Union (Leningrad), and spoke
Russian, his natural inclination was towards doing the outsourcing in CIS.
Quick study of levels of salary supported the view. After learning the
environment, the salary levels, the accessibility and other factors the
following criteria were developed:
1. It should be a provincial town – the salaries were at least 30% percent
higher in major cities (Moscow, St. Petersburg, Kiev)
2. It still should be a relatively big town in order to have critical mass of
people with suitable skills
3. It should have a fair amount of Universities or similar educational
institutions – once again to ensure availability of skilled workforce
Suitable Location
A friend invited him to Dnepropetrovsk, and Dnepropetrovsk
matched the profile. Dnepropetrovsk (formerly Yekaterinoslav) is the
Ukraine's fourth largest city, with population of about one million people
(and about 1,360,000 people in Dnepropetrovsk Metropolitan area). It is
located to the Southeast of the Ukraine's capital Kiev on the Dnieper
River, in the south-central part of the country.
A vital industrial centre of Ukraine, Dnepropetrovsk was one of the
key centres of the nuclear, arms, and space industries of the former
Soviet Union. In particular, it is home to Yuzhmash, a major space and
ballistic missile design bureau and manufacturer. Because of its military
industry, Dnepropetrovsk was a “closed” city up until the 1990s.
Dnepropetrovsk is a major educational centre in Ukraine and is
home to two of the Ukraine's Top-10 universities: the Dnepropetrovsk
National University and the National Mining University. Dnepropetrovsk
currently has 14 state-run higher educational institutions, and a large
number of private institutions.
Cooperation between Russian and Israeli companies
The list below is a list of all current state-organized higher
headquartered universities are excluded)
Dnepropetrovsk National University
Dnepropetrovsk State Institute of Physical Culture and Sport
National Mining University of Ukraine
National Metallurgical Academy of Ukraine
Ukrainian State Chemical-Technological University
Dnepropetrovsk State University of Internal Affairs
Prydniprovska State Academy of Civil Engineering and Architecture
Dnepropetrovsk National University of Rail Transport
Dnepropetrovsk Agricultural University
Dnepropetrovsk Academy of Finance
Alfred Nobel University of Economics and Law
Academy of the Customs Service of Ukraine
Dnepropetrovsk Medical Academy
Dnepropetrovsk Institute of the Inter-regional Academy for Human
Dnepropetrovsk regional institute of the Presidential Civil Service
Academy of Ukraine
Dnepropetrovsk Institute for the Preparation of Industrial Experts
Currently around 55, 000 students study in Dnepropetrovsk, a
significant number of whom are students from abroad.
Establishment of the off shore subsidiary
It took several weeks and 3 visits to Dnepropetrovsk to establish an
off shore subsidiary there. This demonstrates great mobility of software
industry and great opportunity it creates for attracting similar businesses
to Russia (more about it later in a business plan).
During the first visit, the friend of the entrepreneur introduced him
to a local lawyer and organized 3 interviews with headhunters for him. All
the meetings and the interviews took place in the coffee shop. On his
second visit, he already met with accountant and property agent in
addition to the interviews with several programmers scheduled by the
headhunted selected earlier. Property agent showed a few listings and on
the third visit all the meetings and interviews were held in the company’s
brand new Dnepropetrovsk office. The founder was giving instructions to
Cooperation between Russian and Israeli companies
the local lawyer, property agent and headhunter by phone and managed
to establish a meaningful operation in no time. Currently the office
employs 70 programmers.
The office operates as a Ukrainian company fully owned by an
Israeli company. There is no special tax treatment for the software
developers and as everybody around, the company uses the methods of
legal tax optimization. All the employees have registered as private
entrepreneurs in order to reduce the tax burden of the company.
According to the entrepreneur if all the labour and social taxes were to be
paid, the attractiveness of this move would have become much lower.
The network effect or the power of the herd
As fascinating as this success story is, it’s far from creating any
significant volume of business activity that can be of interest to the policy
makers. However, as it often happens, the network effect kicked in. Other
Israeli software developers heard the story (small country, we said it
previously), learned how easy it can be done and in no time 10 software
development companies set their operation within couple of blocks away
from Web Technologies’ offices. Thus a cluster of software industry has
been created. It now has life of its own and is growing fast. One of the
companies that have settled there is going public on NASDAQ in
September and this will strengthen the cluster’s reputation even further.
It’s important to emphasize that all of it happened almost accidentally,
without any help or involvement of authorities.
Analysis of Israeli venture capital industry
Analysis of Israeli venture capital
Sources of funding
Israel is a well-developed modern economy with significant role
played by technology intense industries. In 2010 Israel was reclassified
from Emerging to Developed market by MSCI, a move that from one side
confirmed the maturity of local economy but from the other side, as many
experts had predicted, negatively affected the trading volumes. When
Israel was classified as emerging market, it was very attractive
investment target for institutional investors with “Emerging markets”
mandate due to proper legal system and good investor protection
mechanisms (see chart below). Now local companies need to work harder
because they are compared with mature market multinationals. In 2010,
Israel also was admitted as a full member of OECD.
The big role that high-tech industry is playing in Israeli economy
has supported the development of vast VC industry (despite recent
decline Israel is still the leader by VC investment per capita) however big
reliance on international LP’s makes this industry sensitive to economic
cycles in US, EU and other places (although they do not affect Israeli
economy as hard as some other places).
In its annual “Doing Business” survey of 181 countries the World
Bank, ranks Israel the fifth, alongside the U.S., Canada, and Ireland and
outranking the United Kingdom in the area of investor protection.
