Israeli start-ups raise over $1 billion
First half figures are the highest since 2001.

Globes' correspondent, Jul 16 08   

High-tech start-ups in Israel raised $1.08 billion in the first half of 2008, the highest sum since 2001, when $1.15 billion was raised over the first six months. According to the IVC quarterly survey, in the second quarter of 2008, 115 Israeli high-tech companies raised a total of $465 million from venture capital investors both local and foreign. The figure represented a 7% increase over the corresponding quarter of 2007, but was 25% below the unusually high first quarter of the year. In the first half of 2008, capital raised was $1.08 billion, up 28% from the amount raised in the first half of 2007. “First half figures were the highest since 2001, with Israeli high-tech investments reaching over $1 billion,” said IVC director of research Efrat Zakai. Zakai warns, however, “Despite these records, first and seed investment data suggest investments by Israeli VC funds are slowing. We therefore expect end-of-year capital raising figures to be only marginally higher than the four-year average of $1.6 billion.” Seventy-eight companies raised over $1 million each. 17 of those companies raised $5 million to $10 million each, 13 companies raised $10 million to $20 million each, and 3 companies raised more than $20 million each. In the second quarter of 2008, Israeli VCs invested $161 million in Israeli companies, a decrease of 17% from second quarter of 2007 ($193 million) and 39% below first quarter levels of $262 million. The Israeli VC share of the total amount invested in Israeli high-tech was 35% in the second quarter and 39% in the first half, with the remainder of capital coming from foreign investors as well as non-VC Israeli investors. The sector which raised the most VC funds in the first half was the communications sector, 26% of capital raised. It was followed by software with 22%, the life sciences with 17%, and the internet sector with 11% of total capital raised. Seed companies attracted 5% of capital raised in the first half of 2008, compared with 12% in 2007. Early Stage companies captured 34% of capital raised, mid-stage companies (up to $10 million in revenues) 37%, and late stage companies 24%. The IVC survey is based on reports from 80 venture capital investors of which 51 are Israeli firms and 29 are other mostly foreign investment entities.

The Conference Main session is dedicated this year to 4 parallel Professional Conferences, 3 of them in technological sectors in which Israel has gained reputation for its innovative achievements and breakthroughs: Life Science; Information and Communications Technologies (ICT); and Environmental Technologies (Cleantech). The fourth Professional Conference is dedicated to Israel’s Financial Market and its Prospects in the Future.

Web video platform co PLYmedia raises $6m
PLYmedia Inc. has raised $6-6.5 million in its second financing round from Greylock Partners and Elron Electronic Industries Ltd. The company raised $2.5 million from Elron and private investors in October 2006. The company recently completed development of its product and has begun sales. PLYmedia, Greylock, and Elron declined to comment on this report. PLYmedia has developed an interactive, multidimensional web video platform PLYplatform, which delivers web video publishers and broadcasters a range of applications for creating personalized content. The technology allows layers, or PLYs of context-related material (such as subtitles or ads) to be added to a video, which can provide information about the clip at the viewer's request. Until now, the primary use of the concept is for personalized advertising. The company was founded by a group of entrepreneurs headed by CEO Ben Enosh, who was previously strategic business development manager at energy-saving streetlight developer MetroLight Ltd. PLYmedia president and COO Yuval Klein was a co-founder of music store chain Third Ear Ltd.

PLYmedia was showcased at CICC IsraelWebTour 2008

GigaSpaces gets $7m loan from Plenus
Israeli network solutions company GigaSpaces Inc. has obtained a $7 million credit line from Plenus Venture Lending Fund. The company intends to use the funds to expand its business activity in new and existing markets in Asia, Europe, and the US. GigaSpaces was founded in 1999 and according to IVC Online data, it has raised $14 million to date from BRM Capital, Intel Capital, and FT Ventures. The company develops technology for real time data processing, enabling rapid implementation of advanced IT architectures.

Media buying optimization co MediaBoost raises $4.7m
Israeli media start-up MediaBoost Ltd. has closed its second financing round, raising $4.7 million from Vertex Venture Capital, Teuza - A Fairchild Technology Venture Ltd. and BRM Capital, controlled by Eli Barkat. MediaBoost has now raised total of $6.2 million to date.This is the first early-stage investment in start-up by Barkat since the announcement that BRM is to be disbanded. Barkat said in the past that the winding of up the fund would not affect his investments and that he intended to continue investing in Israeli high-tech companies. Teuza invested $1 million in MediaBoost in the latest financing round, bringing its total investment in the company to 17%.

