Most Active Venture Capital Funds in Israel - 2015

IVC and APM report: Israeli venture capital funds upped first investments in 2015; Singulariteam hailed 2015’s Most Active Fund Key facts:  Israeli VC fund Singulariteam led first investments with 12 deals in 2015  Israeli VC funds first investments up 6% in 2015  Foreign funds continued to lead, despite a 19% drop in the number of first deals made in 2015

Tel Aviv, Israel, February 10, 2016. IVC Research Center, in cooperation with Israeli law firm APM & Co. today released a report analyzing first investments in Israel by venture capital funds in the past five years, and ranking the most active venture capital funds which invested in Israel in 2015.

In 2015, Singulariteam, a medium sized Israeli fund founded by Moshe Hogeg and Kenges Rakishev, topped all VC fund investors by making 12 first investments. This makes a slight increase for the number of deals made by the top ranked fund, compared to 10 first investments made in 2014 by the year’s Most Active Fund, JVP. Singulariteam manages $152 million via three funds – two early stage funds and a new growth stage fund. The first investments made in 2015 were funded by Singulariteam II, a $102 million early-stage fund closed in 2014.

Placing second, with nine first investments each, were Israeli fund Carmel Ventures and American fund Innovation Endeavors, co-founded by Google's Chairman, Eric Schmidt and Dror Berman. Carmel, with $802 million under management, invested from its vintage 2014 fourth fund. The third place is also shared by two funds, Israeli Magma and First Time, with eight investments each. Magma, with $450 million under management, invested from its fourth fund, raised in 2014. First Time is a vintage 2014 fund, managing $60 million and managed by TheTime technological incubator's founders, focused mainly on supporting the incubator’s graduates with supplemental funding.

The Most Active Micro VC fund was local fund OurCrowd First, with seven first investments from its vintage 2014 $10 million fund. Following OurCrowd was lool Ventures with six investments from a $33 million fund, closed in 2011. Israeli funds InovGate, Peregrine and Elevator Ventures tied for third place, with five investments each. No foreign micro VC funds have made it to the top of the chart.

The IVC-APM report, which analyzes trends relating to first investments by foreign and Israeli VC funds in Israel, points to a decrease in the total number of first investments, as well as the number of active VC funds in 2015, compared to 2014’s record numbers. The downtrend is a direct result of foreign funds’ relative lowered activity in 2015, following a similar global trend, while Israeli funds actually increased their activity in 2015, both in the number of funds and number of deals made. However, despite the opposite trends, foreign VC funds maintained their leading position, with the majority of active funds and first investments. (Chart 1)

Foreign funds made 178 investments, or 52 percent of first investments last year, compared to 221 investments (58 percent) in 2014. Israeli VC funds made 166 investments, compared to 157 in 2014, seeing the Israeli funds’ share climb from 42 percent to 48 percent in 2015, despite locals

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making up only 31 percent of the number of active VC funds, or the funds that made at least one first investment last year.

The gaps between Israeli and foreign VCs is perhaps best explained by the average number of first investments made by each fund. In 2015, foreign VC funds made an average of 1.6 first investments per fund, while Israeli funds made twice as many investments, with 3.2 first investments per fund on average.

Koby Simana, CEO of IVC Research Center, observed another difference between Israeli and foreign VCs: "Our analysis of the data shows a significant difference in first investment patterns between foreign and Israeli funds. Traditionally, more than 80 percent of first investments by Israeli funds are made in the early stages of a company's life - startup seed and R&D - while foreign funds activity is a little more evenly balanced between various stages, from seed and growth to late stages." (Chart 2)

The report writers say that the foreign VC funds that continue to rank at the top of the Most Active Funds list year after year are mostly funds that have a strong Israeli presence with a local branch, capital allocation to Israel or Israeli partners and team members who drive their continued focus on Israel. The 2015 Most Active Funds ranking includes several such funds, with Innovation Endeavors, Marker and Blumberg, all having a strong local presence, as well as OrbiMed Israel, an Israeli VC fund founded by American investors OrbiMed Advisors to spearhead their Israeli investments.

The report also suggested the micro VC funds phenomenon seems to be losing steam after soaring in 2011 and climbing steadily through 2014. The top micro VC fund made only seven first investments in 2015 compared with 12 first investments made by the top fund in the larger fund’s ranking, or 11 first investments made by 2014’s Most Active Micro VC Fund, Titanium Investments.

