This article was first published by The Times of Israel and is re-posted with permission.
As Israeli entrepreneurs eschew the traditional quick exit route and opt instead to grow their companies to maturity, they have come to realize that they cannot go it alone. They need the help and experience of peers who face similar growing pains — and they need to join forces so that problems they encounter can be quickly addressed.
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“Israelis and the Israeli government have been extremely good at fostering ideas and startups and then selling the companies. They have not developed a method for helping companies grow — which is the stage from which all parties benefit even more. In the three years we have been operating, the change in the government’s perspective and will to act has been dramatic,” said Kerem Nevo, the head of government relations at Wix.com, a Tel Aviv-based do-it-yourself website development company, who also heads the Israel Growth Forum.
The forum, set up three years ago, comprises some 20 mid-size Israeli startups — including Wix.com, Lemonade, and Outbrain — defined as companies that have finished developing an initial product and, alongside research and development are now also doing marketing, sales, and support; have over a few dozen employees; and have raised more than a few dozen millions of dollars, or have sales in that amount. They have joined forces to lobby the government on issues that concern the Israeli tech community.
Israeli entrepreneurs have a reputation for being inventive and moving fast, developing new technologies and selling off their startups when they are still young. That trend, however, seems to have waned in 2017, as entrepreneurs held on to their companies, raising greater amounts of money privately while staving off buyers in hopes of either developing the company themselves or getting a better valuation in a sale at a later date.
“Previously, local players set their sights on a quick exit, but this appears to have changed in 2017,” said Yaron Weizenbluth, a high-tech partner at PwC Israel, in the consulting firm’s 2017 exits report. This trend reflects “more than anything, a more mature mindset of local technology firms.”
Indeed, according to the report, 2017 was characterized by a greater number of larger deals, with an average value of some $106 million, a 66 percent increase year on year, even when excluding from consideration the year’s two mega deals: the sale of Mobileye to Intel Corp. for $15.3 billion and of NeuroDerm to Mitsubishi Tanabe Pharma for $1.1 billion.
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