Analysis of Israeli venture capital industry
Chart 9. World Bank “Doing Business” survey
Israel’s venture capital industry has approximately 70 active
venture capital funds, of which 14 are international VCs with offices in
Israel27. Between 2003 and 2012, Israel's venture capital funds attracted
$6.77 billion.
VC funds raised $607 million in 2012, following $796 raised in 2011
(2011 was the year when VC funds were back to raising capital, after two
very difficult years. No capital had been raised by Israeli funds in 2010,
and only $256 million had been raised in 2009, a 76% drop from 2008
level)28. See the chart below.
27, 31, 37, 38, 40, 46
Ministry of Economy State of Israel, “VENTURE CAPITAL IN ISRAEL”, 24.4.2013:
28 28, 32
IVC Research Center, Israeli Venture Capital Fund Raising - 2012 Summary, IVC-KPMG Survey:
Israeli venture capital funds raised $607 million in 2012.
Analysis of Israeli venture capital industry
Chart 10. Total venture capital raised by Israeli VC
Funds by Vintage Year ($b) 2002-2012
The leading funds, Sequoia V, Pitango VI and Magma III, raised a
joined amount of $450 million, 74 percent of the total funds raised by all
Israeli VCs in 2012. Micro-VC funds continued to attract investments with
six micro funds raising a total of $83 million, nearly 14% of total capital
International Venture Capital Firms: Several leading U.S. and
European VC funds have Israeli branches, namely Alta Berkeley Venture
Partners, Battery Ventures, Bessemer Venture Partners (BVP), BlueRun
Ventures (BRV; formerly Nokia Venture Partners), Blumberg Capital,
Bridge Capital Fund (BCF) LP, Canaan Partners, Defta Partners,
Lightspeed Venture Partners, Partech International Inc., Susquehanna
Growth Equity (SGE) LLC, Venrock, YL Ventures, and Ziegler Meditech
Equity Partners (ZMEP) LP. Additionally, there are some 220 international
funds, including Polaris Venture Partners, Accel Partners and Greylock
Partners, that do not have offices in Israel, but actively invest in Israel
through an in-house specialist. The VC divisions of leading multinationals,
with R&D centres and acquired companies in Israel (e.g. Intel, HP,
TimeWarner Inc., Sony, Cisco and others) have also found that the
country offers an attractive VC market.
Most active VC funds in Israel
As it appears in IVC’s 2012 Research: Ninety venture capital funds
made their first investments in Israeli and Israel-related companies in
2012 according to the Most Active Venture Capital Funds report prepared
by IVC Research Centre. Nineteen Israeli and foreign venture capital
funds made three or more first investments, with the most active being
Carmel Ventures, an Israeli VC fund managed by Shlomo Dovrat and Avi
Analysis of Israeli venture capital industry
Zeevi. Carmel made 11 first investments in 2012, compared with only
three first investments in 201129.
Horizons Ventures, controlled by Hong Kong investor Li Ka Shing,
made 10 first investments, followed by two Israeli funds, Genesis and
Gemini, each of which made seven first investments. Jerusalem Venture
Partners made six first investments, followed by Magma Venture Partners
with five30.
Five different venture capital funds – including Pitango, Israel's
largest fund – made four first investments in 2012. Eight others made
three first investments, while each of 19 funds, including Israeli microfunds, invested in two companies during the year. The remaining 52
venture capital funds made only one investment each31.
Table 3. Most active VC funds in Israel – 2012 (Ranked
by Number of First Investments)
VC Fund
Total First
29, 34, 35
Portfolio Company
Facemoods, Ekoloko,
TradAir, Tapingo, Tonara,
SAManage, Adapteva,
ironSource, Desti, Abes
Market, Cooldata,
PlayMyTone, Hola, Wibbitz,
Ginger Software, Shine
Security,, Invy,
Stevie, Mishor 3D
Moovit, Jfrog, WalkMe,
Sckipio, Mominis,
Sportority, SAManage
EatWith, Commerce
Sciences, TradAir, 3Dsloes,
DaPulse,, Sckipio
Correlor, Wishi, Gamba
Games, Playshift, Theta
Ray, ReDuxio
IVC Research Center, “Most Active Venture Capital Funds in Israel - 2012”.
Analysis of Israeli venture capital industry
BigPanda, Indeni, Adallom
StorONE, WalkMe, Pebbles
Clarizen, FiftyOne, Celeno
Applicaster, Cooladata,
Wochit, SherPa, 365Scores
CloudLock, StartApp,
Regentis, Pharma Two B,
twtrland, Corephotonics,
AppsFlyer, Xplenty,
JethroData, DudaMobile,
Skycure, Magenta Medical
Otic Pharma, RDD Pharma,
Omim, cCAM
Dragonplay, Fiverr,
MobileSpaces, Origami
Logic, Mishor 3D,
Cyvera, MentAd
Vayyar, MyHeritage,
Intigua, Ravello
Base, Simplee, CloudOn
The High-Tech companies
In 2012, the Israeli high-tech companies attracted $1.9 billion,
11% decrease compared to $2.14 billion in 2011. In 2010 and 2009, the
high-tech sector raised $1.26 and $1.2 respectively32.
In 2011, there were 85 mergers and acquisitions (of Israeli
companies) in the Israeli market worth a total of $5.23 billion, a 134%
increase from $218 billion in 2010 and the second highest amount in a
decade, after the $10 billion worth of deals in 2006.The average deal size
in 2011 increased by nearly 85% to $60 million from $32.5 million in
2010. This increase reflects a relatively high number of deals above $100
million, with M&As of Israeli VC-backed companies in 2011 totalled
$12.52 billion, a 102% increase from 201033.
