Keeping track of Israeli exits is no simple assignment. Mergers and acquisitions (M&A) deals in the first half of 2016 indicate that Israeli startups still fetch top-dollar price tags and remain in hot demand.
According to the IVC-Meitar Exits Report from the IVC Research Center, which analyzes and monitors Israel’s high-tech industry, there were 45 exits by Israeli startups worth $3.32 billion in the first half of this year.
The report estimates that by the end of 2016, at least 100 exit deals, with a total of approximately $7 billion in total proceeds, will have closed.
“For a relatively small country, Israel has a super role in technological innovation,” Eric Schmidt, formerly Google chief executive and now executive chairman of its parent company, Alphabet, told an audience at Google Tel Aviv in mid-June.
“I can’t think of a place where you could see this diversity and the collection of initiatives aside from Silicon Valley,” said Schmidt. “I’m amazed to see how Israel has matured as the startup nation in the four years since I first visited. I am beginning to see companies that are on their way to being unicorns, in other words worth a billion dollars, and they have more sophisticated growth strategies.”
Google’s $1.03 billion buyout of Waze navigation app in 2013 remains the country’s biggest-ever exit. But Israel’s tech sector has seen some headline-grabbing exits in the first half of 2016 as well as noteworthy M&As.
“The largest deals in the first half of 2016 were the $811 million acquisition of EZchip by Mellanox and the $643 million buyout of Xura, followed by the $430 million acquisition of Ravello Systems by Oracle. The top three deals accounted for 57 percent of total exit deals,” said the IVC-Meitar Exits Report.
In January, Sony bought Altair Semiconductor for $200 million, giving the Japanese electronics giant a bigger role in the Internet of Things (IoT) sector via the Israeli provider’s single-mode 4G LTE solutions.
That same month, US-based Harman International Industries acquired automotive cyber security startupTowerSec for a reported $70 million.
In March, Cisco Systems paid $320 million for Leaba Semiconductor, a designer of networking chips. A few weeks later, Verizon Digital Media Services paid “tens of millions of dollars,” according to Ethosia Human Resources, to acquire Volicon, a provider of technologies for broadcasters.
In April, Oracle came shopping again for Israeli tech, this time paying $50 million for advertising startupCrosswise.
Other peak acquisitions so far include Intel’s $175 million purchase of Replay Technologies; British specialist healthcare company BTG’s $110 million buyout of Galil Medical, developer of innovative cryotherapy solutions for kidney and other cancers; German mobile ad-technology platform RNTS Media’s $72 million purchase of Inneractive; Electronics For Imaging will pay up to $52.8 million for Optitex, maker of integrated 3D design software to digitize the textile industry and accelerates the adoption of fast fashion; and Sweden’s EasyPark Group’s acquisition of Parko, the Israeli startup with a big-data solution to finding street parking.
Israeli high-tech guru Yossi Vardi, speaking to Globes, said Israeli exits are crucial to keeping the local high-tech ecosystem healthy.
“The state of Israel owes its success in the high-tech sector to the exit culture. We need to understand our limitations; we are a small country, covered in red-tape, and we have no local market. We are tiny. When we tried to found large firms to fend for themselves in the past, they often collapsed after the first, second, or third hiccup; even great companies like Scitex,” Vardi said.
“The success of Israeli high-tech comes down to this crazy synergy between big American companies and lots of small Israeli entrepreneurs. The big companies come here to buy companies and connect. There are 350-400 research centers of the most esteemed companies in the world; Intel has 10,000 people here, IBM has 2,200 workers here, HP has 6,000 employees in Israel, and Broadcom and Cisco also have a presence. … This connection to American companies is what built all these research centers that provide experience and training and create new jobs.”
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