California VCs look to Israel for the next big thing

XLoom’s InfinFlame uses the mechnical XFP form factor adopted by leading switch vendors as the form factor of choice for high speed links.For the second year running, a delegation of some 30 American venture capital funds based in California were …

XLoom’s InfinFlame uses the mechnical XFP form factor adopted by leading switch vendors as the form factor of choice for high speed links.For the second year running, a delegation of some 30 American venture capital funds based in California were wowed by Israeli technological startups during a four-day visit last week.

20 innovative Israeli start-ups, in the preliminary stages of funding recruitment, presented their business ventures to the funds – companies specializing in telecommunications, computer and software development, security of computerized environments and media advertising.

Sponsored by the California Israel Chamber of Commerce (CICC) in partnership with Lightspeed Venture Partners, Ernst & Young, Silicon Valley Bank and Pillsbury Winthrop Shaw Pittman, the goal of the 2005 VC Mission was to pave the way to new investment opportunities in Israel’s top technology ventures.

“Last year’s trip was great, but this year it’s been spectacular. Everyone’s been so excited, interested and engaged. I strongly believe that there’ll be major investment coming out of this trip,” Isaac Applbaum, a senior partner at Lightspeed told ISRAEL21c.

Among the visitors were delegates from New Enterprise Associates, Menlo Ventures, Onset Ventures, Accel Partners, Softbank Capital Partners, Sigma Partners, Wilshire Associates, and Swiss Re. The group visited the cream of the crop of new, up and coming Israeli companies including:

* Ethernity Networks Ltd – a leading developer of networking engines for the telecom equipment market;

* LeanWay – whose original software solution, called StreamWay handles and manages streaming data and the relevant complex business processes in database centric environments.

* Olista – which develops and markets innovative solutions for assuring the optimal mobile data services experience by identifying and solving problems that can seriously impact users’ experience of mobile data services.

* XLoom – makers of the industry’s first front-panel, hot-pluggable optical interconnect solution for InfiniBand applications.

* And DoubleFusion – which provides advertisers an effective and easy delivery of their ad campaigns into the most exciting media for teenagers and young adults – interactive games.

Other companies which made presentations include Aduva, Broadlight, Cablematrix, CopperGate, CrossID, cVidya, Lambda DSS, mConfirm, Networks, Prolify, Safend, SeaPass, SentryCom, Silicon Design Systems, Transchip, and Xtellus.


According to DoubleFusion’s co-founder and Executive Vice President of Business Development Guy Bendov, the presentation to the delegation was a great success

“There was a big interest from US VCs. We already set follow up meeting with a few of them,” he told ISRAEL21c.

In addition to learning about tomorrow’s top Israeli companies, the delegation also
met with Israel industry legends such as the CEOs of Checkpoint, Rad Industry Group, M-Systems, Amdocs, Teva and Mercury Interactive, as well as visiting multinational companies with prominent offices in Israel: IBM, Intel, Motorola, Applied Materials, SAP and Texas Instruments

According to the Israel Venture Capital Research Center, of the $350 million in venture funding that Israeli tech companies raised last quarter, 38% of it came from foreign investors. Several top-tier U.S. VC firms – including Sequoia Capital, Benchmark Capital, and Greylock – have partners or affiliated funds in Israel.

“Israel’s reputation in advanced technology – specifically in the fields of current information technology, chip design and telecommunications – is unparalleled,” said Yoram Tietz, Senior Partner at Ernst & Young, one of the mission’s organizers.

Unlike China and India, Israel doesn’t offer cheaper labor and lower costs than the US. But with a highly educated engineering workforce, it can provide creativity, inventiveness, and rapid development.

“It is encouraging to see that Israel continues to have tremendous appeal in the US VC community, in spite of the growing attention given to the emerging markets of China and India,” said Zvi Alon, Chairman of the California Israel Chamber of Commerce (CICC).

Security and software have always been hot sectors in Israel, and recently, fields like nanotech and electronic design automation have begun flourishing too, Business Week reported recently.

“I’ve been in Israel maybe 50 times since 2001 investing in companies, and I can tell you that the environment has never been better for investing that it is now,” said Lightspeed’s Applbaum.

DoubleFusion’s Bendov agrees.

“The last two years are better in terms of the world wide high tech economy. Couple that with a better security situation in Israel – more US VCs are happy to invest again in leading Israeli technology and Israeli innovation.

“The benefits of quicker, effective and quality development cycles in Israel were always here. Now that the security risks are not as relevant, the time to invest is now.”