Israel Innovation 2.0

During the week of July 25, 2010, web security firm Commtouch acquired Authentium’s antivirus unit. The sale is likely to be the first of several Commtouch will make in the upcoming months and next few years. Israel’s VoIP site ooVoo is gaining ground on rival and market leader Skype and issues Israel’s government and tech industry need to discuss continue to be brought to light. For these stories and the rest of this week’s headlines, see below.

Cleantech
1. Green hi-rise to hit Tel Aviv

2. 8 Ways Israel and China Intersect in Clean Energy

Investment and Economy
3. Israel tries to lure major banks to expand its R&D

4. IBM buys Storwize for $140 million

Information Technology
5. ooVoo vs. Skype: Tech firm gaining ground on larger rival

6. AT&T, Amdocs launch Israel innovation center

7. Commtouch Security Platform Boosted by Acquisition

Miscellaneous
8. Start-Down: Israeli Start-ups in crisis

9. ‘Sniffing’ Technology Helps Disabled Move, Communicate

Over the past few years there’s been significant increase in trade, investments and R&D partnerships between Israel and China. Except for during the recession, trade has increased steadily and is expected to grow even more as a result of the Israel pavilion at the Shanghai Expo and new initiatives among business organizations in both countries.

Recent heightened business activity between the two include a plan from NDS, a digital pay-TV solution provider, to “augment its investment in the China market”; an R&D cooperation agreement that supports collaboration between Israeli and Chinese manufacturers; and an investment in a Chinese water company by Israel’s Infinity I-China investment fund.

According to Media Mughals, NDS‘s move comes after it,

“Identified a key growth opportunity through partnerships with Chinese companies in the consumer electronics space, semiconductors, systems integration, and digital-TV applications markets… According to Media Partners Asia, China is the largest market worldwide with over 66 million digital pay-TV subscribers. By 2014 this is predicted to reach 198 million subscribers. In parallel, cable TV revenues will increase from $9 billion in 2009 to $17 billion in 2014.”

NDS is tripling its investments to more fully immerse itself in all aspects of its business in China and is relocating part of its R&D resources from India and Israel there so that it can hire more locals as part of the efforts.

Pythagoras Solar’s new photovoltaic glass unit can lower the cost of energy in commercial buildings and find strong markets in China and India.

Israel’s Pythagoras Solar recently unveiled its new photovoltaic glass unit. The clear glass panes that can be used as windows, curtain walls or skylights double as solar panels and are intended to change the way commercial buildings are built.
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The week of March 29, 2009 was one of the busiest weeks of the year for Israel’s Web industry, with conferences and events happening everyday. Three bigg events were TheMarker’s COM.Vention on Sunday and Jeff Pulver’s Tel Aviv breakfast and Techonomy on Tuesday. While these events showcased Israel’s most promising Web startups, there was buzz about Israeli companies starting to bypass the US market and target the market in China. For more on these stories and the rest of this week’s 13 Israel-related headlines, see below.

Cleantech
Israel’s Aora Solar To Begin Clean Energy Production

Leviathan looks to wind energy device sales

Global VC Funding of Clean Tech Plunges

Investments and M&A
Building A Bridge Between Israel & China

Israeli Entrepreneurs: Know What Game You Are Playing

The tycoons’ companies don’t create jobs

Information Technology
AICC member Unisfair Launches Channel Program to Capitalize on Growth of Virtual Events 

Savvy entrepreneurs tapping risk (CTERA)

XMPie and NowDocs Introduce XMPie-enabled NowPrint 7.0

SaaS’ Testuff Nabs 2,000th Customer

The curious case of face.com

Miscellaneous
Techonomy 2009: Great Startups And Amazing Event

MyHeritage: Avoiding the MetaCafe Curse

Impressions of TheMarker’s COM.vention from a new immigrant (Israel Innovation 2.0 coverage from guest blogger Jessica Korman)

Sarah Lacy over at TechCrunch posted today that Israeli entrepreneurs post-bubble have lost their mojo and VC funding has reflected that. There has been a lot of reaction to her post in the comments section and off the site, but it is really much more complex and wide-ranging than a post on TechCrunch or even here on Israel Innovation 2.0 can handle. I think that Sarah is both right and, of course, wrong.  

