[News] Google and Apple invest in Israel

[Anti-Imperialist News]

Google back Israel startups as local funds decline

Jonathan Ferziger,Gwen Ackerman, Bloomberg News

Tuesday, January 3, 2012
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/01/03/BUSS1MIBK4.DTL

The Google executive with his bright yellow vest was impossible to 
miss in the middle of the Israeli startup owners seeking cash in a 
rusty boathouse at Tel Aviv's Jaffa port.

David Lawee, Google's mergers and acquisitions chief, used the early 
November session, called Garage Geeks, to round out his contact list.

"I've met about 100 Israeli companies in two days and that's, like, 
super-efficient," he said between conversations at the corporate 
speed-dating-style event arranged by startup promoter Yossi Vardi 
that introduced local businesses to multinationals.

Google set up a funding program two weeks later for Israeli 
entrepreneurs, part of an acceleration in U.S. technology companies' 
backing in late 2011 that has included Apple buying a company in the 
country for the first time, according to business newspaper Calcalist.

The foreign investments are important to Israel, where the high-tech 
industry accounts for 47 percent of manufactured exports, and could 
be a new source of innovation for giants like Google because of the 
Mountain View company's strength in technology startups.

Money from Google and others is making up for a decline in local 
financing that Avi Sasson, Israel's state research-grant provider, 
says could hurt industry growth.

"The minute the Israeli venture capital funds aren't helping in the 
early stage, there won't be a new generation of companies for the 
foreign investors to invest in three or four years down the road," 
said Koby Simana, head of the Israel Venture Capital Research Center 
in an interview. "Israeli startups won't exist if there is no Israeli 
venture capital."

Of the $522 million raised by Israeli technology companies in the 
third quarter, $96 million came from domestic venture capital funds, 
a drop of 40 percent from the second quarter and 12 percent from a 
year earlier, according to the research center. The proportion coming 
from Israel, at 18 percent, was the lowest since the center started 
covering the industry in 1999, Simana said.

'Make or break year'

Many Israeli venture capital funds, hurt by the global recession, 
have been unable to raise money, and 2012 will be crucial for their 
recovery, Simana said. "For some, it will be a make or break year 
because they haven't raised funds since 2007 or 2006, and if they 
don't raise any money this year or next, many will cease to operate," he said.

The Israeli government's annual research-funding allocation has been 
cut by $262 million over the past decade, Sasson, who oversees the 
Ministry of Industry and Trade's development financing for local 
companies, said this month at a conference in Tel Aviv. That 
represents a decrease of 56 percent to a yearly budget of about $209 million.

Israel, with a population similar to Switzerland's at 7.7 million 
people, was dubbed the "startup nation" in a 2009 book of that name 
by Saul Singer and Dan Senor. It has 64 companies on the Nasdaq 
<http://finance.sfgate.com/hearst?Account=sfgate>Stock Market, the 
most of any country outside North America after China, with 56 
percent focused on technology.

Google's investments in fledgling Israeli companies in the past two 
years include takeovers of LabPixies, a developer of game 
applications, for $25 million, and Quiksee, which makes software for 
posting 3-D video online, for an undisclosed price. Other U.S. 
investors that have acquired Israeli assets include social-networking 
site Facebook and online marketplace eBay.

Apple buys Anobit

Apple agreed to buy semiconductor designer Anobit Technologies, 
Calcalist reported Dec. 20. On the same day, Prime Minister Benjamin 
Netanyahu's office posted on its Twitter account a message 
congratulating Apple "on your first acquisition here," without naming 
the target company. Mark Regev, a spokesman for Netanyahu, declined 
to elaborate.

Anobit, founded in 2006 and based in Herzliya Pituach, and investor 
Pitango Venture Capital declined to comment. Steve Dowling, a 
spokesman for Apple, declined to comment on "rumor and speculation."

International investments may not be the answer to the needs of 
Israel's startups because the smaller number of local financiers 
poses a risk to the industry's independence, said Abraham Peled, 
executive chairman of Staines, England-based digital-television 
coding developer NDS Group Plc.

"The minute Israeli high-tech is primarily based on development 
centers of major companies, their fortune will be tied to that of 
those companies so that, if they are cutting staff, they will cut in 
Israel as well," Peled said.

http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/01/03/BUSS1MIBK4.DTL

This article appeared on page D - 1 of the San Francisco Chronicle






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