Blue Star Indexes, Why Invest in Israel, 2012 BlueStar Global Investors LLC:
Ministry of Economy State of Israel, “VENTURE CAPITAL IN ISRAEL”, 24.4.2013:
Analysis of Israeli venture capital industry
Chart 11. Israeli High-Tech companies: capital raised
from investors vs. proceeds from M&A and IPO
In Q1 2013, the software sector attracted the largest share of
investments for the first time in four years. 34 software companies raised
$136 million (29%), compared with $105 million (21%) and $107 million
(22%) in Q4 2012 and Q1 2012, respectively. The Internet sector
followed with a 22%share of investments.
53 seed stage companies raised $31 million (7%) in Q1 2013, a
37% decrease from $49 million raised in the previous quarter and 6%
below $33 million (7%) attracted by 41 seed companies in Q1 201234 (see
the chart below).
IVC Research Center, Summary of Israeli High-Tech Company Capital Raising Q1 2013, IVC and
KPMG Report.
Analysis of Israeli venture capital industry
Chart 12. Israeli High-Tech Capital Raising Q1/2011 –
Q1/2013 ($m)
Investment by Stage
In 2011, mid stage companies were leading in capital raising with
$903 million or 42% of total capital raised. Seed companies attracted 5%,
early stage companies 26% (slightly down from 35% in 2010) and mid to
late stage companies raised $1.48 billion, an increase of 90% from 2010.
According to KPMG, the increase in late stage investments indicates the
strength of Israel's technology industry, as well as its attractiveness to
foreign investors35.
IVC Research Center, Summary of Israeli High-Tech Company Capital Raising Q1 2013, IVC and
KPMG Report.
Analysis of Israeli venture capital industry
Chart 13. Capital raised by Israeli High-Tech companies
by stage
Opportunities for Russian investors
As it was shown previously, Israeli venture capital industry is going
through a very serious challenge. The lack of funding that leads to a
major contraction of the industry is caused mostly by the economic crises
but not only.
A big rock was dropped into the quite pond of VC firms relationship
with their LPs. The waves this rock has created, can be largely regarded
as another step towards search for a new model. On May of 2012, there
was a report published the Kauffman Foundation, which currently has
about $249 million of its $1.83 billion portfolio allocated to venture. The
report had a title “We Have Met The Enemy… And He Is Us” and drew on
the lessons from 20 years of Kauffman Foundation experience in VC
investment in venture capital. The Kansas City, Mo.-based Kauffman
Foundation promotes entrepreneurship and education, and is known in
the venture world for creating the Kauffman Fellowship to train venture
capitalists, a program that was spun out in 2003.
The essence of the report is that financial institutions spectacularly
failed in managing their VC allocations. Currently established practices
create a situation where VC fund’s manager’s interests are not aligned
Analysis of Israeli venture capital industry
with the interests of LPs. The funds are big enough to allow the managers
to have a nice lifestyle just from collecting management fees (2%) and in
vast majority of the funds, the managers contribution towards the fund is
1% only from the fund. Alongside these observations, general
performance analysis shows that most of the VC (except for a few
outstanding players) returned pretty disappointing result. The
combination of the crisis and the Kauffman report publication has
significantly reduced VC allocations of big institutional investors. CalPERS,
(California Public Employees' Retirement System) that has traditionally
been a big LP in several Israeli funds is a very good example. With $257
bn under management and 1.6 mln pension beneficiaries, it’s the biggest
pension fund in the USA. It has traditionally allocated 7% of the funds for
the VC investment. Out of $36 bn PE portfolio, slightly above $2 bn have
been allocated to VC. In recent public interviews, Calpers managers
promised to reduce it to 1%-2%. Like in every cloud, there is a silver
lining here as well. First, like forest fire cleans the growing grounds for
the strongest trees, the best performers are staying around and are still
keeping and raising capital. For the fund of funds, it provides clear
evidence of what are the funds that can still be trusted by wider
investment community and which have lost the trust. Second, it forces
the industry players to try, innovate, and come with new models some of
which might be better than the existing ones.
In the process of preparation of this report, we met with several
funds and discussed the possibility of learning from their experience.
Obviously all the funds expressed an interest to learn more about fund of
funds like RVC and were happy to share their experience based on RVC
becoming their limited partner. Fair enough, they asserted that this is the
only way to justify spending time and opening the processes for the
review of RVC people. It is very difficult to argue with this approach and
quite unrealistic to expect that successful VC managers will be spending
time on teaching and educating somebody without being clearly
motivated to do so. What is important is to assess the real situation of the
funds to be sure that RVC is not going to save the funds that otherwise
will not raise enough capital. The bet should be on winners,
oversubscribed funds that are picking their LPs very carefully. Such funds
are paying attention not only to the amount of money the LP brings in but
also on additional benefits (doors opening, access to interesting market
etc.). In this situation, RVC can represent and position itself as a gate
keeper and enabler of sizable Russian and CIS market. Leading venture
funds are following the convergence that the Russian market is
undergoing with the regard of new media, internet retail and social
networks with great interest and will potentially be interested to see RVC
Analysis of Israeli venture capital industry
among their LPs and to provide the desired learning experience on
venture investment best practices.
