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Amir-Zaidman.Pdf A Unique Corporate Venture Model December 2013 In a Nutshell • Founded by Rafael Advanced Defense Systems in 1993. • A unique partnership: – Rafael (technology partner) – Elron [NASDAQ: ELRN] (business development partner) • Focus – Technology based ventures. • Model – Early stage investments or home grown projects. • Applications – Medical, communications, industrial. No military or defense innovation. RDC’s Mission: “To launch and develop leading companies, leveraging Rafael’s technology and know-how, and Elron’s business capabilities and financial strength” 2 Rafael Advanced Defense Systems On Land At Sea In the Air 3 Rafael Advanced Defense Systems In the Air Python 5 Spike-ER Full Sphere IR Missile Tactical Precision Weapon Sparrow Lightning Airborne Ballistic Targets Reconnaissance Pod Derby OfeQ Satelight Active Radar A/A and Propulsion System S/A BVR Missile 4 Rafael Advanced Defense Systems At Sea Typhoon Protector Stabilized Weapon Station Unmanned Surface Vehicle Toplite Sea Spotter IR Search, Track & Situational Electro-Optic System Awareness Torbuster Scutter Hard Kill Torpedo Defense Reactive Torpedo Decoy 5 Rafael Advanced Defense Systems On Land SpotLite-P Trophy E/O Small Arms Detection Active Protection System System Terra Sonic Iron Dome Oil Pipeline Integrity Defense System Against Monitoring System Short Range Artillery Rockets Spike Family Matador AS Tactical Precision Weapon 6 System Anti-Structure Munition The Iron Dome 7 Rafael – Core Technological Capabilities • Tubes • Conversion solar cells • Radar • Lasers • High voltage • Small generators • Radiometers • RF-micro • Localization • Fuel storage • Signal interception • MEMS • HPM • Thermal batteries • Acoustic • IR imagers • Servo System Energy Sensors Semiconductor • Medical plastics • Transceivers • Imaging • Adhesives • Networks • Image processing • Armor • Secure communication • Optical design • Coating • Microwave antennas • Cryo • Metals • Ceramics Materials Communication Electro-optics 8 Rafael – Human Capital Approximately 7,000 Employees Academics/ Technicians Engineers 20% 61.6% B.Sc. 35.2% Other 18.5% Ph.D. M.Sc. 5% 21.4% 9 Rafael – Financials In Million US Dollars Market Distribution Latin America Israel Far East 5% 45% 25% Europe 14% U.S.A 11% 10 Elron • Founded in 1962 – The oldest technology investment company in Israel. • Some past successes: – Elbit Systems (NASDAQ: ESL) – Elbit Medical Imaging (NASDAQ: EMITF); – Orbotech (NASDAQ: ORBK) - automated optical inspection and imaging – Zoran (NASDAQ: ZRAN) - DSP technology – Netvision: Internet service provider – Peach Networks (now Microsoft), Hynex (now Cisco) • >$2.2B in total exits value in the past 15 years • $400M in the last 4 years • Invested $180M in medical device in the last 5 years 11 RDC – A Unique Synergistic Partnership RAFAEL – Access to Core Capabilities Technological DD, Design and Dev. Process Reputation Testing Development QC, Manufacture Product Company Idea Evaluation Concept Building Product Building Company Exit $$ Scope and Business DD Biz Dev, Funding M&A Management ELRON - Access to Business Ecosystem 12 Organizational Structure Rafael: Elron: - Chairman - Chairman Board of - CFO - CEO Directors - CTO - CFO - VP in-charge of subsidiaries - Chief Investments Officer CEO Management CTO Vice President of BD CFO Portfolio Portfolio Portfolio Portfolio Co. A Co. C Co. E Portfolio Portfolio Co. B Co. D 13 Rafael Development Corporation PROJECTS AND INVESTMENTS 14 GIVEN Imaging GIVEN Imaging Video capsule endoscopy for gastro- intestinal and oesophageal diagnosis • Given Imaging was established in 1998 by RDC, based on real-time image processing and communication technologies from Rafael’s Missile Division. • Traded on Nasdaq since 2001 (market cap of ~$0.75B), revenues in 2013 expected to succeed $200M. • RDC holds 9% of Given, after selling shares in the market for over $36M. 15 GIVEN Imaging TM PillCam Capsule Main Components 1. Optical dome 2. Lens holder 3. Lens 4. Illuminating LEDs (light emitting diodes) 5. CMOS (Complementary Metal Oxide Semiconductor) imager 6. Batteries 7. ASIC (Application Specific Integrated Circuit) transmitter 8. Antenna Dimensions: Diameter: 11mm Length: 26mm Weight: ~3gr Projects and Portfolio Video capsule endoscopy 3D cameras and chipsets Miniature insulin dispenser • Established in 1998 by RDC • Established in 1998 by RDC • Established in 2005 by RDC • Based on real-time image • Based on real-time 3D • Using Rafael’s capabilities processing technology imaging technology that in mechanical from Rafael used in enables state-of-the-art miniaturization and missiles gesture recognition for special materials video games, PCs and • Acquired by Roche in 2010 • Traded on NASDAQ: other home appliances 2012 revenues: $200M; using laser matrix • RDC’s ownership prior to sale- 70% Market cap: $750M • Acquired by Microsoft in • RDC’s ownership prior to 2009 IPO – 37% • RDC’s ownership prior to sale- 25% 17 Projects and Portfolio • Founded in 2008 • Project founded by RDC • Established in 2007 • Develops microwave in 2010 , incorporated in • Develops automated on- radar-based thoracic fluid 2012 line image processing for monitoring system for • Develops implantable Cardiac Catheterizations CHF patients devices for low energy • System is FDA cleared • Direct cost of CHF in the atrial and ventricular and CE marked defibrillation USA is $39.2B in 2010 • Acquired by Volcano in • Currently in clinical trials • Direct cost of AF in the 2012 USA is $26B annually • FDA expected by the end • RDC’s ownership prior of 2013 • Currently in preclinical to sale- 78% trials • RDC’s ownership- 62% • RDC’s ownership- 96% 18 Projects and Portfolio • Developed a Radar on • Developed a software • Developed a Sat-comm Chip for the car industry for automatic, machine antenna for inflight - Joint Venture with learning, image internet systems. General Motors recognition • Now Panasonic and comparison. 19 Projects and Portfolio Artificial Tissue RF Lung Radar • Used Missiles sensor • RDC’s Sprouting Project • RDC’s Sprouting Project cooling system to to develop a Gas to develop a multi develop Cryoablation Exchanger as an artificial sensor device for live system for cancer lung using Nano tissue scanning, mainly tumors. Materials technology. for MIS operations. • Used at many hospitals around the world 20 Summary • Our Lessons: – NIH (Not Invented Here) is a major issue. • A C-Level Executive as a champion within the organization is a must. – In order to make smart investment decisions, a skilled and experienced venture team is required. • A dedicated investment vehicle (company or fund) will make it easier to attract talent (autonomy, compensation). – A strong relationship should be formed between the CVC team and the corporate leaders. – In order for the CVC to succeed, a clear strategy must be created accompanied by success parameters. 21 Thank you for your time For more information please visit our website. Rafael – Financials Market Distribution Latin America Israel 5% 45% Far East 25% Europe 14% U.S.A 11% 23 .
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