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Israel’s R&D
Landscape
Yoram Yaacovi
General Manager
Microsoft Israel R&D Center (ILDC)
World’s Most Innovative Countries
World Economic Forum 2016-2017 Global Competitiveness Report
1. Switzerland
2. Israel
3. Finland
4. United States
5. Germany
6. Sweden
7. Netherlands
8. Japan
9. Singapore
10. Denmark
Source: World Economic Forum Global Competitiveness Report
2016 Q1-Q3: Most Prolific in History for Israeli Hi-Tech Capital Raising
Gro
wth
Total capital raised reached
$4B in 510 deals
+27% YoY in capital raised
+22% YoY in average deal size
57% of H1 deals included at
least one foreign VC investor
Source: IVC-Exits Report , October 2016
2.161.93
2.4
3.43
4.44
5.3
544577
666 681 693
510
0
100
200
300
400
500
600
700
800
0
1
2
3
4
5
6
2011 2012 2013 2014 2015 2016Q1-Q3
Capital Raised in $B and Number of Deals
4
Over the past 4 years alone, Chinese investors have invested over $15B in
Israeli companies
Total
Investment
High-tech investments with Chinese participation grow by ~50% annually
and are expected to reach over $500M this year, up from $118M in 2012.
Tech
Investments
Chinese giants such as Alibaba Group and Huawei have set up R&D centers
in Israel as well as invested in local tech companiesR&D
Source: Catalyst Fund Research, 2016
A growing trend of Chinese companies and investors looking to tap into the local technology
market and acquiring Israeli technologies
Chinese Investors are Tapping into the
Israeli Tech Market
$
Key Sectorial Trends in the Israeli Ecosystem
Israel Leading in Cyber Security
$300M
Source: IVC Research, 2016
In 2016, over 430 local
companies alongside 20R&D centers developed
security solutions
20% of global
investments in the Security sector are in Israel
2 universities ranked
top 20 globally in
computer science; heavily
invested in cyber security
Nearly $300M raised
by cybersecurity
companies in 2015 (+50%
YoY)
Israel’s expertise in the Security, Communication, ML and IoT is being deployed in automotive
technologiess, leading to unparalleled dominance in the field
Leading global automotive companies invest in local R&D
Home to some of the
leading automobile
technology companies
Global automobile
vendors are
establishing relations
with local companies
Israel’s Automobile Startup ecosystem is rapidly growing
150 startups and research groups, +100% from 2013
As Vehicles go High-tech, Israel’s in the Driver’s seat
Source: Vertex Venture, June 2016
The Marker, October 2016
Source: Vertex Venture, June 2016
The Marker, October 2016
Israel Becoming a Global Leader in IoT
There are approx. 330 IoT startups, ~5% of the Israeli startup ecosystem
The IoT ecosystem leverages Israel’s strengths in sectors like Big Data & BI, Life Science, and Security
There is much more IoT growth to come: most companies are in early R&D or initial revenue stages
Source: Bank Leumi research, 2016
Globes, September 2016
Fintech is Flourishing
Israel is a main source for Fintecdevelopment. There are over 200 Fintec startups, most launched in the last two years
Local companies and startups focus their developments around investments (37%) payments (21%) and loans (13%)
Global and local banks and credit card companies are opening local innovation centers, hubs and accelerators
Israel continues to attract global companies’ R&D Centers
Some however are choosing to close their local operation
Hi-Tech Workforce Trends
Changes in demand and pay YoY (2015/2016) Changes in number of hi-tech employees
Shortage in Relevant Graduates
2,346 2,476 2,635 2,649
2,806 2,984 2,917 3,020
5% 5% 5% 4% 4% 5% 4% 4%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
-
500
1,000
1,500
2,000
2,500
3,000
3,500
2008 2009 2010 2011 2012 2013 2014 2015
Computer Science, Math & Statistics Graduates
Number of Graduates % of all-up graduates number
Source: Israel Bureau of Statistics, 2016
Classified as Microsoft General
Shortage in skilled
professionals is
worsening, short and
long term solutions
must be put in place
Israel continues to
lead in global
innovation and as a
result attracts interest
and investments from
foreign investors
Local expertise creates
leadership in key
technological domains:
Security, Fintec, IoT
and Automotive
Key Takeaways
Israel’s Cyber Startup Domain Map
Source: BVP Israel Cyberscape
Israel Startups - Automotive 2.0
*Startups that raised >$100K
Source: Vertex Ventures, June 2016
Startups that raised >$100K
Source: TLV Partners, December 2015
Israel’s IoT Startups Map