Attitudes and experience in outward
investment of Israeli institutional
investors and VC in particular
The Israeli Institutional Investors - facts and figures
Israeli institutional investors manage more than 350 billion USD36
(these figures do not include insurance firms’ own investment capital,
private investors’ or private firms’ investment capital). Until recently, the
government has either heavily taxed or prohibited investment in foreign
instruments while granting generous exemptions for local investment,
thus forcing the institutional investors to allocate most of their
investments within the Israeli capital markets. Recent years witnessed a
significant shift in the attitude of the Israeli Commissioner of Capital
Markets Insurance & Savings. The Commissioner currently allows global
investment diversification as a risk management strategy. And its
regulation establishes that financial institutions will be able to invest in
foreign countries which are ranked BBB or higher, or in countries that are
members of the OECD.
As a result, Israeli institutional investors are starting to seek
investment alternatives abroad. Secondly, Israel is a small country and it
has very large institutions here. As they grow bigger (insurance side and
pension side where they have new money coming every month) they are
almost forced to go offshore because they're already very heavily
invested in the Israeli market.
36, 42, 43
Israel’s Institutional Investor Conference: <>
Analysis of Israeli venture capital industry
Provident and pension funds manage $195 bn, Mutual funds $42
bn, insurance firms manage $58 bn and banks manage $40.5 bn in own
investment accounts37.
The long term savings market in Israel, excluding the banking
system, companies and family funds, has more than $246 bn under
The market is centralized and is managed by seven dominant
managing firms: Migdal ($21 bn), Clal ($20 bn), Harel ($10.6 bn),
Phoenix and Excellence ($10.86 bn), Menorah ($13.6 bn), Psagot ($14.3
Banks’ own capital for investment: Leumi manages $16 bn, Poalim
- $7.7 bn, First International - $4.4 bn and Mizrahi $2.2 bn.
There are three investment tools: provident funds with
approximately $80 bn under management, pension funds with
approximately $102.9 bn under management and life insurance firms with
approximately $64.3 bn under management. Most of the large
institutional bodies offer all of these three investment vehicles.
The local market is opening itself more and more to investments
abroad, and this diversification is largely supported by the government.
The exposure to funds in general and to hedge funds in particular is
growing annually, especially amongst the large institutional bodies. Some
invest through FOF and others directly. In insurance firms out of total
assets, around 3% is invested in funds and 1.25% in hedge funds; in
pension funds 0.75% is invested in funds and 0.2% in hedge funds; and
provident funds invest 1.5% in funds and 0.5% in hedge funds38.
From the interviews with several executives from Israeli
institutional investors we learned that the change is rather small and the
investment committees are very conservative. The preferred exposure to
the external markets is either through investment in commercial real
IVC Research Center, Summary of Israeli High-Tech Company Capital Raising Q1 2013, IVC and
KPMG Report.
Analysis of Israeli venture capital industry
estate in Western Europe (mostly not directly) or through ETNs (Exchange
traded notes) that are tracking various indexes and issued by triple A
banks. Everything beyond this exposure will be considered not prudent
and will never pass the investment committee.
Moreover, Israeli institutional investors are not participating in
financing local VC industry. According to the data presented by Israeli
Ministry of Finance, 95% of the money invested in Israeli venture funds
comes from outside the country. For example, when the amount of money
under management of Israeli institutional investors grew from $99 bn to
$238 bn between 2003 and 2010 (increase of 140%), the relative amount
of investment into VC funds contracted from the highest record of 0.22%
in 2005 to 0.15% in 2010. Since 2010 till today it remains without much
change. Even after the government provided the institutional investors
with 25% downside protection (allocating $228.6 mln for it) and got their
commitment to invest at least $128.6 mln, they have only invested
$102.9 mln39. Israeli private investors are slightly more international in
their capital allocation. According to the data from the Bank of Israel
(reviewing the distribution of assets of the public): In 2013, 12.2% of all
assets were invested abroad. A slight increase from 11.9% and 11.6% in
2012 and 2011 respectively40.
41, 42
Inbal Orpaz, 17.07.2013, The Marker.
Bank of Israel, Information and Statistics Division, Current Data on Market Capital, Distribution of
assets of the public (by type of assets), 2009-2013.
In conclusion
In conclusion
On the backdrop of long economic downturn and diminishing VC
allocations of major USA institutional investors, Israeli venture capital
industry is money strapped. Vast numbers of VC funds in Israel are in a
“zombie” mode. They have portfolios to manage however they have very
slim chances of raising additional funds. Only a few exceptional funds,
with great track record are keeping and raising money.
In the same time, a booming start up scene with strategic buyers
pouring in creates strong motivation for VCs to keep investing locally.
We have presented the question of possibility of investment in
Russian technology companies to both Israeli institutional investors and
venture funds and their response was universally discouraging.
Israeli market is a very fertile ground for sourcing technology
experts. A big number of small companies, with quite frequent
failures/success constantly create meaningful number of people of
sufficient quality and experience who are available for short term
assignments and consulting projects. Very often these people are on a
very senior level with experience in international project management and
great technological achievement. Some of them are out there and either
looking for a job or for shorter term consulting assignments, some are
taking a deliberate break, others are starting their own small businesses
based on their skills. Additional factor that creates relatively large number
of technology experts available is the narrow pyramid at the management
level in technology companies. It creates a situation where many good
tech experts, who either deliberately or for the “lack of elbows” do not
make it to the higher ranks of senior management, get frustrated and
leave the companies where they have spent many years.
Not only people who are out of organized job market can be good
consultants. Many companies are very open-minded and allow their staff
members to do consulting in parallel with their main employment.
Additional aspect that makes Israeli market an attractive source of
expertise for Russian technology companies is abundance of Russian
speakers with technological experience from the world leading players.
