Report on Workpackage no. 7 - Mapping the Israeli - IFISE

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1
?
University of Haifa


Center for Study of Organizations & Human Resource
Management


Project:


A Methodology for the
Creation of Seed and Start Up Capital
Sources for High Tech Firms in Europe Following the
Success Stories of the Yozma and Technological Inc
ubators
Programme
s

and its Application to the Italian Reality


Acronym:
IFISE:

Israeli Financing Inst
r
uments

for the Support of
Entrepreneurship



This project is sponsored by the 5
th

Framework Programme
,

Commission

of
the European

communities
,

DG Enterpri
se


Contract number: IPS029032PR




Report:



Mapping the Israeli Start
-
Ups



Dr. Arie SADOVSKI








September 2001

2
?
Content









Introduction




Methodology




Results




Section 1
: Industrial

branch distribution, age, and employee



Section 2
:
B
usiness development status

and

R&D expenditures


Section 3
:

Details of the founders

Section 4
:

E
nvironment in which the new idea was
create

Section 5
:

Fund raising pattern

and some success indicators


Section 6. Ranking the difficulties

encountered and expectation for


government assistance







Appendices


3
?


Introduction


The work reported hereunder is a part of a project that deals with methodologies to
encourage the creation of seed and start
-
capital for high tec
h firms. The Israeli
experience presents two successful models: the Technological Incubators and
Yozma that may be explored and considered as templates for programs that could
be implemented in Italy or elsewhere in Europe. In this work we have undertaken
to

map the Israeli High Tech Start
-
Up

companies
by defin
i
ng and
describ
ing their
main features as follows: The industrial branch distribution,

employees,

founders'
personal and professional data
,

sources of financing, and some of the difficulties
encounter
ed in their undertakings.

These details are important for planning,
implementing or evaluating any entrepreneurship encouragement programs.

In
addition, an attempt is made to unveil the
importance
of the Yozma and
Technological Incubators

programs
, to the
performance of companies that were
assisted by them.






Methodology


The methodology
used

for mapping the Israeli
h
igh
t
ech
s
tart
-
ups was by a Phone
-
Fax questionnaire

(Appendix 1)
.


The questionnaire was constructed in concert with the other participati
ng research
groups in this project.
The companies that were
surveyed

were arbitrarily chosen
from a commercial

data base dedicated to the
Israeli
h
igh
t
ech Industry
of

D&A

Hi
-
Tech Information Ltd.

In

a preliminary test

we have found that
t
his data base
hol
ds
the details of
some
1200

companies
that were established since 1993.

We
have compared t
his entr
y

number

to other commercially available data bases and
we found it to be the largest by far.


The telephone
-
fax interviews were conducted by the
Statistics
Consulting Unit of
U
niversity of Haifa
.


To ensure that the respondent
s

will be truly Israeli originated
s
tart
-
u
ps, only
companies that were established after

1993

and

those
that indicated an Israeli
address
for
their headquarters
were included
.

T
his
selec
tion was designed to
exclude

Israeli
branches of international organizations
.


The survey was launched in April
2001 and conducted

through May and June. At
that period
,

the recession in the
high t
ech industry in the world and in Israel had
already begun. T
his had a direct bearing on the
collaborati
ng

attitude
of the
companies that were contacted. With
an

aim to
have some 200 respondents we
have
contacted over 800 companies
. T
he final number of
valid
respon
ses

was

143.

The interview
s

cycle
s

included an initi
al telephone contact in which the
founders
'

identity was
identified
.

This was followed by
sending the questionnaires

to the
founders personally.
In most cases additional follow
-
up calls had to be made
to
the
founders
before the filled questio
n
nair
e
s
were t
u
r
ned in.


The statistical analysis was conducted with an
SA
S

system
.


4
?

Most
of
the information presented in this report
is based on the
details

collected in
the survey

but some
was extracted
from the data base

and marked as such when
applicable
.


5
?
Results






Section
1.


I
ndustrial branch distribution, age,
and





e
mployee
s





1.1
Industrial
branch

distribution


The data
on the
industrial
branch distribution of the
respond
ing

companies

is
summarized in Table 1 and illustrated in
Figure 1.