She is right that the crop of Israeli IT and Web startups are disappointing when compared to Check Point and ICQ from the 1990s. There have been many theories, denials and other responses of the lack of companies of this caliber in the past few years and I have to say, when researching these different companies, there definitely is a difference. 

The theories for this that I believe and have often mentioned (sorry to anyone familiar with those posts) are the ones Daniel Cohen of Gemini Israel Funds wrote about in an article on Venture Beat back in the fall of 2007: “Entrepreneurs want to retire with $3-$4M, Impatience of investors, ‘Think small’ mentality and The lack of $1bn experience.” Add to these reasons the brain drain of top engineers and entrepreneurs and relocating the company outside of Israel and Lacy has a very good point. 

Fortunately though, Lacy’s post on TechCrunch was only fulfilling a certain agenda and only relevant for the IT and Web 2.0 sectors which TechCrunch covers. No matter what happens with Israeli IT companies in the future (and I believe Israeli SaaS and security companies, such as Clarizen, Imperva and Trusteer all have a lot of potential), Israel is almost guaranteed to be the main player beyond this in the next tech revolution, clean technology. 

A lot of VC funding has gone into cleantech companies in wastewater management, solar energy and wind energy that won’t mature and really show its worth for another few years. In addition, there is a noticeable trend over the past year of people from Israel’s IT sector considering and heading into cleantech.

So, where does China fit into cleantech? I haven’t researched it to say, but on the Israel end I know that China, along with several other Asian countries, countries in Africa and Australia have all expressed interest in Israel’s innovations especially to deal with water conservation management and solar energy. If in relation to Lacy’s article, China is getting more investments in IT (the greatest tech sector in the past) in comparison to Israel but not in relation to cleantech (the likely greatest tech sector in the future), the answer to Lacy’s question about “If China is the new Israel..” would really be that Israel is the new Israel.

Last Friday, in the first installment of this series, I mentioned that now is the time to invest in Israeli water technology. Below is a list of recent activities initiated by the Israeli government and VCs that are setting Israel up to emerge as the go-to global leader when it comes to water technology solutions:

Government Initiatives
-The Israeli government is dedicated to helping ventures in this field succeed and has interest in helping fund it. According to Haa’aretz, “the Ministry of Infrastructure is considering the possible introduction of private venture capital funds as partners in its cleantech ventures, in exchange for a share in the efforts.”

-According to a JPost article on the WATEC conference, the Israeli National Infrastructures Minister, Binyamin Ben-Eliezer is working on deals to export its water technology to countries such as, China and Australia. China, faced with rapid population growth and 70% water pollution, and Australia, dealing with a more than a decade-long drought are both interested in Israel’s desalination techniques.

-With the goal of doubling Israel’s water technology exports to $2 billion by 2010, Globes recently reported, that the Ministry of Industry, Trade and Labor launched a new water R&D program, Israel NEWTech – Novel Efficient Water Technologies. The new initiative will serve as an “umbrella organization for all Israeli entities operating overseas,” by coordinating the “activities of ten government agencies, academic institutions, and additional authorities,” while also working closely with the Israeli water industry and different water sectors, including irrigation, water security and desalination among others.

Venture Capitalist activity
-Earth2Tech provides a good summary of recent venture activity in Israel. The most important being, that Terra Venture Partners LP has raised $15 million and plans on investing in 10 startups, including Phoebus, a water heating company, and that Greylock Partners and Israel Cleantech Ventures are forming a joint platform for investment in early-stage cleantech startups.

-Israel’s cleantech innovations have also attracted attention and investment from VC companies in other countries, including Japan’s CSK Venture Capital, recently. According to the Invest in Israel website, CSK invested $15 million in Israel in 2007 and plans to invest another $80 million over the next two years.

Conclusion
While these actions ensure that certain things will be done in the future, it doesn’t explain the key players in the water technology sector that will make this possible or what water technologies have been pioneered in Israel. Be sure to check back here next week for the next installment in this series.