"There is a clear correlation between the funds’ ranking at the top of the Most Active Funds table and the funds’ vintage year, "says Rotem Inbar, the researcher responsible for the report, at IVC Research Center. “In general, the older the fund, the less available capital it has for first investments. Most top-ranked funds belong to the 2014 or 2015 vintage, but in the past two years we have seen fewer micro VC funds raising new capital, which is why the 2015 ranking include relatively older micro VCs, such as lool (2011) or Peregeine (2006). In fact, a number of the latest vintage funds are second or third funds raised by former micro VC management companies that have taken advantage of the VC capital raising momentum and scaled up to larger funds. These include this year’s Most Active Fund Singulariteam II, a $102 million fund closed in 2014, which followed a first time smaller fund closed in 2012. "

Some of the micro funds ranked share a characteristic also observed at First Time Fund, their founding teams come from other earlier stage investment entities such as a technological incubators, a startup accelerator or an angels’ club. Such fund, namely OurCrowd, InovGate, Peregrine, Elevator, as well as others, are formed as a follow on investment mechanism by those teams, allowing them to keep backing portfolio companies after graduation or into following early rounds.Yonatan Altman, a chairman at law firm APM & Co., concluded: "The venture capital industry is reclaiming its position and place as the main engine driving the Israeli high-tech industry. 2015 witnessed the formation of new venture funds, sequel funds, technological incubators and alternative investment vehicles with significant assets under management. We are

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optimistic as we face 2016, given the funnel of Israeli funds under formation as well as the number of international investors continuously diverting capital to Israel."

Most Active Venture Capital Funds in Israel - 2015 Ranked by Number of First Investments Total First Total Capital Rank VC Fund Portfolio Company Name Investments Managed ($m) Kukupal, Meucci, Oliver, BidFlyer, Articoolo, Menu Is 1 Singulariteam 12 232 Us, CatchApp, TalentTribe, Octopus, TNI The Net, Webydo, Inabi Carmel 9 802 DEEP, Splacer, CrediFi, Evercompliant, Lightricks, Worthy, Cellwize, Cloudyn, Seebo 2 Innovation Dyadic Security, CropX, Yotpo, Qwilt, WeissBeerger, 9 - Endeavors1 Illusive Networks, Sight Diagnostics, Equalum, OwnBackup Magma 8 450 Workey, PayKey, AllSeated, Sulu, Iguaz.io, Nubo, 3 Realtyka, Scylla First Time 8 60 Oggii, Pixellot, Redis Labs, FanZone, LogDog, Kalsefer, LooKAt, Kidbox JVP 7 1,112 SCADAfence, DBS-H, Secret Double Octopus, Iguaz.io, Aspectiva, DMWay, NSLComm 4 Vintage2 7 965 Ravello, SAManage, JustVisual, Yotpo, ColorChip, Cellwize, JFrog Pontifax3 7 431 EyeYon, NovellusDx, CathWorks, Pi Therapeutics, Otic, Enlivex, NTB Pharma Marker1 6 - VeedMe, KeyWee, SAManage, Colabo, Yotpo, Illusive Networks 5 Blumberg1 6 - Solomoto, Deep Instinct, Blender, Panoply, Fifth Dimension, Firmitas OrbiMed Israel3,4 6 222 SmartZyme, Pi Therapeutics, Chemomab, MBCure, Ice Therapeutics, Memofit Notes: * Data are based on the IVC-Online database (www.ivc-online.com) and information provided by participating VC funds. * Ranking includes Israeli and foreign VC funds managing over $50 million in capital. * Investments include Israeli high-tech companies only. * Investments do not include non-technology companies. * Amount of capital managed by foreign VC funds is not relevant for this ranking.

1. A foreign VC fund with an allocation to Israel 2. Vintage manages VC funds, secondary funds and funds of funds 3. Life science specialized fund 4. An Israel-dedicated foreign fund

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Most Active Micro-Venture Capital Funds in Israel - 2015 Ranked by Number of First Investments Total First Total Capital Rank Micro VC Fund Portfolio Company Name Investments Managed ($m) Stringify, Invertex, Rimoto, TechSee, Missbeez, Capester, 1 OurCrowd First 7 10 PushApps dbMaestro, Dronomy, FarmDog, CreditHood, LawGeex, 2 lool Ventures 6 33 ClipCall Peregrine1 5 71 Jobrain, ShapeDo, SinuSafe, Yotta Green, Cordio Elevator 5 10 Yodas, Graduway, Errnio, Percepto, Hermetic Security 3 Ventures InovGate 5 5 4Eyes, American Volume, Atrinet, Xpandion, Zoomd Terra Venture 4 60 Neurolief, SolAround, Augmedics, AquaHD Partners2 Disrupt-ive VP 4 50 Tailor Brands, CoCycles, DEEP, TLDR 4 Poalim 4 20 TipRanks, HopOn, Paybox, Offla FinTech3 Cerca 4 12 Curiyo, EverMinder, RoadShows, Breezometer, TaskCurrent Notes: * Data are based on the IVC-Online database (www.ivc-online.com) and information provided by participating VC funds. * Ranking includes Israeli and foreign VC funds that manage $50 million or less in capital. * Investments include Israeli high-tech companies only. * Investments do not include non-technology companies.

