Venture Capital Venture Capital InvestmentsInvestments

Mr. Yigal ErlichMr. Yigal Erlich President & CEO, The Yozma GroupPresident & CEO, The Yozma GroupChairman, Israel Venture AssociationChairman, Israel Venture Association

0

200

400

600

800

1000

1200

1400

1600

1800

1993 1994 1995 1996 1997 1998 1999

$M

Venture Capital Raised

1st Wave:Establishment

of Yozma

2nd Wave

3rd Wave

Source: PriceWaterhouseCoppers

1993-5

Average Leading VC Size ($M) 20

No. of Venture Firms 15

1996-8

80

40

1999-01

180-200

60

VC firms development over the years

Distribution of Capital Raised by H/T Companies by Character of Investor ($M)

0

500

1000

1500

2000

2500

1997 1998 1999 Q1-Q3/2000

Other

VC investments

Source: PriceWaterhouseCoppers

Capital Raised in Public Offerings ofIsraeli Companies in the US

0

500

1000

1500

2000

2500

1994 1995 1996 1997 1998 1999

$M

Venture BackedAll

In total: during the past 7 years more than 100 Israeli companies raised ~$6B ; 40% of them were venture-backed

M&As of Israeli Technology Companies and Foreign Strategic Partners:

1994 - 1997 $1.5B

1998 - 1999 $4.5B

1st Half - 2000 $7.6B

Investments by Industry (1999, $1B)

48%

29%

9%

9%

2% 3%

Software

Communications

Medical Devices

Computers &Electronics

Biotechnology

Other

Source: PriceWaterhouceCoopers - MoneyTree

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Capital Raised by Israeli High-Tech Companies

0

100

200

300

400

500

600

Q1/99 Q2/99 Q3/99 Q4/99 Q1/00 Q2/00 Q3/00

Mill

ions

of D

olla

rs

Communications

Internet

Software

Source: PriceWaterhouseCoppers

Israeli VC Arena today

Political Risk Declining Capital Markets Uncompetitive Tax Policy Mature VC market Globalization of VC’s

Uncompetitive Tax Policy

Tax on foreign Investors Double tax on Israeli related

companies for U.S investors Double tax on some European

Investors

Uncompetitive VC Market

Increased Carried perception