Innovation Israeli Style Nava Swersky Sofer Istanbul 13

Innovation, Israeli Style Nava Swersky Sofer Istanbul, 13 October, 2017 1

Nava Swersky Sofer, Adv. o International expert on entrepreneurship, innovation & commercialization with over 25 years’ experience living & working on three continents o Sought-after public speaker and visiting professor US, Europe, Asia o Board of Directors, Israel Military Industries (IMI Systems – Taas) o Selected public boards – INSME (Rome), KEN (Brussels), ICA (Toronto) o Boards of Governors Ruppin Academic Center & Tel Aviv-Jaffa Academic College o Mentor IBM Alpha Zone, Israel Air Force; Nanjing Microsoft; Spark, Thailand o Founding Managing Director, IDCBeyond, leading entrepreneurship programme o Former President & CEO, Yissum – Hebrew University Technology Transfer o Founder & Chair, Nano. Israel o Venture Capital o Partner, Concord Ventures o Founder & Managing Director, Columbine Ventures o Partner, Sanderling Ventures (Silicon Valley) o Vice President, Novartis (Switzerland & US) o Selected exits: X Technologies (sold to Guidant), Optonol (sold to Alcon), Dynavax (NASDQ: DVAX), Novagali (floated on Euronext, then sold to Santen), 2 Bio. Cancell & Proteologics (TASE), Aderis Pharma (sold to Schwarz Pharma / UCB)

Israel: The Start-Up Nation Translated into >20 languages 3 Nava Swersky Sofer

Source: The Economist / GE Lookahead, Dec 2014 4 Nava Swersky Sofer

Israel Inside 5 Nava Swersky Sofer

Israel: An Innovation Powerhouse Globally Open 2 nd highest number of NASDAQtraded companies >60 companies traded in EU World Class Science 1 st in quality of scientific research institutions 6 Nobel laureates Entrepreneurial 1 st in start-ups per capita 2 nd in business entrepreneurship Human Capital 2 nd in availability of qualified scientists & engineers Source: IMD World Competitiveness Report, World Economic Forum Competitiveness Report Nava Swersky Sofer

R&D Expenditure as Percentage of GDP 4. 5 4. 2 4. 3 4 3. 5 3. 1 2. 9 3. 0 2. 8 2. 9 3 2. 5 2 1. 5 1 1. 0 1. 2 1. 3 1. 7 1. 5 1. 6 1. 9 2. 0 2. 1 2. 2 3. 3 3. 5 2. 4 0. 5 G re e Tu ce rk e Sp y ai n Ita Ire ly l C and an ad a N U C or K ze w ch ay R ep EU. 2 C 8 A hin us a tr a Fr lia O a EC nc D e av g. G US er A m Fi any n D lan Sw enm d itz ar er k la Ta nd i Sw wan ed e Ja n pa K n or e Is a ra el 0 Source: OECD Main Science & Technology Indicators 2016/02, published 24. 3. 17 7 Nava Swersky Sofer

80% of R&D Funding from Private Sector • • 80% of total R&D investment comes from private sector 20% from government and public sources Source: Getz, D. and others. (2013). Measures for science, technology and innovation in Israel: Comparative infrastructure data. Haifa: Shmuel Ne`eman Institute 8 Nava Swersky Sofer

Only 15% Government Funded • • • 42% of Israeli R&D funding financed by foreign entities 39% financed by local private sector 15% financed by the Israeli government Source: Getz, D. and others. (2013). Measures for science, technology and innovation in Israel: Comparative infrastructure data. Haifa: Shmuel Ne`eman Institute 9 Nava Swersky Sofer

2016: $10 Billion in Exits 93 M&A deals, 8 buyouts and 3 IPOs $10 Billion in exit proceeds, incl $4. 4 B Playtika deal 12% up from 2015 Average exit multiple 4. 34 x, 5% higher than 2015 10 Source: IVC-Meitar 2016 Exit Report

2016 Israeli Hi-Tech Exit Highlights $10 B in exit proceeds in 2016 including the Playtika deal The average exit in 2016 reached $46. 3 M* – 21% below the $58. 4 M** five year average VC-backed average exits multiple in 2016 was higher than five-year average Semiconductors led all exits with $1. 34 B*** Buyouts and M&A deals maintained a constant share over the past five years 27% of M&A deals involved Israeli high-tech companies on both the acquiring and acquired sides Source: IVC-Meitar 2016 Exit Report 11 Nava Swersky Sofer