1. Two micro VC funds under management. Raising a third fund targeting $70 million. First investments in 2015 were made by Peregrine II, a $30 million fund 2. Managing two micro VC funds 3. Fintech specialized fund

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Chart 1: First Investments in Israel by VC Funds: Foreign vs. Israeli Funds 2008-2015 (# of Deals, # of Funds)

Chart 2: Distribution of First Investments by Rounds: Foreign vs. Israeli VC Funds 2013-2015 (%)

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Methodology IVC Research Center in cooperation with APM & Co. ranked Israeli and foreign venture capital and venture lending funds according to the number of first investments made in Israeli high-tech companies in 2015, excluding incubated companies, foreign companies or non-technology companies. The data are based on information received directly from the VC funds and from the IVC-Online Database (www.ivc-online.com). Rankings reflect the number of deals only, not capital invested and are divided into two tables, according to managed capital: VC funds managing more than$50 million (regular-sized, larger funds) and micro-VC funds (managing up to $50 million).

This press release contains analyses based on the IVC Industry Analytics business intelligence product, and the Most Active Investors Dashboard containing detailed information on active VC and other investors via an interactive, user- friendly interface. The Dashboard is available online to IVC Industry Analytics subscribers and presents a wealth of continually updated investor data, which can be filtered according to year, type of investor, type of investment and more.

Further information on Most Active Investors in 2015 will be reported in the IVC High-Tech Yearbook 2016 to be published in April 2016.

For additional information: Marianna Shapira, Research Manager, IVC +972-73-212-2339 [email protected]

About the authors of this report: IVC Research Center is the leading online provider of data and analyses on Israel’s high-tech, venture capital and private equity industries. Its information is used by all key decision-makers, strategic and financial investors, government agencies and academic and research institutions in Israel.  IVC-Online Database (www.ivc-online.com) showcases over 14,000 Israeli technology startups, and includes information on private companies, investors, venture capital and private equity funds, angel groups, incubators, accelerators, investment firms, professional service providers, investments, financings, exits, acquisitions, founders, key executives and R&D centers.  Publications include newsletters; Daily Alerts; the IVC High-Tech Yearbook – The Israel High-Tech, Venture Capital, Startup and Private Equity Directory; surveys; research papers and reports.  IVC Industry Analytics – analysis, research and insights into the status, main trends and opportunities related to exits, investments, investors, sectors and stages

APM & Co. is a renowned Israeli law firm with a robust legal practice. Established in 1956, and headquartered in Tel Aviv, the firm draws on six decades of excellence, to offer an up-to-date innovative approach to the practice of law. The firm provides a comprehensive range of legal services to an Israeli and international client base that spans across all business sectors and stretches to India and China through the firm's China and Indian practices.

APM & Co. high-tech and venture capital practice is one of the most prominent and dynamic practices in Israel, representing all players of the ecosystem from the inception of young startups through financing rounds, M&As and IPOs, and is consistently ranked as a leading practice by international and local directories of the legal profession, such as Chambers & Partners, EMEA Legal 500, Dun’s 100 and BdiCode.

APM & Co. is a market leader in fund formation and the formation of other investment vehicles, including technological incubators, accelerators and various holding companies. The firm tailors the business, legal and economic structure of the vehicles and provides all supplemental counsel, including tax rulings and governmental incentive programs.

The firm’s fund formation practice, continually rated and perceived as Tier-1, focuses on the formation of venture capital firms, private equity funds, debt & special-situation funds, real estate funds, infrastructure funds and others and has played a key role in the formation of Israel's most successful funds which have raised billions of dollars in the

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aggregate. APM’s in-depth knowledge of the market enables us to provide legal and business counsel and to be instrumental in the fundraising process by drawing on the firm's longstanding relationships with Israel's institutional investors and prominent family offices. As the funds hold their initial closing, APM & Co. continues to support all corporate, commercial, tax, labor, IP and other legal needs of the funds and to represent the funds in their investments.

APM & Co. is also a market leader in the formation and representation of Technological Incubators, both private and those operating under the lucrative franchise of Israel's Ministry of Economy/Office of the Chief Scientist, granted through Competitive Processes (also referred to as the "Incubator Tenders"). Our team of experts specializes in guiding the contenders through all legal and commercial aspects of the Competitive Process to ensure that all legal prerequisites and conditions are met, and to best highlight the contenders' business and financial proposition. We have provided counsel in this regard to international and local key technology companies, including Fortune 500 ones, reputable local and international VCs and existing incubators, and have formed and represent the majority of Israel's leading incubators and dozens of incubator backed companies.

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