Israel Innovation 2.0

Lilach Weissman reported on Globes online yesterday that Ministry of Industry, Trade and Labor director general Gabriel Maimon told the Knesset Economics Committee that 4,000 high-tech employees have lost their jobs since October, and that the number could reach 15,000 (out of a total of 70,000).  A day earlier, Roi Carthy posted an entry on TechCrunch that Deloitte Israel recently released its VC Indicator Survey, conducted among Israeli VCs in December that he said, spelled doom for the industry regarding  employment and funding.

While times will be tough in Israel regarding the economy this year, it doesn’t seem likely that most of those unemployed in the high-tech sector will sit by idly. Eze Vidra of VCCafe.com reported in early December 2008 that of the 270 startups founded in Israel in 2008, 40 of them were founded in a 30-day span in November and beginning of December. It seems that once laid-off and with time, several high-tech workers are able to pursue their ideas. (How many laid-off employees out of the 15,000 this will acutally benefit should be kept an eye on in 2009.) 

While venture capitalists will be more conservative in their investments, this past September a panel of angel investors at TechCrunch50 basically said that this is the time for them. Though there’s less money going around, especially coming from VCs, there’s still money out there for the right ideas. (There’s also still some investments in R&D-type activities that are being made in Israel.)

Here are some facts from Carthy’s entry and the Globes article that are particularly of interest:

• 92% of VCs surveyed believe that companies who do not lay off employees will slash salaries.
• 74% predict that at least 10% of venture backed startups will be shutdown.
• 95% foresee harsh times in the fund raising department.
• 54% expect a slowdown in seed investments.
• 87% expect a decrease in company valuations.
• According to the Globes article, every high-tech employees supports 4-6 employees in business services sectors. 
• Total cost of layoffs could reach NIS 12 billion a year. 
• High-tech industry employs 70,000 people directly, such as engineers, programmers, and R&D staff, and 300,000 people indirectly, such as subcontractors, lawyers, accountants, catering and cleaning staff.

The 12th annual Israel Journey took place yesterday in Tel Aviv. Organized by Ernst & Young and Globes, the conference provided VCs, investors, entrepreneurs and others in the industry with an update on the current economy and what is likely still to come during the different sessions.

Pessimism and optimism were discouraged throughout the event and realism was preached – a reality that the keynote speaker, Harry S. Dent explained would be grim not for 2009, but for the time period after that. Dent, a renowned economist and writer, illustrated through his trademark heavy use of charts how the best indicators for what will happen to the economy in the next few years and over a much longer period of time comes from lifecycle spending charts and the birth index, among others. While it provides some comfort to understand why there is a slowdown and that things will eventually pick up, the time frame that Dent gave, 2020-2020, extends the period longer than expected and marks 2010-2012 as likely to resemble a depression.

After the darkness of a depression and the 2010s in general though, Dent showed charts on innovation predictions and predicted that if Israel, which has been an innovation hotbed in recent years and has a positive population growth chart, plays its cards right, it can come out of a worldwide economic downturn ahead of the other developing countries. While A LOT needs to happen and not to happen for that to be a
reality, Israel’s innovation and leadership in such areas as robotics,
nanotech and cleantech, makes it a relatively strong possibility.

Whether or not Dent’s forecasts turn out to be true, it’s almost certain that there will be a light at the end of the tunnel for many of Israel’s innovative companies, even if Israel won’t come out on top.

What do you think? Share your thoughts in the comments below.

About the author: Lisa Damast is the Membership
Manager of ebizQ.net and currently resides in Israel. Any questions or
inquiries regarding this blog or ebizQ membership services can be
directed to her via email at ldamast (at) ebizq (dot) net. She can also be followed on Twitter, where she covers additional Israeli technology companies and Israel-related headlines and topics.

The 12th annual Israel Journey took place earlier today in Tel Aviv. During the conference, which is organized by Ernst & Young Israel and Israeli business newspaper, Globes, Globes announced its top 10 Israeli companies for 2008-2009 as follows:

YCD Multimedia Ltd.
Tulip Medical Ltd.
Dune Networks, Ltd.
Aternity Inc.
Payoneer, Inc.
N-Trig, Ltd.
Altair Semiconductor Ltd.
Vascular Biogenics (3rd Place)
InfoGin, Ltd. (2nd Place, picture on right is of CEO and Founder, Eran Wyler)
Amobee, Ltd. (“Start-up of the Year”)

Congratulations to the top 10 start-ups!

More on the conference to come tomorrow.

About the author: Lisa Damast currently resides in Israel. Any questions or inquiries regarding this blog can be directed to her via email at lisa (at) israelinnovation20 (dot) com. She can also be followed on Twitter, where she covers additional Israeli technology companies and headlines among other topics.