From several background conversations with technology and
management experts, we have learned that a vast majority of them
demonstrated openness and readiness to be engaged as advisers to
Russian technology companies, investment funds or development
In the table below, there are several examples of consultants who
are available and will be happy to consider consulting engagements.
Table 4. List of possible consultants
Areas of
developed, IPOed on NASDAQ a
Partner in a
leading venture
Chairman of
tech market, VC,
companies from
start up stage to
100s of millions
CEO of regional
branch of one of
the world
providers for
Director in big
Start ups
Global Networks
VP R&D in
several global
VP R&D in
medical devices
and clean tech
start up
Machine Vision
IP protection
Patent lawyer,
Partner in
patent law office
Senior partner
in patent office
Patent law –
IP management
and protection
On a specific request, a relevant consultant can be found in every
area of expertise.
Appendix 1 – List of events in Israel sep13-sep14
Software and Technologies
The Event
HVC 2013
HVC: Haifa Verification Conference
Haifa, Israel
Embedded 2013
Annual development of real-time systems and
Ramat Gan,
The exhibition is designed for the global business
communities including: CEOs, industry & Institutional
buyers, CFOs, marketing & sales directors, IT managers,
network & system managers, R&D, project managers,
operational & logistics mangers, architects & interior
Tel Aviv, Israel
2013 IEEE International Conference on Microwaves,
Communications, Antennas and Electronic Systems
Testing 2013
Testing equipment and processes.
Ramat Gan,
IATI- Cyber Forum
Cyber un-conference
IATI- VC Committee
VC Committee Meeting
Coming soon
Journey 2013 - The
17th conference of the
technology industry
The (Ernst & Young) Journey conference summarizes
the main events that took place in the high-tech, lifescience and venture capital industries over the past
year. It also provides future forecasts and trends.
IATI- Multi National
Companies Forum
IATI's 2nd Multi-National R&D Centres Conference
The exhibition for
office technologies,
computing and smart
business solutions
MobilITy 2013
How Can the Enterprise Get Ready for the Post-PC
Tel Aviv, Israel
ICR 2013
Tel Aviv, Israel
Electronic Packaging
Annual Conference for development and production of
electronic equipment
Avenue, Israel
IATI- Cyber Forum
iX | Tel Aviv 2014
Machine Vision 2014
Start-Up Conference
The Israeli Start Up
conference 2014
New-Tech 2014
Robotics 2014
ST Technoday Israel
TCE Conference 2013
Rax International
Cyber Forum
Bootcamp Venture's 23rd event globally in 6 years and
will showcase 20 of the most promising Israeli start-ups
from the fields of digital media, mobile and ecommerce, health tech, IT and more.
Attendes profile includes from field of Nanomaterials,
Nanoelectronics, Nanophotonics, Nanobio,
Nanomedicine, Energy & The Environment,
Nanosatellites; nanocomputers….
Coming soon
Coming soon
Tel Aviv, Israel
Annual Computer Vision Conference
Tel Aviv, Israel
Coming soon
Start-Up Conference
Tel Aviv, Israel
Coming soon
The Israeli Trade Fairs & Convention Centre
Tel Aviv, Israel
Coming soon
Hi Tech and Electronics
Tel Aviv, Israel
Coming soon
Annual Robotics Conference
Tel Aviv, Israel
Coming soon
International Conference on Israeli Chip industry
Herzliyya, Israel
Coming soon
The 4rd Annual International TCE Conference
Profile for exhibit includes Automation & Control,
Industrial automation, Control instruments, Automatic
computerized controls, Pneumatic electronic control
Haifa, Israel
Coming soon
Tel Aviv, Israel
Storage & Backup
DRP 2013
Storage & Backup
Avenue, Israel
Coming soon
Annual Conference of Functional Continuality
Tel Aviv, Israel
Coming soon
CMO 2013
BI, CRM, Big Data, Clouds and more…
Avenue, Israel
Coming soon
CloudCon 2013
Cloud Tech
Avenue, Israel
Coming soon
M2M 2014
Herzliyya, Israel
Coming soon
Technology 2014
Machine to Machine Communication
The 23th International Fair For Technological
Innovations and Achievements.
Tel Aviv, Israel
Coming soon
Technology, Computer and software, Security
Tel Aviv, Israel
Coming soon
MDDMI 2013
Conference &
It is a premier event in Israel to the medical device
industry, in which numerous medical device innovative
companies, looking for service providers subcontractors
and professional suppliers, aiming to partner with them
to accelerate its innovative products' time to market.
