The World is Investing in Israel More Than Ever
Illustration: Stock Market Quotes (Image Credit: Wix)
Overseas investments in the Jewish state have been on the rise of late, as seen in a number of positive developments:
1. A full 368 multinational corporations — mainly research and development centers from the U.S. — now operate in Israel, leveraging Israel’s brain power. Most of the multinationals initiated operations with the acquisition of Israeli startups.
Of them, 105 employ more than 100 persons. Breaking down these R&D centers, 128 are in the area of information technology and enterprise software, 64 in telecommunications, 48 in life sciences, 42 in Internet, and 38 in semiconductors, among others.
Intel has the largest presence, with 12,800 employees in four R&D centers located in Haifa, Jerusalem, Petah Tikvah, and Yakum, in addition to two manufacturing facilities in Jerusalem and Kiryat Gat, which is one of Intel’s most advanced facilities in the world. Intel Israel exports $3.6 billion annually, and Intel’s 7th and 8th generation Intel-Core processors were developed mainly in Israel. Intel Capital’s investment portfolio includes 28 Israeli startups in the areas of cyber security, 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 include Microsoft, IBM, GE, Johnson & Johnson, Merck, Marvell, Apple, AT&T, Facebook, Google, Cisco, 3M, AOL, Yahoo, E-bay, Amazon, Pfizer, Oracle, Sony, SanDisk, Philips, Siemens, Deutsche Telecom, Alibaba, Huawei, and more.
2. A record of 211 overseas venture capital funds, mostly from the U.S., operate in Israel according to Israel VC Research Center. This signifies an increase from 149 in 2013, and these funds primarily invest in software startups.
3. 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. A total of 57 software startups raised $660 million.
4. Israel is becoming a key country in digital health activity with 537 digital health startups in 2018, up from 327 in 2014, and is benefiting from more than $500 million in private investments — a 32% 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 partnership with Best Buy. Forty-seven U.S. investors constituted 67% of foreign investors in Israel’s digital health startups in 2018.
5. The Silicon Valley-based Nvidia acquired Israel’s Mellanox for $6.9 billion in March, 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. MacDonald’s second-largest acquisition in 20 years was Israel’s artificial intelligence Dynamic Yield startup for $300 million, also in March. And that same month the New Jersey-based ID Systems acquired Israel’s Pointer for $140 million.
6. 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 in April. Softbank also led a prior round of $120 million. Israel’s cyber security Tufin raised $108 million at the NY Stock Exchange — the round was led by JP Morgan, Barclays Capital, Jeffries, Oppenheimer & Co., and Piper & Jaffray. Israel’s 3-year-old Innoviz, which specializes in autonomous vehicles’ sensors and perception software, raised $132 million from China Merchants Capital, Shenzhen Capital, and New Alliance Capital.
7. In 2018, there were 6,673 Israeli startups. Of them, 1,150 startups in the area of AI (back in 2014 there were only 512) raised $2.25 billion, up from $1.33 billion in 2017 and $0.5 billion in 2014. This was 37% of the total raised by Israeli startups in 2018, which stood at $6 billion and constituted a 15% increase from 2017. Ninety-seven Israeli startups were sold in 2018 for $3.28 billion, 49% of which were sold to Americans and 30% to Israelis. Most investors are from Israel, closely followed by the U.S., and then Britain, Germany, and China.
Ambassador (ret.) Yoram Ettinger is the director of The Ettinger Report: Second Thought: a US-Israel Initiative Click here to read more of this writer’s work in The Jerusalem Herald.