For the classification w
e have used 19 industrial branch categories
. But a
s shown
,

120 out of 143
companies

(84%) are

classified in
only
eight

main
industrial
branches:







Communication (hardware) and electronic components



Software for interne
t



Software for other applications



Electronic medical instruments and devices



Software for telecommunication (ex internet)



Biotechnology (excluding pharmaceuticals)



Computer (hardware) semiconductor devices and electronic components



Optical instrume
nts and

materials (including optical communication items)







6
?


Table 1
.
Industrial branch distribution



Industrial Branch


Companies

Number Percent

Communication (hardware) and electronic
components

29

20.3

Software for

internet

25

17.5

Software for other applications

17

11.9

Electronic medical instruments and devices

15

10.5

Software for telecommunication (ex internet)

10

7.0

Biotechnology (excluding pharmaceuticals)

10

7.0

Computer (hardware) semiconductor devices

and
electronic components

7

4.9

Optical instruments and

Materials (including optical communication items)

7

4.9

Industrial engineering and automation

5

3.5

New materials

4

2.8

Internet sites

4

2.8

Internet services

3

2.1

Precision instrument
s, measurements and control

3

2.1

Other

3

2.1

Pharmaceuticals

1

0.7

Total r
espondent
s


143

100




7
?
Figure 1
.

Industrial branch distribution of the surveyed
High Tech Start Up firms






1.2
The age of the sur
veyed
h
igh
t
ech
s
tart
u
p firms


Analysis of the age of the
responding
companies

(Table 2)

was done
from the
information provided

in the data base

and
shows that 80% of the companies were
under 5 years
old

and
that
the average age was 3.5

years
.



Table 2.

Age
distribution
of the
responding
companies



Age

Companies

N
umber

Percent

Mean

1 year

29

20.3

3.5

2
-
3 years

54

3
7.8

4
-
5 years

31

21.7

6+ years

29

20.3

Total respond
ents

341

311





8
?
1.3 Number of
employees
per company and their formal education


The clas
sical EC
definition
s

for firm size
classification

with respect to their
employees' number

include the following size groups
: 10
-
19; 20
-
49; 50
-
99;
100
-
249 and over 250.


The Israel
i business reality is somewhat different
with many start
-
up firms
having
fewer than 10 employees.

To adopt the EC classification to the Israeli
reality we have added
size
classes

for

employee
s'

number
of
1
-
5 and
6
-
9.


T
he
analysis of the
firm size
of the
respondents

showed that 80% of the firms
have less than 50 employees and the average
number is

36.

Fifteen percent of
the companies have fewer than 10
employees
.



Table 3
.

The numbers of employees
*



Number of employees

Company

Number Percent

Mean

1
-
5

9

6.6

35.6

6
-
9

20

14.7

10
-
19

46

33.8

20
-
49

33

24.6

50
-
99

18

13.2

100
-
249

7

5.2

250+

3

2.2

Total respond
ents

311

311



*
The data was extracted from the data base.



Exploration of t
he f
ormal education
status
of the
respondents'
employees

revealed
that the mean
employees'

number having formal academic degrees is 23.4. And

when compared with the data above
,

it shows that on the average more than 65%
of the employees have academic degrees.






9
?
Section 2.

The business development status

and
R&D
expenditures






2
.
1

The business development
status
of the
surveyed firms


The development cycle of technological start
-
ups with respect to their product
development effort
s

is schematically assumed to proceed thr
ough the following
phases:




R&D

Technological
demonstration



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site
stage
.

Sixty percent of the respondents

were
involved in
some

initial or actual
sales
.

A cross check with the
details that we have collected
on the
sales
turn
-
over
o
f the companies in
year
2000 corroborates this information with the findings that
56.5
% of the firms had sales of
$ 100K

or over
.

The sales revenues for 2000 are
shown in

section 5.5 of this report.





Table
4
.
The business development
status

of the comp
anies as judged by their


progress in product development



The most advanced product
development phase of the
company today

Companies
*

Number Percent

Research and Development

21

15.0

Technological Demonstration

6

4.3

Prototy
pe

12

8.6

ß

site

17

12.1

Initial sales

43

30.7

Sales

41

29.3

Total respondents

341

311

†††



10
?

2.2 The R&D expenditures


R&D expenditures

in

proportion to the sales revenues
was found as expected
to be a
n

impressive

f
igure
(Table
5
)
. The average was 74% and
more than half
of the respondents (56%) spent for R&D
50%
or
more of their sales revenues.



