Ventures like Oraytec Ltd deal with the global recession and an ever-volatile socio-political climate.
(Download this story in Microsoft Word format here.)
It is no secret that Israeli high-tech companies have offered lucrative opportunities to astute investors in recent years. Take for example, this past summer’s purchase of Jerusalem-based Ophir Optronics Ltd, a designer and producer of photonics instrumentation and precision infrared optics, for about $230 million by California-based advanced-technology company Newport Corp (NASDAQ: NEWP).
For the vast majority of Israeli start-ups, however, international financial press coverage and glorified “exits” may seem unattainable given both the global recession and the ever-volatile socio-political climate within which they themselves operate.
Not far from Ophir, for example, sits Oraytec Ltd, an obscure Israeli start-up that was founded in late 2007 with the express purpose of assisting other like-minded “israpeneurs” (Israeli entrepreneurs) in quickly bringing their great ideas or inventions into fruition. Netzer Winter, Oraytec CEO, approximates the total funding awarded to 116 new Israeli start-ups in 2010 by Israel’s Technology Incubator Center, amounted to NIS 200 million (around $60 million). The need for such support keeps increasing, he maintains, due to the sharp decrease on the part of private equity in new technological ventures as a result of the continuing global financial crisis—most notably the staggering $14 trillion dollar debt situation in the United States.
Yet if the most recent data for the first half of 2011 is any indication, the Center’s Incubator program is not immune to the global meltdown. As of June 30, only 31 new start-up projects received an estimated cumulative amount of NIS 54.5 Million from the Chief Scientist Year-to-Date – down sharply from 2010 on an annualized basis. Winter, however, does not seem the least bit perturbed. Whatever the annual budget earmarked by Israel’s Chief Scientist for incubator projects is, he explains, has already been predetermined—presumably over a multi-year period. As such, the Oraytec CEO anticipates an accelerated pace in the Office's grant funding for the second half of 2011, though he is quick to point out that approval for such funding is typically contingent upon that start-up's ability to provide matching capital itself.
According to Mr. Winter, the medical device field remains a top-priority among tech-incubator programs such as the one supported by Israel's Chief Scientist. The global financial crisis notwithstanding, Winter believes that breakthrough technologies in health, wireless, and even consumer related products will prove to be recession-proof and points to clients such as Anglebase Ltd., a developer of revolutionary green technologies, and MILBAT, which develops solutions that enable the integration of Israel's disabled community, as examples.
When it comes to private investment, Winter feels that those projects focused on biopharma, diagnostics and, medical devices will continue to attract attention. Take his prior client SoftWheel Ltd, which develops breakthrough solutions and assistive technology for wheelchair-dependent individuals, and was fully integrated by Yehuda Zisapel’s RAD BioMed this past February within the latter’s portfolio of companies.
It remains to be seen just how Israel’s start-up environment will cope with the grave uncertainty surrounding the global recession, not to mention the ever-present hostilities and possible escalation in mid-east tensions. “It’s very difficult to predict as to when countries such as the U.S. will return to its glory days of both production and consumption,” Winter admits, “so there’s no denying that Israeli start-ups need to adapt accordingly by developing patents and technologies that fulfill a need even during times of perceived socio-economic crises.”
Rafi Lisker, a veteran Oleh (Israeli immigrant) originally from Queens, NY, is a contributing writer for JNS. He has lived in Israel for over twenty years, and can be reached via email: email@example.com
Netzer Winter, is co-founder and CEO of Oraytec Ltd, a Jerusalem-based company specializing in patent and business development. A Sabra (native Israeli) and veteran of an elite IDF combat unit, Mr. Winter can be reached via email: firstname.lastname@example.org