Vertex Management Israel

1

• Vertex Management Israel
• Venture Capital Funds
• January 18, 2001

1
2
The Vertex Group

• Manages over US 1B in 7 VC funds since 1983
• Offices in
• Redwood City, CA
• Singapore
• Tel Aviv
• London
• Invested in over 245 companies of which 82 have
  exited via MA or IPO on
• NASDAQ
• EASDAQ
• Neuer Markt
• Vertex Israel manages US 250M in 3 Israeli VC
  funds

• Taipei
• Beijing
• Hong Kong

• Nouveau Marché
• Singapore Stock Exchange
• Taiwan Stock Exchange

2
3
Investment Strategy - General

• Focus on seed early stage Israeli /
  Israeli-related
• Target investment transactions leadership
• Investment size of US 2M to US 5M and up to US
  10M per company (in special cases upper limit is
  higher)
• Invest in companies that contribute to the growth
  of the Internet Economy and Information
  Networking
• Bitways
• Communications Software Enhanced Services
• Internet and E-commerce Applications
• Emerging IT Technologies

3
4
Investment Strategy Portfolio Focus

• Bitways
• Intelligent networks
• Broadband networking
• Internet appliances
• Communications Software Enhanced Services
• OSS
• Security
• Enhanced services enabling software platforms
• Applications
• Content delivery networks
• Mobile-commerce enabling technologies
• Emerging image and video distribution
  technologies
• Special opportunities in core Information
  Technologies

• Broadband access (Cable, xDSL, fixed wireless)
• Photonics (components systems)
• Voice data convergence

• Streaming Compression
• QoS and Traffic Management

• Peer to Peer distributed processing

4
5
Exits

• Statistics for the last 5 years in Israel
• 60-80 Mergers Acquisitions (MA)
• 20-40 Initial Public Offerings (IPO)

5
6
MA Activity in Israel
6
Statistics from DolevAbramovitch
7
IPO Activity in Israel
7
Statistics from DolevAbramovitch
8
Israeli Hi-Tech MA and IPO Activity
1995-2000
Year No of deals Amount in M
1995 4 168
1996 6 633
1997 3 543
1998 11 2527
1999 16 2812
2000 25 11627
Year Aggregate Amount Raised No. IPOs
1995 120 6
1996 559 19
1997 190 9
1998 413 9
1999 1797 16
2000 4290 26
Statistics from DolevAbramovitch
8
9
MAs

• An MA is a real alternative
• MA is not a default to IPO
• In the long term, failure rate is high for both

9
10
Factors for MAs

• Management difficulties
• Distance from markets
• Availability of resources
• Political situation

10
11
MAs- Best of Both Worlds

• The acquired company becomes the Israeli arm
  of this larger, established foreign company and
  enjoys the following benefits
• Financial backing
• Name recognition
• Market and distribution channels that would have
  been next to impossible to have achieved alone

11
12
Best of Both Worlds contd

• Increased employment in Israel
• Increased economic activity in Israel
• Increased opportunities for stakeholders
• Revenues for shareholders

12
13
MAs

• Stock or Cash?

13
14
Telegate

• Develops and markets MultiGate which enables
  CATV operators to offer telephone and data
  services over their HFC infrastructure
• Current customers in Belgium, Germany Pacific
  Rim with an aggregate sales potential of US 150M
• ECI and GI were strategic partners and
  shareholders
• Exit Company sold to Terayon Inc. for US 400M

14
15
Telegate Ltd. sold to Terayon

• December 1999
• 100 employees
• 3M sales

15
16
Tradeum

• XML-based Software engine for hosted on-line
  exchanges
• Seed investment
• Company recruited a US-based management team
• In 8 months the company staff grew from 10 to 100
  
• Exit Company was sold to VerticalNet Inc. for
  US 478M

16
17
Tradeum sold to VerticalNet

• April 2000
• 60 employees (of 150 intl)
• 0 sales 1999

17
18
MoreCom

• Interactive TV infrastructure software
• The President was a senior executive in GI and
• Philips in the Cable and HDTV businesses
• Strategic investments by Divicom/C-Cube
• Invested in seed 2 follow-on investments
• Exit Company was sold to Liberate for US 561M

18
19
Morecom sold to Liberate

• April 2000
• 46 employees
• 100K revenues 1999

19
20
VisionTech

• Develops and markets advanced MPEG-2 Coding VLSI
  components for PVR, DVR, PauseTV and Internet
  STBs
• Highest quality MPEG-2 encoding silicon
  realization
• Major design wins and customer signup with
• WebTV
• AOL-TV
• GI
• Exit Company was sold to Broadcom Corp.

• Scientific Atlanta
• Haupauge
• Vestel

• ReplayTV
• Panasonic
• Fast

20
21
VisionTech sold to Broadcom

• December 2000
• 37 employees
• 1.5M sales 1999

21
22

Portfolio Companies
23
www.vertexisrael.co.il
Contact Information
            

1 HaShikma St.
P.O.Box 89 Savyon 56530 Israel Tel 972 3
535 7621 Fax [phone] Mr. Yoram
Oron, President yoron_at_vertexmgt.co.il   Dr.
Gideon Shichman, VP gideon_at_vertexmgt.co.il