Israel Innovation 2.0

During the week of January 18, 2009, business was back to normal for better and for worse. Announcements were made that Israel is planning the largest desal plant and Varonis and SAManage received funding. On the other end, the Israel Venture Capital Research Center released VC funding numbers for the fourth quarter of 2008 that were expectedly very low and promising social search engine, Delver announced that unless it receives more funding or gets acquired in the next few weeks it will cease its operations. For these and the rest of the 18 Israel-related headlines from the week of January 18, check below. 

Cleantech

1. Israel plans largest desal plant in $513M deal

2. Cleantech Expert: “In Financial Crisis Context, Israeli Solar Energy Companies Could be Shining Stars”

Investments and Economy

3. Aviv VC raises half of what it hoped

4. EMC leads $15m round for Varonis

5. Global crisis hits local venture capital industry

6. Nokia, Intel Slump Torpedoes Israel Economy as Rockets Grounded 

7. SAManage Secures Series A Funding from Xenia Venture Capital

Information Technology

8. BPM VIEWPOINT: The Opportunity in Unstructured Business Process Management (ActionBase)

9. Cordys Process Factorytrade; Wins Best Cloud Management Solution

10. Leading Industry Analyst Positions Magic Software in Three Quadrant Reports on Application Infrastructure

11. ClickSoftware launches new system for customer interaction management

12. Kontera and Advertising

Telecom

13. Which companies will Nortel take down in its crash?

14. Skuku Embeds GIPS VoiceEngine

15. AudioCodes Announces Availability of VoIPerfect and High Definition VoIP on MIPS Technologies’ Cores

Miscellaneous

16. Michigan, Israeli companies share business growth ideas

17. Peres invites new envoys to join science and tech R&D council

18. Social Search Engine Delver On Death Watch

Though 2008 was clearly a tough year for companies and venture capital funds in Israel and worldwide, several announcements this week have given a better picture of the extent of its impact on Israel’s Silicon Wadi.

Globes reported this past week that Aviv Venture Capital raised $52 million for its Aviv II Fund last month but had originally set out to raise $100 million. It was also announced that social search technology startup, Delver, will be ceasing its operations in the next 30 days unless it raises necessary funds or gets sold.

In addition to these, research on venture capital funding in the fourth quarter of 2008 from the Israel Venture Capital Research Center shows how the global recession affected fundraising in Israel overall. According to a Jerusalem Post article on the research, in the fourth quarter, 109 Israeli hi-tech companies raised $394m. which was 34% below the $600m. raised in the previous quarter and 22% below the $503m. raised in the fourth quarter of 2007.

It’s not just on the funding side. Nortel’s recent bankruptcy filing has raised questions about what toll it will have on Israeli companies that were financially intertwined with it through business contracts and partnerships. Israeli companies expected to take a hit include AudioCodes and TTI and possibly Radvision and Alveron.

Things might continue to be gloomy and hard in 2009, but it won’t be the end of innovation and entrepreneurship in Israel. The layoffs that have been a result of the economic crisis are producing a new crop of entrepreneurs and startups that will have better skills to succeed in the long term using less money should they survive the downturn.