ISRAEL 
HIGH-TECH & INVESTMENT REPORT

from the March 2014 issue


Everbright invests in breast cancer company Real Imaging

This is the first major investment in an Israeli company by the Chinese private equity fund. Breast cancer diagnostics company Real Imaging Ltd. has raised several million dollars from China Everbright Investment Management Ltd. This is the company's first financing round since the failure of its run as a public company on the Tel Aviv Stock Exchange (TASE), and the first major investment in an Israeli company by the Chinese private equity fund.

Real Imaging merged with stock market shell Bee Connect in 2011, but was unable to raise financing for its business. In 2012, just before it faced delisting for failing to meet trading terms, it was acquired by a group of investors headed by Israeli-Canadian businessman Amos Michelson, who now serves as chairman.

Real Imaging CTO and COO Boaz Arnon founded the company in 2004. In November 2011, Maiki Yoeli was appointed CEO.

ÒThe product is now automated and can advise doctors on follow-on tests. In China, the product is especially important as an initial scanner, because of the lack of expert mammography and ultrasound technicians, and many women there have dense tissue breasts, and breast cancer appears at younger ages,Ó says Real Imaging VP R&D Dr. David Izhaky.

China Israel Synergy CEO Amir Yaar mediated the deal and has invested in Real Imaging. He says that the Chinese government's five-year plan calls for 150 million breast cancer tests by 2015. He adds that China Everbright manages $7 billion, and makes few investments outside the country and directly in companies.

Real Imaging is preparing to obtain Europe's CE Mark for its diagnostic device.
Cyber innovation and start-up opportunities through the eyes of strategic investors was presented at the session by he JVP CyberLabs partnerÓ at a conference session the CyberTech 2014 conference held in Tel Aviv.

The cyber market will reach $93 billion in 2017, and that investment in US cyber companies totaled $931 billion in 2013, up 41% over 2012, says Jerusalem Venture Partners (JVP) Cyber Labs partner Yoav Tzruya, moderator of the JVP, which focuses on cyber, says that the number of companies seeking investment rose by 31% in the fourth quarter of 2013, after stronger growth in the preceding two years. JVP, which has almost closed the $120 million funding for its latest fund, is a beneficiary of interest in cyber. A Cisco Systems Inc. (Nasdaq: CSCO) executive at the conference announced that the company would participate in the $60 million part of the fund that is designated for investment in cyber.

Despite the warm embrace of cyber at the conference, it is clear to everyone that it cannot last. ÒFor years, investors avoided cyber. What has changed to cause the current romance?Ó asked Tzruya.

ÒSome will say that the romance is too much, but I think it's a good thing,Ó replied Cisco head of investment and acquisitions in Russia and Israel Tal Slobodkin. ÒThis is because the world has adopted a lot of new technologies in recent years and computer use has changed. These changes create options for start-ups. I'm trying to stay optimistic, but these companies should realize that the market is tough.Ó

US Venture Partners partner Jacques Benkoski is less unequivocal, saying, ÒI think that the investors' romance has gone too far, because it is already too late.Ó USVP's investments include Check Point Software Technologies Ltd. (Nasdaq: CHKP) and Trusteer.

As for the question whether company valuations were too high, the consensus was that while there is no bubble, valuations seemed unrealistic. ÒWe're very sensitive to valuations,Ó says Intel Capital director Merav Weinryb. ÒI've seen many companies hold their first financing round at a high valuation, but the question is what will the value be at the next round. I fear that a lot of companies will get stuck at the next round and hold them at declining valuations.Ó

New Enterprise Associates partner Ravi Viswanathan agrees, saying, ÒIn contrast to 2000, companies have real performance. It's very hard to believe in a company with high earnings multiples; you'd have to believe that the companies will dominate the market. I believe that valuations will fall.Ó

Symantec Inc. (Nasdaq: SYMC), once synonymous with information security, realizes that that the market has changed and talks about Òreimagining securityÓ. Symantec VP Information Security Group product management Samir Kapuria says that while new needs will create new technologies vendors, in the longer perspective, solutions will not come from Ònew and shinier technologiesÓ, but from better integration of products by vendors of general solutionsÓ.

Check Point Software Technologies Ltd. (Nasdaq: CHKP) chairman and CEO Gil Shwed agrees. Ironically, the firewall solutions company is totally absent from the government cyber initiative, including the Cyber Lab in Beersheva. Shwed's remarks may explain why. ÒThe number of viruses rose by 87% from 2012 to 2013. Managers' natural response is to add security. But there are a lot of technologies and a lot of technology vendors. Does it work? Surveys show a 9% drop in security this year compared with the effectiveness of security systems in 2009. Today, it's harder to see the forest for the trees. Just adding technologies doesn't work. You need a variety of vendors and technologies and to continue the merger of solutions.Ó



Reprinted from the Israel High-Tech & Investment Report March 2014

Click HERE to request further information.
Click HERE to go BACK.