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Overseas investment in Israel expanded in 2018

In 2018, Intel Capital invested $120 million in 14 Israeli startups, out of a total of $400 million invested in 95 startups globally.

Israel's Finance Minister Moshe Kahlon is shown the cutting-edge dispatch technology at new National Operations Center on Feb. 25, 2019. Credit: Magen David Adom.
Israel's Finance Minister Moshe Kahlon is shown the cutting-edge dispatch technology at new National Operations Center on Feb. 25, 2019. Credit: Magen David Adom.
Yoram Ettinger
Yoram Ettinger
Yoram Ettinger is a former ambassador and head of Second Thought: A U.S.-Israel Initiative.

A significant 368 multinational corporations (mostly from the United States) operate in Israel—mainly research and development centers—leveraging Israel’s brain power. Most of the multinationals initialed operations with the acquisition of Israeli startups. Some 105 of these corporations employ more than 100 persons each; 128 are in the area of information technology and enterprise software; 64 in telecommunications; 48 in life sciences; 42 in Internet-related areas; 38 in semiconductors, etc.

Intel has the largest presence: 12,800 employees in four research and development centers (Haifa, Jerusalem, Petach Tikvah and Yakum), and two manufacturing facilities (Jerusalem and Kiryat Gat, which is one the most advanced Intel facilities in the world), exporting $3.6 billion annually. Intel’s seventh- and eighth-generation Intel-Core processors were developed mainly in Israel. Intel Capital’s investment portfolio includes 28 Israeli startups in the areas of cybersecurity, Internet, enterprise software, cloud computing, autonomous vehicles and 5G (the next phase in global telecommunications). In 2018, Intel Capital invested $120 million in 14 Israeli startups, out of a total of $400 million invested in 95 startups globally.

Additional multinational corporations operating in Israel: Microsoft, IBM, GE, Johnson & Johnson, Merck, Marvell, Apple, AT&T, Facebook, Google, Cisco, 3M, AOL, Yahoo, eBay, Amazon, Pfizer, Oracle, Sony, SanDisk, Philips, Siemens, Deutsche Telecom, Alibaba, Huawei, etc.

A record of 211 overseas venture capital funds (mostly based in the United States) operate in Israel—up from 149 in 2013—primarily investing in software startups (source: Israel VC Research Center).

During the first quarter of 2019, Israeli startups raised $1.55 billion in 128 rounds, compared to $1.2 billion in 111 rounds during the first quarter of 2018. Artificial intelligence (AI) startups attract increased attention—51 AI startups raised $600 million during the first quarter of 2019. Fifty-seven software startups raised $660 million (Globes business daily, April 17, 2019).

Israel is becoming a hotbed of digital health (artificial intelligence) activity with 537 digital health startups in 2018, up from 327 in 2014, benefiting from more than $500 million in private investments—a 32 percent increase over 2017. For example, Israel’s AiDoc partnered with the American College of Radiology Data Science Institute, raising $27 million in Series B funding. Israel’s TytoCare raised $25 million, establishing a partnership with Best Buy. Forty-seven U.S. investors constituted 67 percent of foreign investors in Israel’s digital health startups in 2018 (Business Insider, April 19).

The Silicon Valley-based Nvidia acquired Israel’s Mellanox for $6.9 billion, the third-largest “exit” of an Israeli company to date, following Frutarom, which was acquired by the New York-based Flavors and Fragrances for $7.1 billion, and Mobileye, which was acquired by Intel for $15.3 billion (Globes, March 12). MacDonald’s second-largest acquisition in 20 years is Israel’s artificial-intelligence Dynamic Yield startup for $300 million (Globes, March 27). The New Jersey-based ID Systems acquired Israel’s Pointer (remotely monitored and controlled Internet of Things) for $140 million (Globes, March 15).

Israel’s artificial intelligence (online property and casualty insurance) Lemonade raised $300 million in a round of private placement led by Japan’s Softbank, Germany’s Allianz, Google’s venture capital arm, the Silicon Valley-based GV and the New York-based Thrive Capital. Softbank also led a prior round of $120 million (Globes, April 12). Israel’s cybersecurity company Tufin raised $108 million at the New York Stock Exchange. The round was led by JP Morgan, Barclays Capital and Jeffries, Oppenheimer & Co. and Piper & Jaffray. Israel’s three-year-old Innoviz (autonomous-vehicle sensors and perception software) raised $132 million from China Merchants Capital, Shenzhen Capital and New Alliance Capital.

In 2018, there were 6,673 Israeli startups. Ninety-seven of them were sold in 2018, for $3.28 billion, 49 percent being sold to Americans and 30 percent to Israelis.

Most investors are from Israel, closely followed by the United States, and then Britain, Germany and China (Globes, March 12).

This article was originally published at the Ettinger Report.

The opinions and facts presented in this article are those of the author, and neither JNS nor its partners assume any responsibility for them.
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