Foreign investment in Israeli high-tech has long been a North American near monopoly, but this is starting to change as more European funds put money into Israel.
Figures obtained by TheMarker shows that in 2020, European investment in Israeli startups jumped 63 percent to a record $1.28 billion, or about 12.5 percent of total investment. Five years ago, Europeans invested just $331 million in the country. The number of European investors reached 195, capping years of steady increases.
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The data were compiled by IVC Research Center ahead of Europe Days next month, a conference designed to showcase Israeli high-tech to European investors. About 13 European funds with assets of more than 2 billion euros ($2.5 billion) are expected to attend, said Gilli Cegla, an investor and conference organizer. Many of them have never invested in Israel.
Corporate venture capital funds formed by companies in non-tech industries looking for innovation are a prominent feature of the European tech-investment scene. One example is the M-Industry fund, which belongs to Migros and will be attending the conference.
Switzerland’s largest retailer and a food maker, Migros is unusual in that it is structured as a cooperative that out of principle doesn’t sell alcohol or tobacco. It doesn’t pay dividends; instead, if operating profit margin exceeds 5%, it cuts prices. It donates 0.5% of its revenues to charity.
Naturally, Migros is focused on food-tech, in particular companies developing protein substitutes. It has already invested in two startups – InnovoPro, which has developed protein substitute from chickpeas, and Aleph Farms, which grows steak from cow cells.
Eliana Zamprogna, M-Industry’s chief technology officer, said that in addition to food-tech, she was looking to invest or collaborate with startups developing technology for retail and digital health.
Another corporate tech investor is Alexander Stoeckel, the lead partner of PM Equity Partner, the investment arms of the tobacco giant Philip Morris International. It is looking for startups in the areas of packaging and industry 4.0 as well as for remote health monitoring and “evaporation technologies.”
Other major corporations being represented as European Days are Deutsche Telekom, France’s Metro retail group, Swisscom and the German appliances maker Bosch.
But there are also Europe-based financial VCs active in Israel, such as Target Global, a Berlin-based fund founded by former Israelis that today counts more than one billion euros under management.
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Another non-corporate investor is Daniel Gutenberg, one of the most active angel investors in Europe. He invests in seed enterprises and in several European VC funds. He describes himself as a “unicorn hunter” (unicorns are startups that reach a valuation of more than $1 billion) and counts a dozen of these in his portfolio. In the past, Gutenberg has said that California’s Silicon Valley, the traditional epicenter of global high-tech, peaked years ago.
Gutenberg isn’t new to the Israeli tech scene. He was an early investor in Mobileye, the auto-tech startup that was later sold to Intel for more than $15 billion. He has invested in Orcam, which is led by Mobileye co-founder Amnon Shashua and is developing technology to help the blind and visually impaired, and in the drone-delivery firm Flytrex. Outside of Israel he has invested in Facebook, Airbnb and is a believer in the future of blockchain technology and Bitcoin.
Growing European interest in Israel is to a degree reflected in growing Israeli VC funds’ interest in Europe. That is due to the intense competition inside Israel and in the United States for the best deals, but also because European tech has matured.