Table
5
.
P
roportion

of R&D expenditure
s to sales revenues
*


P
roportion of R&D expenditures
to the sales revenues in ye
ar
2000

Companies*

Number Percent


Mean

R&D

Exp.

0
-
10%

9

ㄱ⸱

74%

11
-
20%

11

13.6

21
-
30%

5

6.2

31
-
50%

9

11.1

51
-
70%

12

14.8

71
-
100%

31

38.3

101+%

4

4.9

Total
respondents

13

311




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Section
3
.
Details
of the founders



3.1 Number of founders per company



The
total
number

of founders of the surveyed companies
was
3
68

and the mean
number of founders per company was found to be 2.6

(Tabl
e 6)
.
Only 15% of the
companies were founded by single entrepreneurs and m
ost (
40%)
were founded
by
two entrepreneurs
.

G
roup
s

of three entrepreneurs were founder
s

of

30% of the
companies.




11
?
Table
6
.
N
umber of
founders
per
company


Number of founders

Compa
nies
*



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3



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4



㄰⸶




6

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呯瑡氠牥獰潮摥湴
s

341

311


†††



3
.2
The f
ormal schooling degrees
and the training discipline
s

of the




founders




The schooling degrees that were used
for classification
were the traditional
formal degrees used in the academic circles. However we have added
additional schooling class
:

graduation

from

military aca
demi
c courses.

These
special course
s provide high level professional training to
serving personnel.

The need to check the
prevalence

of
these

stems from a common belief
of

their
high
contribution
to entrepreneurship in Israel
.


The results
are
summarized in Table
7

and indicate that in 47%
of the
companies there are founders with a Ph.D., in 44% with
a

M.S
c
. and in 51%
with
B.Sc.
.

In only 8% of the companies there are founders that lack academic
degrees and in 6% with a Vocational Engineering degree.

The abundance of
Ph.D.s among entrepreneu
rs
in Israel
has been re
corded before. Still

one
should marvel at that phenomenon and appreciate the contribution of the
institution
s

of higher learning

to entrepreneurship
in

high tech industry in
Israel.



The presence of founders that are graduates from

the
m
ilitary
a
cademi
c course
was limited to 10% of the companies.

It is not a
n

insignificant number

yet in a
country where almost every one is serving in the military it should not be
considered an outstanding
finding.






12
?
Table 7.

The
formal schoo
ling degrees of founders



Distribution of incidence
s


Formal schooling degrees

Companies*


Number Percent

Non academic

11

7.7

Vocational Engineers

8

5.6

B.Sc
. /
B.A

73

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呡扬b

1
.
Professional training disciplines of the founders



-

D
istribution
of incidences



Professional training disciplines
of the founders



C
ompanies
*



Number

Percent

Engineering

64

44.8

MBA

24

16.8

Exact / Computer Science

77

53.9

Management/Economic

21

14.7

Life Science

26

18.2

*
A

m
ultiple
responses

per company

were

given
. N
=
143.


13
?




3
.3
The age
and gender
distribution

frequency of the founder
s



Most
of the entrepreneurs
were f
ound to be
mature adults (Table
9
).
The age
range of 44
-
53

is the most

abundant

among the founders
.


One hundred and
four
founders

out of 314

(33%) are of that age

group
.
83 (26%
) are at the age

of 34
-
43,
74 (24%) are at the age of 24
-
33,

and 53 (17%) are
over

54,
six

of
those (2%) are over 66 years old.






Table
9.
The
founders'

age
group's

distribution


Age of the founders today


Founders


乵浢N爠

Percent

24
-
3
3

74

23.6

34
-

43

83

26.4

44
-
53

104

33.1

54
-
65

47

15.0

66+

6

1.9

Total
respondents

314

100



The
presen
ce

of women among the founders

is very slim. In only in 15
companies some of the founders are women (
Table
10
). And
within
the
founders' population
only 19 are
women compared with 330 men

(5.45%).



Table
10
.
Women founders
-

d
istribution of
incidences



Number



Women

P
er company Companies

1

31

2

1

4

1




14
?
3
.4
Changes in the f
ounders
initial
leadership
position



The average

age

of the responding companies was determined to be 3.6 years.
Changes in the leadership position
of young companies often occur

following
the transition
from infancy to adolescence
of the companies
.

Tab
le
1
3

summarizes the
existing situation in the respondents' population
.
In
94 companies

(67%)
the founders' position is not

changed. But in 46
companies (33%)
some or all of the founders are no
longer in a leadership
position.