Ethernet over copper co Actelis raises $15m
Copper wire Ethernet carrier solutions developer Actelis Networks Inc. has raised $15 million in its sixth financing round. A limited number of the company's investors participated in the round: ATA Ventures, The Carlyle Group, Dupont Capital, and Global Catalyst Partners. The company has raised $133 million, including the current round, since it was founded in 1998. Actelis's products provide high bandwidth Ethernet services over existing copper infrastructure, enabling service providers and enterprises to offer new broadband services to business customers without the laying of new infrastructure. The company also develops Ethernet access and management products.

Olive fires 20 as it raises additional funds
Predictions that small companies will also be hit by the market crisis and uncertainty on the markets have been rife for some time. It now appears that companies, such as Olive Software Inc. are beginning to feel the impact of this. Olive recently fired about one quarter of its staff, (20 employees), leaving 75. At the same time, the company has raised $5 million, after receiving a mezzanine loan a year ago from UK venture fund Blue Crest Capital. According to IVC Online data, Olive has raised a total of $31 million to date, including the current funds, from Pitango Venture Capital, Sequoia Capital, and Elbit Medical Imaging, which invested in it in the latter half of 2000.

Metalink files to raise $25m
Metalink Ltd. filed on Friday a registration statement with the US Securities and Exchange Commission (SEC) to raise $25 million. The filing comes a week after the company stated in its financial report that it was facing liquidity problems. Metalink, founded by chairman Uzi Rozenberg and CEO Tzvika Shukhman, develops broadband telecommunications solutions. The company did not disclose how it planned to raise the money.

Fleet management co Traffilog raising $10m
Israeli traffic management technology start-up Traffilog Ltd. is moving into high gear. The company is currently in the midst of a financing round to raise $10 million. The company's current fund raising effort follows the $1.5 million convertible loan it obtained a month ago from Technological Development and Automation Ltd. Tedea has also become a 49% partner in a subsidiary that Traffilog recently launched in the US, and believes the loan will ultimately become an investment. Traffilog was founded in 2003 by Izraeli and executive VP R&D Adi Amihai. The company has developed a technology for vehicle fleet management with an emphasis on the significant reduction of operating costs.

Shareholders approve Gilat sale
Gilat Satellite Networks Ltd.shareholders today approved at a special meeting the merger of the company with Galactic Holdings Ltd. and Galactic Acquisition Company Ltd. Gilat was sold for $11.40 per share for a total of $475 million. Galactic Acquisition Company is a consortium of Mivtach Shamir Holdings Ltd., Los Angeles-based private equity group Gores Group LLC, DGB Investments, and three private investors.

Leumi launches alternative investment venture in US
Bank Leumi set up a new investment company in the US in partnership with Spring Mountain Capital LP. Leumi will own 75% of Leumi Alternative Investment (LSAI) and Spring Mountain will own 25%. Spring Mountain is managed by Gabriel Capital Management president Ezra Merkin and Lonnie Steffens, a former vice chairman at Merrill Lynch. Gabriel Capital owns 4.64% of Bank Leumi, one of its largest shareholders and which may become part of the controlling core.For Bank Leumi, LSAI will be a platform for the management, marketing, and distribution of alternative assets to the bank's foreign customers. Spring Mountain Capital will be responsible for the actual management of the assets. Israeli law presently forbids the marketing of LSAI products to Israeli residents. Due to regulatory problems, LSAI products will not be marketed in the US either.

Orbotech buys Photon Dynamics of US for $290m
Orbotech Ltd. has acquired Photon Dynamics Inc. of the US for $290 million. This is the largest acquisition ever made by Orbotech, which has a market cap of $497 million. Orbotech will pay $15.60 per share for Photon Dynamics, a 35% premium on its market price. Orbotech VP strategy and business development Asher Levy told "Globes", "This doesn’t happen every day that an Israeli high-tech company makes such a large acquisition. This is undoubtedly one of the largest acquisitions of a US high-tech company by an Israeli high-tech company."

Israel Corp. injects more cash into electric car project
Israel Corp. is to inject a further $15.5 million into Project Better Place, the electric car project headed by CEO Shai Agassi.In an announcement to the Tel Aviv St Exchange, Israel Corp. said it would inject cash in accordance with its share of the project. This is in addition to the $7.5 million that it has already invested in it. The company said it would invest up to $100 million in the venture. This follows a presentation to the Israel Corp. board of the Better Place budget, including milestones and a fund-raising plan. Project Better Place plans to launch a pilot with a few cars in Israel by year-end, and expand to several dozen more cars during 2009. The pilot will precede final development of regular electric cars by the Renault Nissan Alliance. The cost of each demonstration model, such as the Renault Megane that will be assembled in Israel is estimated at $80,000-100,000, of which $40,000 is for the car's special batteries.

RedPoint Ventures invests $13m in Answers
Answers Corporation has sold up to $13 million worth of convertible preferred st and warrants to Redpoint Ventures. Redpoint partner Allen Beasley will join Answers' board.