Haifa, Israel
Annual medical electronics development conference
Ramat Gan,
Medax 2014
Israel Cyber
Conference 2014
The Event
Medithcg 2014
Conference and Exhibition on Investments in Medical
These exhibitions represent the entire spectrum of the
latest innovations in the fields of Medical Technologies,
Healthcare IT, Pharmaceuticals and Hospital Supplies,
as well as Diagnostic
Life sciences and medicine exhibition for manufacturers,
developers and researchers
Development of medical electronics
The 2nd Medical Devices & HIT Summit-MEDinISRAEL
ILSI Biomed Israel
IMS Expo
A complete view of biotechnology and medical devices
Tel Aviv, Israel
Tel Aviv, Israel
Coming soon
Tel Aviv, Israel
Coming soon
Tel Aviv, Israel
Coming soon
Tel Aviv, Israel
Coming soon
Finance and business related
The Event
DC Finance's Going
Public and Raising
Capital Abroad
Tel Aviv Stock Exchange Visitors Centre
Tel Aviv, Israel
Go4Europe 2013
Organized by Cukierman Investment House Ltd. and
Catalyst Fund, Go4Europe is one of the most prestigious
conferences in Israel. Go4Europe is addressing the
current issues of raising funds and establishing strategic
alliances in Europe
The 2013 Israeli
Corporate Finance
Israel's 6th Annual Corporate Finance Conference
Ramat Gan,
Tel Aviv, Israel
Go4China 2013
Coming soon
Tel Aviv, Israel
Israel Business
Conference 2013
The 2014 Tel Aviv
The Marker and Veolia
Conference on
Business and
Annual Conference on
Wealth Management
and Family Office
This gathering of finance, government and business
leaders will examine Israel’s role as a centre for
research and innovation in fuel choices
Go4China is based on Cukierman’s successful
Go4Europe, which since 1997 has been bringing
European investors to Israel
The annual Israel Business Conference is the leading
economic event in Israel
The 6th Tel Aviv Annual Institutional Conference,
Israel's largest institutional investors' event
Tel Aviv, Israel
Environment, Professional conferences and High Tech
Tel Aviv, Israel
Coming soon
The conference provides broad information, comparable
and independent range of topics relating to the world
the Family Office, Wealth Management and Family
Tel Aviv, Israel
Clean Tech
The Event
This year’s conference will emphasize the technologies
that can serve as the key to a much more efficient
exploitation of natural resources (Water, Soil, and
Energy & Materials). Bringing together Israeli &
international business executives, political decisions
makers and leading researches, WATEC 2013 will be a
showcase for the most advanced technologies and
solutions from around the world.
CleanTech 2014 is the 18th annual international event
for Clean Technologies: environmental quality,
infrastructures and green building, renewable energy
and water technologies
WATEC Israel 2013
Tel Aviv, Israel
CleanTech 2014 CleanTech Summit &
Tel Aviv, Israel
IATI- CleanTech
IATI- CleanTech Committee
The Event
ICASM 2013
Aerosupply Israel
Aerospace 2013
The 9th Ilan Ramon
International Space
Conference 2014
54th Israel Annual
Conference on
Aerospace Sciences
International Congress of Aviation and Space Medicine
A true market place for the Israeli Aerospace industry,
the AEROSUPPLY ISRAEL 2013 event will enables
companies to come together, make connections and
identify new Israeli business partners
The event will consist of an exhibition of aerospace
technologies and a professional conference with sessions
on various relevant matters.
The Ministry of Science and Technology, the Fisher
Institute for Air and Space Strategic Studies and the
Israeli Space Agency (ISA) are organizing and hosting
the annual International Conference on Space Research
Aerospace Design, Manufacturing and Maintenance,
Aerodynamics, Fluid Dynamics and Aero acoustics….
Tel Aviv, Israel
Tel Aviv, Israel
Israel Space 2014
Committee on
Aeronautical Fatigue
and Structural
Integrity (ICAF 2015)
Major Israeli Aerospace companies, International
Business Forum, Pre-arranged B2B meeting…
ICAF Conference and Symposium is one of the leading
conferences that is held exclusively for leaders from the
entire aeronautical industry, laboratories and research
houses devoted to investigation on aeronautical fatigue
and structural design, military specialists, experts and
luminaries from the related areas, and finally regulatory
Tel Aviv, Israel
Coming soon
The Event
Miltech & Avionics
Military & Aviation
Development of equipment and systems, technological
innovations and innovations
Annual exhibition of military capabilities.% developments
Avenue, Israel
Coming soon
HLS 2014
Israel`s 5th leading annual event for Homeland Security
Avenue, Israel
The Israeli
International C5I
C5I as an Operational Force Multiplier
Ya'akov, Israel
Coming soon
ISDEF 2014
ISDEF 2013 - Israel Defence The 6th International
Defence and Security Expo - See more at:
Tel Aviv,
Security and Combat
Tel Aviv,
Coming soon
27th International Security Exhibition
** It is possible to be a sponsor, in some of those
Appendix 2 – Intellectual property law firms in Israel
Reinhold Cohn Group
Short description
Senior Partner – Technology
Ena Pugatsch
Senior Partner – Technology
David de Vries
Senior Partner - Hi-Tech
Ehud Hausman
Senior Partner -Life Science & Chemistry
Ilan Cohn, PhD
Senior Partner – Trademarks
Ronit Barzik-Soffer
Senior Partner – Physics
Director of Operations & Business
Development China
Svetlana Stadler
Partner – Trademarks
Partner - Life Science & Chemistry
Ziv Rotenberg
Reinhold Cohn Group is the largest, earliest established intellectual property
firm in Israel offering premiere intellectual property expertise in filing,
prosecution, renewals, protection, oppositions, opinions, due diligence,
enforcement, litigation, licensing, commercialization and evaluation, portfolio
management and strategic counselling in all areas of intellectual property such
as patents, Trademarks, designs, copyrights, and plant breeders' rights etc.'.
Russian speakers in leadership roles:
Ena Pugatsch,
Svetlana Stadler
Shelly Zohar
Partner - Life Science & Chemistry
Mirit Lotan, PhD
Ronnie Benshafrut,
Partner - Life Science & Chemistry
Tamar Morag-Sela
Partner – Technology
Yehuda Seruya
Managing Partner
Bossmat Gonen, PhD
Luzzato & Luzzato
Senior Partner
Luzzato Kfir
Senior Partner
Luzzato Ester
Chechik Haim
First Zadok
Prof. Emmanuel
Dr. Bruce Alpert
Short description
The firm blends old world personal attention with state-of-the-art equipment
and methods. Many efforts and considerable investments are devoted to
acquiring, developing, constantly updating and improving office facilities and
methods. Because of its particular requirements, the firm develops most of its
software in-house, to provide its clients with continuously evolving
sophisticated data management and solutions. Modern and diversified
equipment contributes to the ability of the firm to provide real-time services
combining efficiency with contained costs.
