Globes and Bank Hapoalim launch smartup2 contest

Three early-stage companies will win a financial package and top-flight mentoring.

The local high-tech industry has known its ups in downs in the past two decades, but it seems that the past year has brought some robustness, serenity, and a high wind in the sails of the flagship of Israel's export economy and on the global technology sea. Are we in the midst of a new bubble, in Israel and around the world? That question is impossible to answer, and it will take a year or two to determine which way we are headed. Nevertheless, we can absolutely be optimistic as we approach the end of the first half of 2014 and look at the products of the past year - the exits, the IPOs, and the soon to be public companies.

Despite the accolades, the industry cannot rest on its laurels. It must overcome several hurdles, such as including more women in start up companies and handling fund raising mixes. Currently, the local venture capital industry is too reliant on foreign funds, with too little local money.

For the second year, "Globes", in cooperation with Bank Hapoalim, is launching a "smartup" contest, in which three early-stage start ups will be selected to be followed in the coming weeks by the newspaper's reporters, and advised by experts from technological incubators and accelerators, and consultants from Bank Hapoalim. As the competition gets underway and companies are invited to register, "Globes" takes a look at the state of the Start Up Nation, as it has emerged in the past year.

76% - this is the share of investments taken by foreign funds in start up companies in 2013. For over a decade, foreign VCs have dominated Israel's high-tech market, investing much larger amounts than local funds. In 2013, the widening gap became even more apparent. The fact that only 24% of investments came from Israeli funds constitutes a negative record.

$6.6 billion - the total proceeds from 80 exit transactions of Israeli companies or Israel-related companies in 2013, according to IVC data. These show that 63% of the proceeds came from exits by VC-backed companies, totaling $4.2 billion -- almost double the $2.2 billion annual average over the past decade. One of the reasons for this increase is, of course, Waze's acquisition by Google for approximately $1 billion. Another significant exit was that of Trusteer, sold to IBM for $630 million. It is still difficult to tell whether 2014 will break this record, but considering Viber's large exit two months ago -- totaling $900 million one can certainly dream of yet greater achievements.

$83 million - last year's average exit is far behind Waze, Trusteer and other companies, such as Prolor or Intucell. The figure still reflects Israeli entrepreneurs' preference for quick exits over building large companies. All the same, it constitutes a 50% increase in relation to an average of $55 million per year in the past decade.

$20 million - the average investment in start up companies in 2013 was the highest since 2008, according to PwC's MoneyTree report. Last year's fourth quarter was the most productive since the beginning of 2008, yielding investments of $6.8 million -- a third of the total investment amount of last year, and 20% more than in the fourth quarter of 2012.

43 - the number of investments carried out in 2013 in companies backed by the Chief Scientist, according to PwC -- half of the the number in 2011. The dollar amount of the investments was also cut in half -- $140 million in 2013, compared with 309 million in 2011.

$600 million - Wix's market cap on its first trading day, after its IPO in late 2013. A month later, its market cap rose to $1 billion, making the local industry proud, but in the past month it has stabilized at around $800 million. The company proved that nerve and courage can bring you to Nasdaq without selling the company, even if it is still losing money, a situation which is not expected to change in the near future.

30% - biomed's share of the total funds raised locally in 2013, according to accounting firm BDO Ziv Haft's figures. This constitutes a 15% increase over 2012, positioning the industry as a significant player in the local high-tech scene. Biomed exits totaled $2.3 billion, with the average exit reaching $190 million. Similarly to its share of fund raising, the industry accounts for a third of Israel's exits.

16% - the proportion of women among Israeli entrepreneurs, according to a recent survey by the TerraLab Ventures fund. The scarcity of women in this field is evident not only in the number of entrepreneurs establishing businesses and start up companies, but also among software developers and engineers, as well as angel investors and venture capital professionals. The next generation in the Israeli high-tech sector is also characterized by a small number of women. According to the Central Bureau of Statistics, less than one third of math, statistics and computer science students are females. Their share in the physics student population is somewhat higher -- 38%.

78% - unsurprisingly, the dominant age group in high-tech is 26 to 45. This is where Israel's innovative and entrepreneurial core is to be found. There are also innovators outside this group, aged under 25 or 46 and upwards, but it seems that the innovation seeds sprout right after army service and university studies, and continue until the age of 45. Beyond that age, only 18.5% initiate new companies. The reason may be the fear of seeking an independent route, without a financial safety net, at an age when one has a family and children, a mortgage, and other financial commitments.

77% - the percentage of entrepreneurs who were employees before establishing their own companies, according to a survey conducted last year by accounting firm BDO. It seems that in order to become an entrepreneur, it is not enough to sit in a cafe and dream up the next big idea. You need to want to become independent and follow a new path, to be your own boss. This will combine innovation with a new workplace and managing new employees.

The contest and the prizes

The project is intended for Israeli companies that have already raised seed money totaling at least NIS 250,000. Each company selected to participate in the project will be mentored for three months by high-tech and business experts, who specialize in areas relevant to early-stage companies, such as marketing, finance, human resources, global expansion, etc.

If you are interested in participating, please register at, and tell us why your company should be selected for the program. Participating companies will receive start-up package from Bank Hapoalim, which will include a high-tech account on preferred terms and a grant of NIS 20,000.

This year, it was decided to include in the program leading experts from the high-tech and business worlds, who will advise each of the participating companies. The three companies selected will be mentored by senior consultants from Israel's leading technological incubators and accelerators: Nielsen Innovate, EISP 8200 and Explore.Dream.Discover .

Explore.Dream.Discover. is one of Israel's most active technological incubators. It has invested in more than twenty companies in media, mobile, web, software and cyber security in the past three years. The incubator is owned by Plus Ventures of the Moldavsky Group and the Cheshin family's 2B Angels. Its current portfolio consists of 16 companies. The EISP 8200 program is an initiative of the non-for-profit association of the 8200 intelligence unit alumni, which was established in 2010 and is the first Israeli accelerator. The program is philanthropic in nature. Its aim is to leverage the vast network of 8200 alumni in order to help beginning entrepreneurs from various backgrounds, regardless of whether they have served in the 8200 unit.

The Nielsen Innovate incubator is the product of cooperation between the world's leading research and measurement company, Nielsen, and Partam Hi Tech, real estate developer Igal Ahouvi's investment firm. The incubator -- which focuses on new media, the web, data analysis, consumer-oriented and advertising technologies -- leverages Nielsen's worldwide business ties in order to benefit its portfolio companies.

Published by Globes [online], Israel business news - - on April 24, 2014

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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