Transcript Document

Arie SADOVSKI
Center for Study of Organizations & Human Resources
University of Haifa
IFISE Objectives
1.
2.
3.
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Validation of two complementary financial mechanisms for the
creation of high-tech start-up companies in Israel:The Yozma and
the Technological incubators programmes. Analyzing the success
factors and identifying those that may be relevant to Europe
Validation of a methodology for the creation of seed and start-up
financial sources for new high-tech firms and dissemination to
prominent European policy-makers
Planning of one or more public programs for the creation of seed
and start-up financing sources in Italy and presentation to
Italian policy makers
Sadovski, U. od Haifa,
[email protected]
3
Sadovski, U. od Haifa,
[email protected]
The Yozma and Technological
Incubators programs were put in
place by the Office of the Chief
Scientist Ministry of Industry and
Trade
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Sadovski, U. od Haifa,
[email protected]
THE YOZMA PROGRAM
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Sadovski, U. od Haifa,
[email protected]
Venture capital funds in Israel today
(Funds and other capital sources as of December 31, 1998)
Funds
Technology venture capital funds
Yozma funds
Private funds
Public and other funds
Total
Other private equity Funds
31
All funds
88
Investment companies
All capital sources
101
Number $ Millions
10
43
4
57
764
2,630
13
2,865
(Source: Reiter & Klein 1999)
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Sadovski, U. od Haifa,
[email protected]
256*
1,512
98
1,866
236
Venture capital in Israel up to 1992
?
N=1
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Sadovski, U. od Haifa,
[email protected]
Yozma biography
• Established as a wholly-owned Venture Capital
Company by the government
• Total capital : $ 100 million
• Inaugurated in mid 1992, began operation in
1993
• Privatized in 1997
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Sadovski, U. od Haifa,
[email protected]
Yozma objectives
To create VC industry as a source for capital
for the emerging hi-tech start-up companies
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Sadovski, U. od Haifa,
[email protected]
Yozma methodology
• To entice the private sector and foreign
investors to set up new VC funds
• Participation of Yozma (Government
sponsorship) as a partner in the new VC
funds
• To secure an obligation of the new VC
funds to invest in start-up companies in
Israel
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Sadovski, U. od Haifa,
[email protected]
Yozma operational guidelines
• Yozma investments in the new VC, up to 40%
of the VC’s capital and not more than $8
millions per fund
• The incentive to the private investors: An
option to buy the government (Yozma)
shares during the first five years of the funds’
existence at the government investment price
plus Libor+1% and 7% of the future profits
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Sadovski, U. od Haifa,
[email protected]
Yozma programme agenda (1/2)
• Importing knowledge and experience to set up
and operate VC funds and creating local
management teams
• Raising capital for investment in the high-tech
start-ups.
• Creating an international network with foreign
VCs and other investors.