Dr. Thomas Gutmann
Russian speakers in leadership roles:
Pearl Cohen Zedek Latzer
Short description
Senior Associate
Tal Kaplan
Senior Associate
Idan Frydman
Senior Associate
Yitzchak Chamudot
Senior Associate
Netta Nashlievich
Senior Associate
Sagit Sazgar
Kobi Meir
Amir Sadeh
Irena Shnaider
Ehrlich & Fenster
Pearl Cohen Zedek Latzer (“PCZL”) is an international law firm with affiliated
offices in New York, Boston, Herzliya, Haifa and London.
innovation-driven companies and their investors, we serve clients around the
world, from Fortune 500 companies to start-ups.
Russian speakers in leadership roles:
Irena Shnaider
Short description
Patent Attorney
Benjamin J. Barish
Patent Attorney
Tina Bellomo
Patent Attorney
Gail Bleiberg
Legal Counsel
Amit Ehrlich
Patent Attorney
Gal Ehrlich
Patent Attorney
Maor Eichler
Patent Attorney
Maier Fenster
Patent Attorney
Paul Fenster
Patent Attorney
Michael J. Gerver
Sanford T. Colb & Co
Sanford T. Colb
Senior Attorney
Eitan Shaulsky
Senior Patent Attorney
Daniel Goldstein
Senior Patent Attorney
Dr. Hershel Ginsburg
Ehrlich & Fenster is a leading Israel based Patent Attorneys Firm. The Firm
specializes in all matters concerning protection and prose- caution of
Intellectual Property.
Russian speakers in leadership roles:
Short description
Sanford T. Colb & Co. is a full-service intellectual property and technology law
firm, providing services relating to all aspects of intellectual property and
technology licensing.
Russian speakers in leadership roles:
Borochov Korakh & Co
Eliav Korakh
Eli Borochov
Short description
The firm of Borochov Korakh & Co. is a full service IP and law firm, whose
advocates and patent attorneys actively combine keen technological
proficiency with deep legal acumen. The Firm offers a variety of services in
the fields of Commercial Law, High-Tech Law, Intellectual Property Law,
Corporate Law, Tender Law, Labour Law, Communication Law and
Entertainment Law.
Services provided include ongoing corporate legal
support, full coverage of, M&A, procurement transactions, bidding and
tenders, and litigation before all levels of courts and tribunals.
Russian speakers in leadership roles:
Soroker Agmon
Senior Patent
Eran Soroker
Senior Patent
Jonathan Agmon
Partner & CEO
Ady Nordman
Adi Barkan-Lev
Jenny Mazor
Short description
Soroker Agmon intellectual property law firm is now ranked among Israel’s top
ten intellectual property law firms. Soroker Agmon provides comprehensive
representation for all your intellectual property and portfolio management
needs. Our mission is to provide top-notch intellectual property services in
Israel and abroad.
Russian speakers in leadership roles:
Hagar Raved
Ben-Ami & Associates
Founder and Senior Partner
Paulina Ben-Ami
Founder and Senior Partner
Issachar Ben-Ami
Avihu Avital
Gad Benett
Short description
Ben-Ami & Associates has a team of Patent Attorneys and technical advisors
that can handle and provide advice on intellectual property matters in most
technological areas, particularly in all fields of Life Sciences and Chemistry
including, among others, inventions in the pharmaceutical, chemistry, organic
chemistry, biochemistry, molecular biology, nanotechnology, material
chemistry, diagnostics, cosmetics, agricultural and veterinary areas, as well as
in a variety of High-Tech fields, such as Telecommunications, Computer
software, Computer hardware, and many other areas.
Russian speakers in leadership roles:
Edison Patent Attorneys Ltd.
Eng. Reuben Berman
Patent Attorney
Haim Branstater
Yaniv Gitelis
Short description
Edison Patent Attorneys Ltd., Israel, specializes in intellectual property,
including registering patents, designs and trademarks. Office specializations
include computer technology, telecommunications, optical engineering,
mechanical engineering, indoor inventions, innovative business methods,
Biotechnology, genetic engineering, and more.
Russian speakers in leadership roles:
Nathan & Associates
Short description
Takya Nathan
Menahem Natan
Of Counsel
Dnna Parnes
Consultant - Medical
Alexandra Nathan
Consultant – Business
Vicki Nathan
Daniela Nathan
The firm is specializing in the drafting and prosecution of highly complex hightech/medical device patent applications as well as in IP consulting to
inventors, companies and venture capital firms.
Russian speakers in leadership roles:!
Appendix 3 – Small series producers, prototype and Industrial design experts
R.H. Technologies
Short description
Chairman of the Board
Jacob Rosenberg
External Director
Orly Silberman
External Director
Zvi Cohen
Arie Rahav
Eitan Haimovich
Internal auditor
Asher Matityahu
Member of the Board
Kobe Zaosnitzr
Human Resources
Rotem Hiimzon
R.H. Technologies is a public company, advanced electronics contract
manufacturing group,
offering world-class turn-key solutions of design, engineering, manufacturing and
subcontracting services, for electronic production assemblies and systems
to global customers in a diverse range of industries.