It seems that

these findings

reflect
a situation of
relatively
high transition
among the high tech start ups

in Israel
.



Table
1
1
.

Changes in the founders' position


The original founders leading
position

Companies

Number

Percent


Yes,
all
of them

are still in the lea
d

94

67.1

No,
part

of them

are in the lead

30

21.4

No,
none
of them

are

in the lead

16

ㄱ⸴

呯瑡氠
牥獰潮摥湴n

341

㄰1




Section
4
.
Entrepreneurship

and e
nvironment
al factors


Technological innovation depends on the creativity of the e
ntrepreneurs
but
also

on

s
ome

environmental

factors
.

The environmental factors that we have looked at included: geographical
location

and

the working and employment environment of the founders before
they became engaged in their new enterprise
s
.




4
.
1

The
geographical
loca
tion



T
he globalization process
es and the extensive
interactions

on

international
level
characterize
s

the high tech industry
and usually
facilitate

an unrestricted
flow of technological ideas between countries and markets
.

We have a
sked our respondent
s

about the birth place of the original idea
s

for
development of the new product or technology and gave them
three

choices of
locations: Isra
el
,

abroad

and an open choice
.


The results
indicate that the Israeli high tech start ups are mo
stly depend (
in
90% of the companies) on ideas
that
were
originally created in Israel (Table
1
2
).

In few cases the respondents indicated
a joint location
birth place.



15
?

Table 1
2
. The
geographical
birth place of the
new technolog
ies



Location where the ori
ginal idea
for the new product or
technology was
created


Companies

Number Percent

Israel

128

90.1

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㠮8

B潴o

2

ㄮ1

呯瑡氠牥獰潮摥湴n

341

311




4.2 The working environment


The

list of
wor
king
environments that were

presented in the questionnaire
s
is

shown
in Ta
b
le 15.


M
ost of the
respondents

(62%)
indicated the
high tech industry

as

the
birth
place

of the
new idea
s.

T
he
academic institutions
served as

incubating
environment
s

for

19.5%
an
d 15%

of the companies
indicated that
the
ir

incubating
environment was a l
ow tech industry.




Table 1
3
. The
working

environment
and the birth place of the new
technology


The
working

environment

Companies

Frequency Percent

Academic institution

23

1
9.5

High Tech industry

73

61.9

Academic + High Tech

4

3.4
?
Low Tech industry

18

15.3

Total respondents

331

311



The defense related industry
in Israel
is said to be a significant factor
for
the birth
of the civil
ian or
iented high tech industry.
In
our study we found that
12%
of the
companies
considered

the defense industry

to
the birth
place
of their new idea
s
.




4
.3 The previous
occupation

circumstances
of the founders


The
occupation

circumstances

and positions
of t
he
founders

prior to the
establishment of the new enterprise
s

are described in Table

1
4
. In
75.5%

of the

16
?
companies the
respondents indicated

"
industry
"
as their previous place of
employment

and 17% academia or research institute
.


17
?
Table
14
.
Previous occupa
tion of the founders



Occupation


Companies



Number


Percent


U
nemployed

2

6

S
tudents

9

1.4

Academia,

Research


Institute

24


17

Industry

108

75.5

Total respon
dents

14
3

100



A break down of the industrial
positions held by founders is shown in Table 15.



Table
1
5
.

The previous industrial position
s

of the founders


Position

†††††††

†††††††
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.






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%

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)
.

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桥 獭慬s
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s
.




18
?
Section
5
.
Fund raising pattern

and some success indicators


5.1

Number of fund raising rounds



The
findings

(Table 1
6
) indicate that 39% of the companies used only one
ro
und of fund raising
2
4
%
-

two rounds and 20% three rounds.



Table
1
6
.
Number of
rounds used

for
fund raising


Number of fund
-
raising rounds


Companies


Number Percent


1

48

39

2



14

3





4





5

6

5

乵浢N爠潦
牥獰潮摥湴n

311

311



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d

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1

a湤n

F楧畲u ㈮

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e
ach

潦⁴桥

畮携


I渠 t
桥 晩f獴s 牯畮r
瑨攠 獵浳 睥牥 獰牥a搠 a汭潳琠 e癥湬y 扥瑷te渠 瑨攠
獵浳
ca瑥g潲楥s 潦o<ㄵ1
K
Ⱐㄵ1
-
㘰〠a湤n2
-
㍍⸠I渠瑨e 2
nd

round most companies
raised sums in the
category of 2
-
3M followed by the >
3M

category.

