Most of the capital invested in young Israeli high-tech companies comes from foreign investors. A considerable proportion of local companies are acquired by foreign corporations at fairly early stages in their development, thereby depriving the Israeli capital market and public of the option of benefiting from the ripe fruits of those companies.
Particularly recently, given the global success of Israeli technology companies and their many exits (Mobileye and NeuroDerm represent two prominent recent deals), this want has been very much felt. According to a number of sources, 96% of the money flowing into the Israel venture capital industry is foreign money.
A new and revolutionary program is about to be launched, following several years of preparatory work by the Ministry of Finance, the Israel Securities Authority, the Tel Aviv Stock Exchange (TASE), the Ministry of Justice, and other agencies. This preparation required legislation, which has recently been completed.
As part of the plan, four funds for investing in high-tech companies are being founded. These funds will be traded on the TASE, and will receive limited state protection against losses and guarantees for raising credit.
The Eucalyptus Innovation Capital fund is taking part in the tender. Partners in the fund include Eldad Tamir from the Tamir Fishman investment house, former Intel executive and high-tech entrepreneur David Perlmutter, Infinity Private Equity founder and managing partner Amir Gal-Or, and Evergreen Venture Partners general partner Adi Gan.
"Globes": How is the Ministry of Finance's new plan expected to affect the capital market?
Perlmutter: "It's a real revolution. In effect, the new plan will develop a new investment instrument for each and every one of us, for any amount we want, whether directly at our discretion, or through managed portfolios, mutual funds, pension funds, provident funds, and so on. This measure will also constitute a new resource for the Israeli high-tech industry, which currently relies to a large extent on foreign resources.
"With this program, a window of opportunity has opened for greater local investment in Israel's most successful and prosperous industry, which is generating jobs and tax revenues in such a significant way in the country."
Why in technology?
"High tech is fueling the new global economy, which is becoming digital before our eyes. The high-tech industry in Israel is one of the most outstanding in the world in offering advanced products and revolutionary solutions. Thanks to the program, we'll be able to continue strengthening the diverse sectors of the Israeli industry, with substantial involvement and partnership on the part of the general public."
Tamir: "Technological investments require a great deal of knowledge. The human capital that makes up Eucalyptus has vast experience in both finance and high tech. It is a key element in accompanying and integrating diverse sections of the Israeli population in local high tech - people who have been almost completely excluded from the successes in high tech."
In terms of the TASE, is the plan good news for investors?
"Absolutely. Through this plan, people are getting an opportunity to benefit from Israeli high tech's prosperity, with partial support and backing from the state. Up until now, after holding an IPO on Nasdaq, successful Israeli technology companies, and there are plenty of examples, provided no opportunity for the broad swathe of investors from Israel, who were prevented by bureaucratic reasons from investing on Nasdaq. Now, with the new program, these companies will also have an opportunity be listed on the TASE, and as a direct result, a good option is also being opened for both companies and investors in Israel."
Published by Globes [online], Israel Business News - www.globes-online.com - on September 17, 2017
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