Playtech raises £112m in London
Gaming technology developer Playtech Cyprus Ltd. successfully placed 2.16 million new shares at ₤5.20 per share, raising a total of £112 million. The company said that it will use the proceeds to finance acquisitions.

Transaction mg't co CorrelSense completes $3m round
CorrelSense Ltd. has raised $3 million, from Vertex Venture Capital, ProSeed Venture Capital Fund and eXeed Technology. The company develops IT service level agreement (SLA) management software solutions, and it flagship product, SharePath, is currently installed in several multinational organizations. CorrelSense operates in the Business Transaction Management (BTM) market, an emerging class of products which are considered to be the next generation of IT systems management tools.

Wound treatment co EnzySurge raises $4m
Chronic wound treatment start-up EnzzySurge Ltd. has raised $4 million at a company value of $12.3 million from private investors, led by chairman Eli Gilboa of the Gilboa and Licht accounting firm. The company has raised $7.3 million to date, including the present round. EnzySurge's product provides a continuous streaming of therapeutics for the treatment of chronic wounds. The company has set up a sales office in the US.

Tesla Motors to build Bay Area plant
Tesla Motors Inc. will build its next generation electric Tesla Roadster at a factory in the Bay Area. Based in San Carlos, Tesla Motors makes the Tesla Roadster, an electric sports car released in England in March with a $100,000 price tag. The company plans to release its next-generation vehicle, a sedan-style electric vehicle called the Model S, in 2010. The Model S is expected to cost $60,000. Tesla had considered building a manufacturing plant in New Mexico to produce the Model S. But in his blog on the Tesla Web site, Tesla President an CEO Ze'ev Drori said that the plant should be located as close to the headquarters as possible. Drori also cited being close to Tesla's "most important markets" and Governor Arnold Schwarzenegger's leadership on climate and energy issues as tipping points that kept the carmaker in California. The state offered Tesla lucrative incentives to keep the company's manufacturing facilities in-state. Tesla's Investors include Musk, Mountain View-based Google Inc. founders Larry Page and Sergey Brin, and venture capital firms Draper Fisher Jurvetson of Menlo Park and VantagePoint Venture Partners of San Bruno.

Israeli telecom start-ups find success in Asian road show
Eight Israeli high-tech companies and start-ups participated in a road show in Southeast Asia organized by the Israel Mobile and Communications Association (IMA) the Ministry of Industry, Trade and Industry's Foreign Trade Administration. The companies were Radware Ltd., TTI Team Telecom International Ltd., Cellbrite Mobile Synchronization Ltd., Pudding Media llc., SendM Ltd., TJAT Systems Ltd., Vringo, and Winetworks Ltd. The road show visited the Philippines, which has 40 million cellular subscribers, Thailand (34 million), and Vietnam (17 million). The Israeli delegation met executives of local telecommunications operators, including Thailand's Advanced Info Service plc (AIS) and Total Access Communication Public Company Ltd. (DTAC), Philippine's Globe Telecom Inc. (PSE: GLO), Smart Communications, and Vietnam's Mobiphone and Viettel Telecom. The road show was deemed a success after AIS and Viettel ordered trials from some of the Israeli companies.

Ben Gurion University to collaborate with Microsoft
Outstanding computer science students will work as interns at Microsoft's R&D centers.
Amid claims that the Israeli academia is out of step with the high-tech industry, and perhaps because of them, a new infrastructure of collaborations is now developing between high-tech companies operating in Israel and several universities. A few months ago Oracle Corp. set up a laboratory for research into enterprise software at Ben Gurion University of the Negev (BGU). It is now being followed by Microsoft Corp. Microsoft Israel and BGU announced that they have signed a strategic cooperation agreement. Under the agreement, six outstanding BGU computer science students will complete internships with Microsoft's R&D Center in Israel, including its special "Innovation Labs," which are focused on hands-on practical research. The program, which Microsoft calls its program for excellence, will be operated in four of the university's technology departments. The cooperation will also include research conducted jointly by researchers from the university and Microsoft. Microsoft launched its cooperation with local academic institutions earlier this year. Its first joint venture, also under the auspices of its program for excellence, was with Bar Ilan University, but did not include joint research.

Alvarion and Nortel in WiMAX joint venture
WiMAX technology firm Alvarion Ltd. has launched a joint WiMAX venture with Nortel to create an end-to-end WiMAX solution. The Nortel and Alvarion mobile WiMAX solution is expected to combine technologies from both companies to allow operators around the globe including well-established service providers and new entrants to the wireless market to deliver high-speed wireless broadband for a variety of applications, mobile or nomadic, including VoIP, streaming music, and HD video.