In the
3
rd

round
most of the companies

(
46
%) raised
sums in the >3M
sum
category
followed by the category of 2
-
3M.


Table 1
7
. Sums raised in the different rounds

by the
respondents (
%)



Rounds


Respondents (%)


Sums
raised

Seed

1st

2nd

<150K

26

8

6

151
-
600K

37

14

8

2
-
3M

30

48

40

3+

8

29

46

Total

100

100

100


19
?


Figure 2

Fund raising rounds

-

distribution of
sums





Fund raising patterns
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
<50K
<150K
<300K
<600K
<1M
1-2M
2-3M
3-5M
5+M
Companies
Seed capital
Round 1
Round 2



Sums raised, $






20
?



5.2

Non
g
overnment sources for financi
ng for new st
art ups




The findings are shown in Table
18

and Figure 3.


Table

18
. Non government sources for
new start ups


Non government financial sources


††††
C潭灡湩os
*


Number Percent

Self

39

27.3

Family and friends

19

13.3

P
rivate investors (Business Angels)

76

53.1

Private incubator

7

4.9

V.C

74

51.7

Bank loan

17

11.9

Stock exchange; IPO

8

5.6

Investment Company

14

9.8

Strategic investor in Israel

14

9.8

Strategic investor abroad

13

9.0

Other source

10

7.0

*Multiple

respo
n
ses per

company
were

given
.

N=143




As expected, the companies used many sources of funds simultaneously.
The
frequency
analysis
of using the different financial sources
shows
some patterns:
P
rivate

investors

and V.C
funds
were most prominent:
th
es
e

sources

were
use
d

by
53% and

52% of the companies respectively.

P
rivate money
that was
provided by
the founders themselves ("self"
=27%)
together with
funds
that were
provided
by
family and friends

helped the


financing of
40% of the companies.

The
s
e

fin
dings

emphasize the
relative
importance of private funds

in facilitating
the entrepreneurship in Israel
. It would be interesting to reveal the
contribution of
the tax benefits schemes for investments in
approved project

for the
situation
described
above.


21
?
Figure 3
.

Non government financial sources

Private investors
53
%
V.C
52
%
Self
27
%
Family and friends
13
%
Bank loan
12
%
Investment Company
10
%
Strategic investor in Israel
10
%
Strategic investor abroad
9
%
Other source
7
%
Stock exchange; IPO
6
%
Private incubator
5
%
Non government financial sources
53
%
52
%
13
%
12
%
10
%
10
%
9
%
7
%
6
%
27
%
Private investors
V.C
Self
Family and friends
Bank loan
Investment Company
Strategic investor in Israel
Strategic investor abroad
Other source
Stock exchange; IPO
Private incubator




5.3 The prevalence of Yozma Venture Capital funds as

a source of
funding


Yozma was a government sponsored program that gave birth to
some 11 VC
funds. We

therefore were interes
ted to determine the prevalence of Yozma VC
funds as a source for
funding among the respondents.





Table
19
.

The
prevalence

of

Yozma VC funds

as a funding source


Yozma
VC funds


Companies
*

Number Percent

Eurofund

4

14.8

Medica

1

3.7

Walden

4

14.8

Gemini

3

11.1

Nitzanim

1

3.7

Apex

3

11.1

Inventech

4

14.8

Polaris

9

33.3

Vertex

2

7.4

Jerusalem Pacific Ventures

0

0

Star

4

14.8

*Multiple
respo
n
ses per

company
were

given
.

N=27


22
?

The results (Table
19
) show
that
27 companies (
19
%

of the
resp
ondents
)
were supported by one or more of the Yozma
VC funds
.

Polaris was the most
frequently used.

In general
,

the prevalence of
the Yozma

VC funds as a source
of funding wa
s
moderate.



5.
4

Government sources for financial sources and other support



measures



The
importance of the government encouragement programs is

unquestionable. Many of the respondents are using

these programs as shown
in Table 2
0
.




