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US investors seek out Israeli high-tech opportunities
Posted By David Shamah On December 10, 2008 @ 9:43 am In | No Comments
‘It’s a credit to Israel’s high-tech reputation that these firms are willing to come,’ David Gitlin, partner at Philadelphia’s WolfBlock law firm.Times may be tough and credit may be short – but according to David Gitlin of Philadelphia’s WolfBlock LLP, a partner at veteran law firm in the city, many American venture capital funds and angel investors still believe Israeli high-tech firms are worth investing in.
So much so, in fact, that some 70 VC’s and angels gathered at the start of December for the fifth annual WolfBlock Israel Venture Conference. The potential investors met with directors and staff of 15 Israeli high-tech firms, working in areas like biotechnology, clean tech, and communications – and if all goes well, some deals will come out of the conference, says Gitlin.
“While there are some American VC firms that prefer to invest only in American companies, we have found that there is a great deal of interest in Israel among many VC’s and angels,” Gitlin tells ISRAEL21c. “It’s not easy getting 60 or 70 investors together even during boom times, much less now, when recession is on everyone’s mind.” So it’s a credit to Israel’s high-tech reputation that these firms are willing to come, he says.
Now in its fifth year, the conference has helped dozens of young Israeli start-ups get the funding they need to go on to bigger and better things – and there have been many success stories, Gitlin says. The best known of these is Israeli data security company Safend, which presented at the first Venture Conference. Last year, Safend was elected as the most promising Software and Internet start-up in Israel for 2007 by Red Herring .
Getting on the map
“Most of the companies who present at the conference are pre-revenue or have only limited sales, so this is their chance to really get on the map,” Gitlin says. “We are working on a couple of deals right now for companies that presented last year, and hopefully we will be able to work things out for the company and investors.”
A time lag of a year or more is actually a typical amount of time investors and companies might take to decide to work together, after meeting at an event like the Venture Conference, says Gitlin – and that’s one reason why the bad economy is less of a factor in VC and angel investment decisions than most people would think.
“VC’s are in business to invest, and many have money in the bank they have to spend. Some funds have decided to go slow in calling on their limited partners to come through with their commitment,” – an essential part of the VC system – “but there are plenty that have the cash to invest,” Gitlin explains.
“What has changed is that all investors are more careful with their money, seeking the best opportunities that have the highest chance of paying off. Both VC’s and companies realize that the vetting process is going to be more thorough now, so it’s expected that both sides will take time to check each other out,” says Gitlin.
The money for investment is there, however, and during tough times that money will go to the best companies, says Gitlin – the kind of companies that will be presenting at the Investment Conference.
The Venture Conference is a highlight of WolfBlock’s Emerging Growth Services Program, and Gitlin, along with Emerging Business director Beth Cohen, vets the investors and presenting companies to make sure that interested investors are able to hook up with quality companies.
Israel’s high-tech reputation precedes it
“Israel’s reputation as the home of many innovative startups precedes it, of course, but each company has to make its own case. Fortunately, we have some good candidates coming from varied areas, including life sciences and clean tech, plus a consumer oriented website, which looks very good,” Gitlin says.
Although it’s almost axiomatic that startups are seeking money, that’s not necessarily always the case, he adds – everything depends on the specifics of the deal. “We were prepared to do the conference with just 10 participants instead of the 15 we were aiming for, but in the end we had to turn down applicants,” Gitlin says.
So how did WolfBlock get into the VC game? “The firm was established 103 years ago as a home for Jewish lawyers who couldn’t get work elsewhere,” says Gitlin. “We have actually been working with emerging growth companies for decades. Many of our clients started out as small merchants and manufacturers, and went on to become large Fortune 500 – and even Fortune 100 – companies.
“High-tech is just the latest iteration of a long tradition here,” he adds. “And there is a great deal of interest in high-tech in this area of the country. Philadelphia is a center of life-science research, and 80 percent of the big pharma companies have their headquarters within 80 miles of Philadelphia,” Gitlin says.
Both factors, plus the hard work the firm puts into it, means that WolfBlock not only has the skills to put together an investment conference for Israeli high-tech firms, but can also pull it off successfully. And that is good news for the 15 Israeli companies, who attended this year’s conference.
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