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Sadovski, U. od Haifa,
[email protected]
Yozma programme agenda (2/2)
• Government shares the risks and takes a
leading role for a limited period of time
• Creating up to 10 small size new funds
• To invest directly in start-up companies
(Invested in 15 companies)
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Sadovski, U. od Haifa,
[email protected]
Yozma 10 baby funds
and the leading foreign investors
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•
•
•
•
•
•
•
•
•
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Eurofund
Daimler-Benz, DEG (Germany)
Gemini
Advent (USA)
Inventech
Van Leer Group (NL)
Jerusalem Ventures Pacific Oxton (US/Far East)
Medica
MVP (USA)
Nitzanim-Concord AVX, Kyocera (Japan)
Polaris
CMS (USA)
Star
TVM (Germany) & Singapore Tech
VERTEX
Vertex international funds
Walden
Walden (US)
Sadovski, U. od Haifa,
[email protected]
Yozma baby funds growth
• From $200 millions take off capital to
managing $2.9 billions capital, collectively
• Yozma baby funds take a prominent
position in the list of the 20 major funds that
comprise the leading VC funds in Israel
15
Sadovski, U. od Haifa,
[email protected]
Yozma baby funds maturity
($) millions
Capital
Planned for 2001
• Eurofund
72
150
• Gemini
350
• Inventech
100
• Jerusalem Ventures Partners 255
350
• Medica
70
• Nitzanim-Concord
270
• Polaris
700
• Star
600
350
• VERTEX
150
100
• Walden
120
70
• Yozma
180
150
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Total
2.87
Sadovski, U. od Haifa,
[email protected]
1.17 billions
Acknowledgement
The assistance of
Mr. Yigal Erlich
[email protected]
Chairman&Managing Partner
THE YOZMA GROUP
And the initiator of the Yozma Program
to the 1st part of the presentation
is gratefully acknowledged
Government sponsored
TECHNOLOGICAL “INCUBATORS” IN
ISRAEL
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Sadovski, U. od Haifa,
[email protected]
The official program objectives
• To support the initiation of high-tech
industry by supporting novice entrepreneurs
at the earliest stages of technological
entrepreneurship
• To encourage new export oriented industry
• To create new employment opportunities for
technologically skilled persons
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Sadovski, U. od Haifa,
[email protected]
The program methodology
To provide a supportive and protective
environment to individual inventors and
entrepreneurs, for the development of
technological innovations into business
ventures.
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Sadovski, U. od Haifa,
[email protected]
Establishment of an incubator
How and Who...
• Government:
Initiates, provides
incentives and sets
eligibility criteria.
Candidate must offer:
-Facility suitable for R&D
-Capabilities to assist in
financial and business
management
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• Public organizations:
Municipal/regional
authorities, research
institutes/universities,
industrial organizations
and investors groups
Sadovski, U. od Haifa,
[email protected]
The program structural lay-out
Incubators Programme Directorate
Steering Committee
Incubators
n=24
-Board of Directors
-Projects Committe
Project
n=~9
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Project
Project
Sadovski, U. od Haifa,
[email protected]
An incubator is...
• Independent legal entity
• Non-profit organization
• Has: -A professional experienced manager
- Board of directors from industry, business
sector, research institutes
- Suitable facilities for R&D activity
• In each incubator: 10 - 15 projects
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Sadovski, U. od Haifa,
[email protected]
Incubator offers the entrepreneur...
(1/2)
• Facilities appropriate for R&D (low rent)
• Financing of 85% - 100% of R&D
expenses
• Assistance in obtaining the complementary
financing (15%)
• Central administrative services (secretarial,
accounting, legal, acquisition)
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Sadovski, U. od Haifa,
[email protected]
Incubator offers the the entrepreneur...
(2/2)
• Assistance in management, logistics and
business development
• Assistance in commercialization
• A use of a structural and professional
infrastructure
• Inter-tenant synergism
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Sadovski, U. od Haifa,
[email protected]
Project selection criteria
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•
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•
•
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Product oriented
Rooted in technological R&D
Innovation and uniqueness
For export mainly
Feasible with available resources
Individual initiative
Sadovski, U. od Haifa,
[email protected]
Project proposal...
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Sadovski, U. od Haifa,
[email protected]
Government financial support
• To incubator :
100% of approved budget
- up to $180,000 annually
• To project :
- 85% of approved budget
- up to $150,000 annually
- 2 years maximum
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Sadovski, U. od Haifa,
[email protected]
Special attention to regional
development
Incubators in peripheral regions:
100% government participation in R&D
costs to three projects per year but only for
the the first year of each project
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Sadovski, U. od Haifa,
[email protected]
Project organization and financing
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Registered as an independent company
Staff size: 3 - 5
Support duration- up to 2 years
85% - by the Government -up to $300,000
15% - by private investors - about $50,000
100% budget per 2 years - about $350,000
Covered expenses include: salaries, materials,
equipment, subcontracting, consulting, patent
applications, marketing, overheads.