Table
2
0
.
The frequency of using
g
overnment financial sources




Government financial sources


Companies
*

Number Percent


Government Incubators

21

14.7

R&D grant


Regular


49

34.3

R&D grant
-

For start
-
up

5

3.5

R&D grant
-

“Magnet”


7

4.9

Bi
-
National programme


BIRDF

11

7.7

Bi
-
National programme


Other

1

0.7

Investment Ce
nter


Grant for capital
equipment

11

7.7

Investment Center


Income tax
benefits

21

14.7

*Multiple
respo
n
ses per

company
were

given
.

N=143




The R&D grant program was most frequently used. 49 out of 143 companies
(34%)

used this program. The next most
popul
ar

(15%)
were

the government
incubator program and the Investment Center with its tax
benefits
program.


But even with regards to the more popular programs
a notice should be
taken

to the fact that there is no one program that is being used by the maj
ority of
the respondents.



Other sources for funding were recorded as well (Table 21
).


23
?
Table 2
1
.
The frequency of using
o
ther sources of
funding



Sources of funding

Companies
*

Number Percent

Israeli stock exchange

0

0

Foreign stock exchange
;

NASDAQ

7

4.9

M&A with Israeli entity

3

2.1

M&A with foreign entity

5

3.5

Other foreign stock exchange

1

0.7

*Multiple
respo
n
ses per

company
were

given
.

N=143



The sources listed in Table 21 were used in a sporadic manner
. Only 7 out of 143
companies

used NASDAQ and 8 exercised M&A with foreign or domestic

entity.




5.
5

Success i
ndicators
of

the compan
ies and
the effect
of
the
incubators




and Yozma
programs






The success
indicators

that were
used
are
:

the values for the s
ales revenues in ye
ar
2000

and growth rate
of the companies
in 1998
-
2000.

These indicators may
complement our previous observations on the business development status of the
respondents.


In addition
,

the
specific
performance of the companies that graduated from
government i
ncubators and
companies that were supported by Yozma VC funds
were

evaluated

by comparin
g

the
ir

indicators
' values

to the other respondent
s'

companies.


Table
2
2
.

Sales revenues
(
year 2000
)
of incubators graduate



companies and other respo
ndent companies




Responding
companies (%)


No


Yes


Incubators

graduate


52

63

No sales


Sales , $

1
8

0

>1M



110

(100%)

19

(100%)

Number of
respondents


24
?

As shown in the
T
able
2
2

above more

than 50% of the companies reported on the
lack

of sales revenues for this year

and only
1
8%
have
realized sales revenue of
$1M or
more.


A comparison of the

performance of
the
incubators

graduates to the other
companies

shows

(Table 2
2
)

that this group is somewhat less advanced in their
bus
i
ness

deve
lopment level. This conclusion is based on the observations

that th
e

lack of sales revenues in
companies
of
this group is more common (63% of the
companies compared with 52%)
and that this group
has no
represent
ation

in the
"
$1M sales
"

revenue
s category.



Same analysis was done with companies that were supported by Yozma VC funds.

Here

(Table 2
3
)

we are finding that the
"
Yozma companies
" are more advanced in
their business development level than the other companies. Their representation in
the "no sales re
venue" category is smaller (46% compared with 55%)

but their
representation in the group

that
has

realize
d

sales revenues of $ 1M or more is
much more significant: 42% compared with 18%.


Table
2
3
.
Sales revenues
(in the year 2000)

of Yozma supported



companies and other respondent companies




Responding

companies (%)



No

Yes

Yozma

supported


55

46

No sales


Sales , $

18


42

>1M



105

(100%)

24

(100%)

Number of
respondents




The analysis results of the growth rate compariso
n

for companies that are
incubator graduates

are shown in Table
2
4
.



This analysis
does

not reveal different patterns
of business

development
s for
the
two

companies
'

groups.




25
?
Table

2
4
.
Growth rate of Government incubators graduate companies and the other

respondent companies


Responding companies (%)

2000

1999

1998


Incubators

graduate



No


Yes


No


Yes


No


Yes

39

31

48

58

58

78

No


Growth %

19

31

12

42

8

0

21
-
40


28

31

29

0

19

0

>41




67

(100%)

13

(100%)

58

(100%)

12

(100%)

52

(100
%)

9

(100%)

Number of
respondents




The analysis results of the growth rate comparison for companies that were
supported by Yozma VC funds are shown in Table 2
5
.



Table

2
5
.

