Japan’s ORIX to invest $60 Million in Israeli VC OurCrowd

OurCrowd announced last week that ORIX Corporation (“ORIX”) invests a strategic $60 million in OurCrowd, Israel’s most active venture investing platform. This is ORIX’s first collaboration with Israel’s startup sector, with OurCrowd planning to provide the diversified financial services giant access to a wide variety of innovative technologies and companies.

Under the terms of the agreement, ORIX and OurCrowd will collaborate in agreed focus areas and will establish financial products and investment opportunities suited for the Japanese and global markets. This will include curated access to both venture capital funds and individual portfolio companies on a deal-by-deal basis. 

CEO of ORIX UK, Kiyoshi Habiro said, “We are excited about investing in OurCrowd, Israel’s most active venture investor and one of the world’s most innovative venture capital platforms. We intend to be active partners with OurCrowd and help them accelerate their already impressive growth, while bringing the best of Israeli tech to Japan’s large industrial and financial sectors.”

Over the past several years, Japan-Israel trade has increased significantly with Japan becoming one of the largest investors in Israeli tech and with over 90 Japanese companies now active in Israel. ORIX and OurCrowd will work to further increase cooperation between the two countries and enhance opportunities for Israeli startups throughout Asia.

OurCrowd CEO Jon Medved said, “ORIX is a global leader in diversified business and financial services who will strengthen OurCrowd in many ways. We are enthusiastic about the potential to further transform the venture capital asset class together and provide a strong bridge for our innovative companies to the important Asian markets.”

Established in 1964 from its start in the leasing business, ORIX has advanced into neighboring fields and is presently undertaking a wide range of businesses such as corporate finance, industrial/ICT equipment, environment and energy, automobile-related, real estate-related, private equity investment and concession, banking and life insurance businesses. Since entering Hong Kong in 1971, ORIX has been operating its businesses globally by establishing locations in 37 countries and regions across the world.

The OurCrowd community consists of almost 60,000 registered investors from over 183 countries.  Rated “the most active venture investor in Israel” by Pitchbook, OurCrowd has more than $1.5 billion in commitments and has made investments in more than 220 companies and 22 funds. OurCrowd already has had many exits, including the IPOs of Beyond Meat and Lemonade, the acquisition of JUMP Bike by Uber, the acquisition of Briefcam by Canon, the acquisition of Argus by Continental, the acquisition of Crosswise by Oracle, the acquisition of Replay by Intel, and many more.

Nomura International plc acted as Adviser to OurCrowd in connection with the transaction.

Augury Raised $55 Million for Machine Sensors Platform

The AI-based Machine Health solution provider from Haifa, Israel, has secured $55 million growth funding round led by Qumra Capital and with participation of existing key investors, including Insight Venture Partners, Eclipse Ventures, Munich Re Venture Capital and Qualcomm Ventures. With this round Augury has raised $106 million since its initial funding six years ago.

Augury provides AI-based Machine Health solution for the Industry 4.0 production floor using vibration, ultrasound and other types of sensing technologies to detect equipment malfunctions and provide detailed recommendations for maintainanace. Its algorithms use vast amounts of collected data from over 40,000 machines to build a model of how malfunctioning equipment behaves.

Augury’s customers include manufacturers such as Hershey’s, Colgate-Palmolive, Essity, Heineken and ICL. The comapny said it ihas more than tripled its revenue n the past year. The new funding will finance the expansion of its engineering and development teams in Israel as well as its services and sales teams around the globe.

Earlier this month, ICL announced the expansion of its AI-based Machine Health program with Augury. ICL is a global manufacturer of products based on unique minerals. It said that Augury’s first installation of Machine Health solution saved ICL more than $1,000,000 in production losses and downtime costs in only 10 months. As a result ICL will implement this technology across all of its factories located in Israel, Europe, North and South America.

Economy of Knowledge: 362 R&D Centers of Multinational Companies

Photo above: Selected Active MNCs in Israel by Location

A new report published by IVCGKH and IATI reveals that the depths and scope of Multinational Technology Companies involvement in Israel has reach ed such a level that it influences the National Budget calculations. The term Multinational Technology Companies (MNC) refers to a foreign corporation that controls the R&D or owns a high-tech company in Israel (some entities such as Intel and HP have in addition to R&D large manufacturing facilities in Israel).

With the growth of M&A activity in the last two decades, the presence of MNCs has become an integral part and a major contributor to the Israeli tech ecosystem. According to the report, there are 362 active multinationals in Israel (in 2019), employing approximately 62,000 employees. Israeli based MNCs are about to pay nearly $8.85 billion taxes in 2019 (based on tax payment of $142,500 per employee). This amount is equivalent to approximately 2.6% of Israel’s estimated GDP for 2019, and 18% of the total income from direct tax, which is expected to be $48 billion this year.

Intel is the Biggest MNC in Israel

The majority of MNCs in Israel are U.S. based corporations, accounting for 63% of the 362 companies. While there was a noticeable German presence in 2016 and Chinese presence during 2017, currently there is no other country with any significant presence other than US. The three top technology clusters in MNCs in Israel are: Machine Vision, IoT and Cyber Security. Approximately 32% (115 companies) of all MNCs develop technologies in at least one of these clusters.