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Sadovski, U. od Haifa,
[email protected]
Preliminary ownership distribution
of a project company
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Sadovski, U. od Haifa,
[email protected]
Government incubators budget:
$ 223m in 10 years
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Sadovski, U. od Haifa,
[email protected]
Current status as of mid 2000
• 24 Technological incubators
• 200 Projects operating currently
• 9 Projects in average in each of the
incubators
• 619 Projects have been already out of the
incubators
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Sadovski, U. od Haifa,
[email protected]
Current status of projects as of mid 2000
• 24 Technological incubators
• 200 Projects operating currently
• 9 Projects in average in each of the
incubators
• 619 Projects have been already out of the
incubators
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Sadovski, U. od Haifa,
[email protected]
Incubators’ projects fields of activity
11%
20%
6%
22%
22%
19%
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Machines
Agriculture/Environmnet
Electonics
Softwa re/Computers
Medical Instrument./Medicne
Chemistry
Sadovski, U. od Haifa,
[email protected]
Summary of projects graduation and
evolution pattern as of mid 2000
Graduated Projects
619
100%
36
Stopped (Failed)
302
Continuing
317
49%
51%
Negotiating Investment
70
Attracted Investment
244
11%
40%
Sadovski, U. od Haifa,
[email protected]
Collaboration with private investors
• Private investors are already partners in 16
out of the 24 Incubators
• The private investments are made to the
Incubators’ budget in return for the
Incubators shares in the projects
• The Incubators are considered an
“interesting” investment targets
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Sadovski, U. od Haifa,
[email protected]
Segmentation of private
2000 investments as of mid
Total private investments
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$ 406 m
Continuing graduate projects
376
During the incubation period
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Complimentary financing
15
Sadovski, U. od Haifa,
[email protected]
The characteristic features of the program
(1/2)
•Significant financial support to the projects
•Support is limited to technological R&D with
practical commercial potential
•Limited Incubation term
•Complementing the activity of VC funds
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Sadovski, U. od Haifa,
[email protected]
The characteristic features
of the program (2/2)
• Depends to a large extent on involvement of
representatives of the public from the public and
the private sectors: From the industry, financial
and scientific communities
• Intends to nurture the innovation potential of
individuals in the population at large
• Bottom - up approach to the technology field of
the projects- no specialization
• Presence in all areas of the country
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Sadovski, U. od Haifa,
[email protected]
Success stories(1/2)
Company
Investment
$
Sales
Visionix
20M
Compugen
26.7
10.5
-
5.7
3.0
-
4.0
-
3T Ltd.
7.5M
Fund raised
Nanomotion
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Medicalith
Merged with ESC Ltd.
Phono-Or Ltd
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5.3
12M (Frankfurt Stock E.)
Raised 100M (NASDAQ)
Sales agreement of 100M
Sadovski, U. od Haifa,
[email protected]
Success stories(2/2)
Company
product
Visionix Ltd
Optical surface characterization system
Compugen Ltd.
Biological data computation
3T Ltd.
True temp. pyrometere
Nanomotion Ltd Direct dive ceramic linear motors
Medicalith Ltd.
Dermatological illumintors
Phono-.Or Ltd
Optical microphones
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Sadovski, U. od Haifa,
[email protected]
A mature program but open to
renewing amendments...
• Additional incentives to private investors
for participating in incubators
• Increased budget per project
• New elements of competition: For entering
an incubator and for project acceptance
• More emphasis on support to regional
incubators
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Sadovski, U. od Haifa,
[email protected]
Web site
http://incubators.org.il
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Sadovski, U. od Haifa,
[email protected]
Acknowledgement
Consortium IFISE and Arie SADOVSKI wish to
acknowledge the support that was provided to the
a/m project and to the preparation of the 2nd part
of the presentation in advice and materials
by
Rina PRIDOR Program Director
OCS -Technological Incubators
Ministry of Industry and Trade
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Sadovski, U. od Haifa,
[email protected]