ISRAEL 
HIGH-TECH & INVESTMENT REPORT

from the June 2007 issue


YOGGIE

Yoggie separates your machine from security threats The Yoggie - the brainchild of Israeli-based Yoggie Security Systems - is being billed as the ultimate laptop bodyguard.

The miniaturized security computer that fits into the palm of your hand packs quite a punch with its 13 tiny security appliances, including anti-spam, anti-phishing, anti-spy ware and anti-virus.

When the device is plugged into the USB port of a laptop it physically separates the machine from malware threats.

The battle between such threats is moved to the device itself, freeing up the laptop from the need for any added software, which in turn will improve the performance of the machine.

Since the device went on sale - with a retail price of 113 - at the beginning of the year, it has shifted "thousands" according to the company.

At InfoSec the product - which has already picked up a couple of awards - will go into the Lion's Den, a feature of the show which pits a series of new products against a panel of experts.

Capital raised at $406m. in Q1 2007
In the first quarter of 2007, 121 Israeli high-tech companies raised $406 million from venture investors - both local and foreign. The amount was up 13% from the £360 million raised by 101 companies in the first quarter of 2006, but was 15% below the previous quarter's $477 million (highest in five years) raised by 105 companies. Eighty-three companies attracted more than $1 million each. Of these, 17 companies raised between $5 million and $10 million each, seven companies raised between $10 million and $20 million each, and two companies raised more than $20 million each. The average company financing round was $3.4 million, compared with $3.6 million in the first quarter of 2006 and $4.5 million in the previous quarter.

Israeli VC Investment Activity
In the first quarter of 2007, Israeli VCs invested $171 million in Israeli companies, 42 percent of the capital invested. This amount was very close to Q1/06 and Q4/06 levels of $177 million (49 percent) and $178 million (37 percent), respectively.

The 42 percent Israeli VC share of the total amount invested in Israeli high-tech compared with an annual average of 49 percent for the 1999-2006 period. The remainder of capital was from foreign investors as well as non-VC Israeli investors.

"Q1 results show the continuation of the strong investment level that we saw last year - around $1.5 -1.6 billion," said Zeev Holtzman, Chairman of IVC Research Center and Giza Venture Capital. "The Israeli VC fund investment level is almost the same as in previous quarters, but the relative Israel VC share is less. This indicates a shortage of capital and a very cautious pace of investments by the Israeli VC funds. Other investors - mostly foreign VC funds - have increased their investments. Interestingly, many of these investments were made without the involvement of the Israeli VCs, effectively increasing competition for good deals."

First investments accounted for 51 percent of total dollar investments by Israeli VCs in Q1, compared with 37 percent in the first quarter of 2006 and 55 percent in Q4 2006. The average First investment by Israeli VCs was $2.1 million, while the average Follow-on investment was $0.8 million.

Israeli VC Activity in Foreign Companies
In Q1, Israeli VCs invested $9 million in nine foreign companies in addition to their investments in Israeli high-tech companies. This compares to $16 million invested in foreign companies in the previous quarter and $24 million invested in the first quarter of 2006. Two of the investments were First investments, and the remainder were Follow-ons.

In the first quarter of 2007, 33 Communications companies attracted $124 million or 30 percent of the total capital raised, followed by 20 companies in the Life Sciences sector with $68 million or 16 percent.

Seventeen Internet companies raised $64 million or 16 percent of the capital, which compared with $21 million or just 6 percent in the first quarter of 2006 and $22 million or 4 percent in the previous quarter. "The Internet sector is gaining momentum just as in the US," said Efrat Zakai, Director of Research at IVC. "First quarter Internet figures - the highest in five years - surged due to an increase in the number of deals and one particularly large financing round of over $20 million."

Q1 was another successful quarter for Seed companies with 29 Seed firms attracting $54 million, 13 percent of the total capital raised. This amount showed little variance from Q1/06 and Q4/06 when $50 million (14 percent) and $54 million (13 percent) were raised, respectively. From among the Seed investments, Internet companies attracted the largest share of capital - 37 percent - followed by Cleantech firms with 18 percent.

Early Stage (R&D) companies captured 40 percent of capital raised, Mid-Stage companies (up to $10 million in revenues) 30 percent, while Late Stage companies attracted only 17 percent of investments.



Reprinted from the Israel High-Tech & Investment Report June 2007

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