Many MNCs started as a result of M&A deals (70% of all M&As between 2014 and 2019 were by foreign companies). Most global companies acquiring Israeli startups are from the US, with a steady number of more than 50 exit deals each year. Most active corporate buyers of Israeli companies in the last 5 years are Google (10) and Microsoft (8).  Intel, on the other hand,  is the most active corporation in Israel. During 2014–2019, Intel Capital participated in 52 investment deals and Intel corp. acquired 5 companies totaling $17.5B. The largest number of employees is in a manufacturing facility (Intel Fab in Kiryat-Gat) and not an R&D center.

The full report: Multinational Technology Companies in Israel

Peregrine Ventures Raised $115 Million for Medtech

Peregrine Ventures from Israel announced the closing of $115 million raising for its fourth fund, Peregrine 4. The partners include institutional and private equity investors from Israel, US, Europe and Australia. Peregrine 4 plans to invest in early stage and late stage rounds of medical technology startups in Israel. Since 2001, the VC firm has completed 10 exits totaling approximately $2 billion (cumulative value). . Prominent exits include Valtech, Neovasc, B-Balloon, Eximo and Rocketick.

Peregrine Ventures also owns and operates the Incentive Incubator in partnership with the Israeli Innovation Authority. Eyal Lifschitz, managing partner at Peregrine (photo above), noted: “There is a huge demand and opportunities in the Israeli medical technologies, and foreign investors recognize this. We decided to limit Peregrine 4 fund to $115 million, since we believe this size is best suit our management team and abilities to find the best opportunities – and to take an active role in helping them achieve their goals.”

Hi Auto Raised $4.5 Million in Seed Round

Photo above: Hi Auto Co-founders Roy Baharav (right) and Eyal Shapira

The Tel Aviv based Hi Auto is set to demonstrate innovative audio-visual commercial solution for speech recognition in harsh environments. The company has completed a $4.5 million seed round to fund the development of a novel noise reduction technique for improved speech recognition. The technology will be demonstrated at CES 2020 in Las Vegas.

Read My Lips…

Hi Auto’s technology consists of a microphone positioned in front of the speaker, a camera that tracks the speaker’s lips movements and a deep learning software to eliminate the background noises. “Speech recognition is quickly becoming the method of choice to control devices,” said Roy Baharav, CEO and co-founder of Hi Auto. “But when used in noisy and multiple speaker environments, its reliability goes down dramatically.

“Our audio-visual approach is able to focus the detection on the speaker itself, and remove all the other noises.It will make speech recognition experience in the car and in other noisy environments more satisfying and enable OEMs to introduce complex and sensitive capabilities.”

Hi Auto was founded in February 2019 by the CEO Roy Baharav, the CTO Eyal Shapira and the initial investor Zohar Zisapel, who serves as the chairman of the company. Baharav spent a decade in the U.S., where he served in product management positions at Google headquarters in Mountain View, California. Before, he had commanded an elite intelligence technology unit in IDF.

Intel Chose Hi Auto for its “Ignite” Accelerator

The CTO Eyal Shapira was awarded the Israel Defense Prize during his service in a technology unit of IDF. Later, he gave consulting services to companies such as Intel and Broadcom. Zohar Zisapel is one of Israel’s best-known hi-tech entrepreneurs and managers. Zisapel has helped to establish and is the chairman of prominent automotive startups, including Hailo, Argus and Innoviz.

Earlier this month, Hi Auto’s technology was acknowledged by Intel Corporation, who chose the company to join its newly established “Ignite” accelerator in Israel. The latest $4.5 million financing round was led by by the Israeli car importer Delek Motors and Hi Auto’s acting chairman Zohar Zisapel. Other investors were Allied Holdings, Singapore based Goldbell Group, and Plug & Play.

AI Takes Center Stage in Israeli High-tech

Israeli High-Tech Companies Raised $1.55 Billion in 128 Deals during Q1 2019. According to a new research made by IVC-ZAG, the first quarter of 2019 continued the uptrend of VC investments:  Israeli high-tech companies raised 28% more in capital amounts and 15% more in the number of deals, compared to Q1 2018. Investment amounts and valuations of Artificial Intelligence deals continue to grow, with large deals such as Augury ($25m) and Gong.io ($40m).

The ubiquity of AI makes it the relevant technology for big funding rounds in other industry verticals such as Automotive (Innoviz – $132m) and Cyber Security (PerimeterX – $43m). Another finding is the growing importance of Artificial Intelligence technologies: In general, Out of the $1.55 billion raised in Q1 2019, AI companies attracted $599 million raised in 51 deals—almost doubling the figures of Q1 2018. 

Another major finding is that VC funds prefer mature companies over the young and risky ones. C financing rounds soared  $476 million raised in 17 deals, the highest figures since 2014. Deals higher than $20 million were responsible for 64% of the total amount invested in Q1. The lower amount range, smaller than $5m, accounted for less than 7% of the total raised in the quarter.

It means that the investors appetite for early maturity stage companies (Seed + R&D), decreased dramatically since 2016. The investors have tended to allocate more resources to less risky ventures with moderate returns—a trend that has continued in Q1. During 2018, the gap between capital raising amounts in mature and early stage companies was wider than ever and will probably increase this year.

The researchers mentioned that investors involvement in the Israeli start-up ecosystem has grown in the recent years, as reflected in the Average Number of Investors per Deals chart. “In accordance with rising investor interest in more mature companies, the most significant investor type to increase its presence was the Corporate VC type, which participated in 29 deals in Q1 2019.”