Growth rate of Yozma supported companies and the other respondent
companies




Responding companies (%)

2000

1999

1998


Yozma

supported



No


Yes


No


Yes


No


Yes

41

23

51

47

64

46

No


Growth %

22

17

20

7

6

8

21
-
40


25

41

20

40

2
2

4
6

>41



63

(100%

17

(100%)
)

55

(100%)

15

(100%)

48

(100%)

13

(
100%)

Number of
respondents



The data in
Table 2
5
show the following
patterns

of
improved
performance

of
Yozma supported companies

over the others
:




The proportion of Yozma supported companies
in
the list of the companies
that indicated
"
no growth
"

durin
g 1998
-
2000 is consistently smaller.



26
?


The
difference
s

between

the companies' groups at the 21
-
40% growth rate
category are

not large.




The

comparison of the companies
'

groups having growth

rate

of over 41%
shows
a large difference: The
Yozma supported comp
anies
representation
in this growth rate category
was consistently higher by
1.6 to

two folds.






Section 6.
Ranking the difficulties encountered and



e
xpectation
s

for government assistance


The respondents were presented with a list of a
reas
activities assumed to be
difficult for start
-
ups

and asked to rank the
level of
difficulties on a 1
-
5 scale
. In

addition they were asked

to indicate whether they think that the government should
provide assistance in these areas.



The results are sum
marized in Table 2
6
.


Table 2
6
.
Levels

of
the d
ifficult
y

encountered and expectation
s

for government assistance




Difficulty area

Difficulty
index

(mean) *

"
Yes
"

to government

a
ssistance

(% of the
companies)**

1.


Fund raising

2.4

58

2.


Marketing

8.3

45

3.


C
onnection

to fu
n
ding
sources

4.2

44

4.


Locating and arranging for
building
facility

8.3

19

5.


Accessibility to labor pool and recruitment

8.4

19

6.


Networking with other firms on professional
matters

4.2

17

7.


Networking with
professional
expert

individuals


4.2

7

8.


Networking with strategic partners

8.2

37

9.


Networking with suppliers

8.2

7

10.


Advice on management matters

4.4

17

11.


Connection

with
international collaborators

8.8

49

12.


Sources for technical information

4.2

22

Continue…
\




27
?
13.


Training of existing
personnel

8.3

26

14.


Protection of IPR

4.3

32

15.


Advice on strategic matters

4.2

16

16.


Advice on legal matters

4.8

13

17.


Information on the trends in the markets and on
technology developments

4.2

42

18.


Other

8.2

8

*
The respondents were asked to rank each diffi
culty on a scale of 1
-
5.

*
*
C
ompanies
(%, N=143)
of

respondent
s

indicating

"Yes" to
the
question on the
need for government assistance.



The ten
activity
areas that were indicated by the entrepreneurs to be the most difficult are



shown in Figure 4
.

All of these have a difficulty index of 2.
4

or above.





Figure 4
. The areas of
higher
difficult
y


Activities of high difficulty index
4
.
2
3
.
8
3
.
5
3
.
3
3
.
2
2
.
9
2
.
8
2
.
5
2
.
5
2
.
4
2
.
4
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Financial support
Marketing
Networking with strategic partners
Connection with international collaborators
Accessibility to labor pool and recruitment
Connection to funding sources
Protection of IPR
Professional networking with other firms
Advice on strategic matters
Networking with professional experts individuals
Information - markets trends and tech dev
Difficulty index







28
?
Areas having i
ndices of

lower than 2.
2
,

may be considered as "less difficult".



A comparison between

the areas
that were considered
most di
fficult
and areas were

the government is expected to assist is shown in tables

2
7

and
28
.


Table 2
7
.

T
he
six

most difficult areas


Area
s of activity


Difficulty
index

(mean) *

Financial support

2.4

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8.4

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瑯t
晵湤楮f

獯畲ues

4.2


* The respondents were asked to rank each difficulty on a scale of 1
-
5.



Table
28
.

Six
areas w
h
ere government

assistance is most expected


Area
s of activity


"YES "to
government

Assistance
(% of the
companies)*

Financial support

23

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22

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22

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牣es

22

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83

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o
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s

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ac瑩癩vy
areas
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sca汥

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a獳s獴慮se⁳ a汥l


29
?
For example, a
ccessibility to labor pool and recruiting is considered an area
of
high
difficulty

(difficulty index=3.2
, 4
th

on the list
)
, yet the expectation
s

for
government assista
nce is low (19%
, 8
th

on the list
)
.



*****