Despite the rocket barrages striking Haifa, the Technion - Israel Institute of Technology incubator has been selected for an upgrade: Battery Ventures and Vertex Venture Capital have just signed a three-year agreement to invest in the management of the Technion's incubator. In essence, the two funds will be creating another incubator at the Technion.
Zohar Gendler, CEO of the current incubator, Technion Entrepreneurial Incubator Company (TEIC), will also head the new one. Companies established through the upgraded incubator will receive an investment from both funds (and from others, if necessary), along with funding from the chief scientist at the Industry, Trade and Employment Ministry.
Battery and Vertex will be investing $150 million to $200 million annually in the management and maintenance of the new incubator.
TEIC is privately owned and financed by the Vertex, Vitalife, ProSeed and Shalom Equity funds. Only Shalom will not be participating in the new initiative.
"In the future we will decide how much to invest in each company," says Avi Domoshevizki, a venture partner at Battery. "We figure that within three years we will invest in 15 companies in all fields of activity."
Scott Tobin, a general partner at Battery, notes that the fund decided to invest in the Technion's incubator due to the innovative technology coming out of Israel.
"There are rare places in the world that create innovation," says Tobin. "Based on the Technion's history, we believe this is an excellent platform for investment. Battery has good connections with MIT (Massachusetts Institute of Technology - G.G.). The Technion is Israel's MIT, and we are interested in providing companies in the incubator and the Technion with global exposure and connections to technology professionals, organizations and top investors in the United States."
Domoshevizki says the funds' involvement in Israel is a long-term commitment. "We are proud to invest in the Technion when rockets are falling on Haifa," he says.
Tobin adds that even though the investment is being made during wartime, Battery believes in the strength of the Israeli technology industry.
"Battery began investing in Israel in 1993," recalls Tobin, "with an interest in five companies. A war is going on now, and it is problematic, but we are confident Israel will survive.
"The investment in the Technion will help us build ties with young entrepreneurs," continues Tobin. "We need companies involved in clean and alternative energies in the wake of the crisis in the energy market. Technion companies have technological innovation."
Battery began operating a local office in Israel about six months ago, and it is one of the most esteemed American funds in the market. Founded in 1983, Battery now manages more than $3 billion. Sixty percent of the investments are in communications companies, and 40 percent are in information technology (IT).
Among the fund's investments are Akamai Technologies (whose Israeli founder, Daniel Lewin, was aboard one of the 9/11 hijacked airplanes), Qtera, which was sold to Nortel Michael Networks for $3.5 billion, and Neoteris, which was purchased by NetScreen Technologies for $256 million.
Battery has so far invested in five Israeli companies: RadNet, Veraz Networks, VideoNet, Sungate and Kashya, which was recently sold to EMC for $153 million. Kashya's CEO, Michael Lewin, is the brother of Daniel Lewin.
Domoshevizki's relationship with Battery began after the fund invested in RadNet, which he founded. RadNet was acquired in 1997 by the Germany company Siemens and the Canadian company New Bridge Networks for $75 million. Alcatel later bought up New Bridge, and its holdings in RadNet were taken over by Siemens. Domoshevizki continued to run the company, whose name was changed to Seabridge with its integration into the Siemens group.
Domoshevizki then began working for the Concord VC fund. When Concord failed to raise capital for its continuing investment fund, Domoshevizki moved to Battery, although he continues to be active in Concord's portfolio companies: FlexLight Networks, WholeOptics and Cisco.
Battery Ventures' Israeli team also includes Ronit Koren, who has more than 10 years' experience in the high-tech industry, and has held management positions in both technology and business development for companies ranging from startups to mid-tier firms.
Battery's local office is located in Herzliya, where the Technion's incubator's operations will be managed.