Russian speakers in leadership roles:
Short description
Amit Barak
VP Engineering
Miky Heimann
VP Marketing
Sales & Business
Development Director
Hagai Barak
Industrial Design Director
Administration and
Logistics Manager
David Altit
Taga is an award-winning product design and development firm, specializing in
medical devices, consumer products and professional equipment. Our industrial
design and mechanical engineering teams turn dreams into winning products
Benny Kiron
Russian speakers in leadership roles:
Shlomit Rosenzweig
Gizmo Engineering
Beng & Founder
Nimrod Rotem
Oleg Zokuv
Short description is a full service engineering firm, specializing in working with
and start-ups to make their inventions and product dreams come true.
Russian speakers in leadership roles:
Oleg Zokuv
Short description
Scott Crump
Chairman of the board.
Elhanan Iglom
Objet is a leading international company in the three - dimensional sphere, which
serves for building a proto-type models.
David Rice
Russian speakers in leadership roles:
Erez Simha
* Merged with Strarasys in 12.2012
Maor Lugasi
Short description
Ayetix Ltd.'is engaged in building a prototype, development of patents and
products, providing full support to entrepreneurs, private and corporate
companies. Providing close support to all relevant processes, including advice on
patent registration system, development and production of the product,
marketing platform and more.
Russian speakers in leadership roles:
ZIV-AV Group
Short description
Dr. Amir Ziv-Av
Itzhak Taff
Itzhak Taff
Cesar Liwski
VP R&D and Active
Cesar Liwski
CEO Ziv-Av Project
Yoav Adler
Miki Reter
Miki Reter
Ofer Rotem
Ofer Rotem
Ajay Singh Tomer
Ajay Singh Tomer
Senior Projects Manager
Alon Shani
Senior Projects Manager
Dimitri Vishnevski
Schneider Gadi
Schneider Gadi
Dvir Brand
ZAE LTD is an engineering firm that focuses on the manufacturing of models,
offers consulting services, and provides innovative solutions for the creation and
delivery of technology-based products.
Russian speakers in leadership roles:
Dimitri Vishnevski
Ian T. Clark
Short description
GoalNTech apply advanced methodologies to solve an array of complex technical
challenges. We specialize In programming MCU, CPU, CPLD & FPGA, designing RF
systems, board design and testing as well as, importing goods for industrial
organizations and being leaders in providing state of the art technological
solutions to a variety of companies.
Russian speakers in leadership roles:
ARAN (plastic industry)
Short description
Chairman of the Board
Avraham Zakai
Aran specializes in three main areas:
Ran Stav
Product development services from idea to final product and production
Avi Chai
Production equipment and machines for the plastic industry
Aran GreenTech plans, builds, operate and finances photovoltaic power plants
Russian speakers in leadership roles:
Vision Line Ventures - VLV
Short description
VLV is a leading engineering development company in an industry specializing in:
Amir Kashi
Development of technical products
Means of production and automation.
Alternative energies.
Russian speakers in leadership roles:
Appendix 4 – Technology Transfer Companies of Israeli Academic Institutions
President & CEO
Yaacov Michlin
Sharon Cohen
VP, Head of Business Development - Healthcare
VP Business Development, Healthcare
VP, Head of Business Development Agriculture & Environment
VP, Head of Research Collaborations
VP, Head of Business Development Computer Science & Director
of IT
VP Business Development – Chemistry & Physics
General Counsel
VP Intellectual Property
Russian speaking: None
Shoshi Keynan
Ariela Markel
Michal Levy
Itzik Goldwaser
Chairman of the Board
Head of the Authority of Research
& Development
Director General, The Hebrew
Tamir Huberman
Dov Reichman
Bob Trachtenberg
Renee Ben-Israel
Dr. Aharon
Prof. Isaiah Arkin
Ms. Billy Shapiro
VP Business Development, Life Sciences
VP Marketing and Strategy
Director, Business Development, Physical Sciences
Manager, Business Development
Director, Business Development for high-tech, telecom,
engineering and computer sciences.
Director, Industrial Research Services
Chief Financial Officer
Director, Intellectual Property
General Counsel
Director, R&D Budget & Control
Russian speaking: Larissa Shniderman
Shlomo Nimrodi
Irit Ben Chlouch
Tamar Raz, Ph.D
Larry Love
Alisa Band
Oren Calfon
Orit Bialy Weinberg
Avi Nataneli
Shulamit Hirsch,
Keren Primor
Dr. Giora Yaron
Prof. Yair
Chief Intellectual Property Officer
Patent Portfolio Administrator
Director of Business Development
Director of Business Development
Director of New Ventures
Director of Business Development
Chief Operating Officer
Patent Portfolio Administrator
Legal Counsel
Russian speaking: None
Benjamin Soffer
Ofir Alon Adv
Tali Bergerfroind
Roï Eisenkot BSc
Inbal Lev BSc LLM
Joseph (Yossi)
Nathan MSc
Tzachy (Isacc) Tal
Ilana Shalev MSc
Tami Zaks-Carmel
Nili Weitzman Adv
Chief Business Officer
Mr. Amir Naiberg
Mr. Shay Marcus
Chief Intellectual Property Officer
Dr. Ruth Granoth
Adv. Gil GranotMayer
Mr. Meir Fast
Mr. Yaacov Cohen
Dr. Avital Levy-Lior
Dr. Galit MazoozPerlmuter
Adv. Galit
Adv. Galit Yosha
General Counsel
Chief Financial Officer
Senior Licensing Director
Licensing Director
Legal Counsel
Legal Counsel
Russian speaking: None
Prof. Mordechai
Prof. Haim Garty
Abraham BenNaftali, Adv