At the conference we met entrepreneurs, venture capitalists, investment bankers, attorneys and other service providers.
One friend that we met was Sol Gradman who was managing Netex, a company launched in Israel in late May 1999. It immediately captured the attention of the Internet-using Israeli surfer. The number of Internet users in Israel early in the year 2000 surpassed the 100,000 mark. The figure was growing at 10,000 new users a month. "In another year the non-English language side of the net is expected to reach 173 million users vs. 168 million English-language users. We are rapidly moving into Europe, to introduce Netex to the German, French and Spanish speaking public," Sol Gradman, Net Express Ltd., Chief Executive Officer, was quoted in our July 2000 IHTIR interview. Netex, the company Mr. Gradman headed, had plans to offer its smart routing services on mobile communication platforms like cellular phones and other wireless appliances. However, Netex failed as a business and those dreams were shattered. Today a much more experienced and visibly self-confident Sol Gradman is the Israeli CEO of the Israeli based research and development unit ,owned by the Silicon Valley based Monterey Design Systems.
Ernst & Young Israel, one of the sponsors of Ventures '02 sounded a note of optimism "that at a low level venture capital funding had stabilized in the second quarter". Yoram Tietz, an Ernst & Young Israel partner projected that available cash for investment and demand by the high-tech industry has balanced out.
In due course existing Israeli enterprises will respond to a reawakened global economy. Business activity whether in 2003 or 2004 will pick up. What is somewhat worrisome is the relative dearth of local capital for startup and early stage technologically oriented companies.
A survey conducted by the accounting and consulting firm, Deloitte and Touché - Brightman Almagor found that Israeli venture capital fund managers are becoming increasingly pessimistic. 44% of respondents in the VC Indicator survey for the third quarter of 2002 conducted, reflected belief that the economic climate will deteriorate in the next six months, compared with 27% in the previous quarter. The survey covered 49 venture capital funds that account for 85% of Israel's investment market. All the survey's respondents expect that they will face difficulties in raising money for new vc funds, in the months ahead. Of the respondents, 63% expect that funds will merge; 57% expect more limited partners will withdraw from the funds; 53% expect that more funds will reduce their management fees; 48% expect to continue returning money to investors; and 66% expect that the activities of secondary funds will expand in the next six months. This is not all bad news. Israel's venture capital industry, as we had noted is overcrowded, a result of the boom days of the late 1990s. We predicted, a year ago, that a shakeout is both likely and a good idea..
In spite of concern brought about by a global recession and in the shadow of of acts of terror, the Israel Journey '02, the Sixth Israeli Venture Capital & High Tech Entrepreneur Conference was held in Tel-Aviv, the first week in September, a week before the Jewish New Year. As Israelis tend to take the last of the summer vacations at this time of the year. Surprisingly, the Tel-Aviv Hilton was filled to overflow capacity. More than 1,400 attendees participated. Some of them attested to "being comeback survivors" of the era of the "burst bubble". In the aftermath of the stock market collapse, many Israeli high-tech entrepreneurs were left without companies to run, and high-tech personnel were left to search for jobs that were scarce.