A Good Balance of Sectors Source: IVC-Meitar 2016 Exit Report 12 Nava Swersky Sofer

Top 5 Deals in 5 Years: Some Diversity Source: IVC-Meitar 2016 Exit Report 13 Nava Swersky Sofer

VC: No. 1 Per Capita, No. 2 Absolute US $69. 1 Billion Population: 320 million = $215 / person Israel $4. 8 Billion Population: 8. 5 million =$565 / person Source: NVCA 2016 Report; IVC-Meitar 2016 Report 14

2016: A Record $4. 8 Billion Invested In 659 Companies • • 11% above 2015’s previous record Average deal size grows to $7. 2 m, 19% above 5 year average VC-backed deals account for 56% of total Trend continues in Q 1/17 with $1. 025 B raised in 155 deals Source: IVC-ZAG 2016 VC Report 15 Nava Swersky Sofer

Trend Continues in H 1/17 with $2. 3 B Raised in 312 Deals 16 Nava Swersky Sofer

2017: Israeli Tech Comes of Age 17 Nava Swersky Sofer

But: Local Technology, Foreign Capital Investments in Israeli Hi-Tech (US$ Billions) Foreign Investors (%) Israeli VCs (%) Note: Most investors in Israeli VCs are foreign Source: IVC Research Center, August 2015 18 Nava Swersky Sofer

300 Multinational R&D Centres Employing 50, 000 People 19 Nava Swersky Sofer

Successful Academic Commercialization � World pioneer in tech transfer since 1959 � Two of world’s top tech transfer companies Yeda, Weizmann Institute of Science ( est. 1959) � Yissum, Hebrew University of Jerusalem (est. 1964) � � >$22 Billion in licensed product sales per annum � >$500 Million in tech transfer revenues annually � Hundreds of spin-off companies � Many success stories � Copaxone®, Exelon™, Erbitux®, Azilect™, Doxil™, Rebif®, Cherry tomatoes, peppers, NDS Ltd. encryption algorithm, Mobil. Eye driver assistance system… Source: ITTN, Israeli Central Bureau of Statistics Aug 2014 20 Nava Swersky Sofer

The Israeli Tech Transfer Model � Company, not office � Wholly-owned subsidiary with business focus & operational independence � Professional team with relevant industry experience � Business leaders on boards � Balance academic viewpoint � Clear IP ownership… … with generous revenue sharing (40 -60%) � One-stop-shop for industry – leverage relationship � � Licensing R&D collaborations Sponsored research Sometimes consulting � Focused on royalties 21 Nava Swersky Sofer

Smart Government Intervention Office of the Chief Scientist (now Innovation Authority) supporting private sector innovation since 1969 Strategic decision to create military R&D capabilities Venture industry created by government => privatised Incubators: from job creation scheme to pillar of national innovation eco-system Innovative industry/academia support mechanisms Evolving policies addressing market needs 22 Early stage funding Multinationals Strategic initiatives, e. g. nanotechnology Nava Swersky Sofer

Some Innovation Authority Programmes � Academia/industry technology transfer � Proof of concept grants for early stage project, academia-based (100% funding) � Proof of principle grants for academia-based projects with initial industry interest (90% funding, 10% from industry for first look) � Tech transfer grants for academia/industry collaborations between one academic institution and one industry partner (66% funding, 34% industry) � Consotria encompassing several academic institution and several companies Initial IP protection � Early stage company formation � R&D support for both young and mature companies in the form of grants, repayable as royalties in the case of success � Collaborative agreements with multinationals providing matching funding for projects with local companies and academic institutions � Bi-national & European collaborations (Matimop, ISERD) � Special initiatives, e. g. military technologies for civilian use � Nava Swersky Sofer

Hardship Breeds Innovation Small Interdisciplinary New Isolated No strong traditions => Open to change Strong military => training, innovative technology International outlook Brain power, education => innovation Novel job creation schemes No natural resources, not even water Immigration – from 600 k to 8 million in 65 years 24 Nava Swersky Sofer

This Is Israel; These Are Israelis https: //www. youtube. com/watch? v=y__Kn. W 3 a. K 0 E# action=share 25 Nava Swersky Sofer

The Innovation Recipe Infra- structure Environment Culture 26 Nava Swersky Sofer

Infrastructure Education Innovative research Smart funding Infra- structure Management Facilitiess IP system 27 Nava Swersky Sofer

Environment Regulation Market access Tax credits Environment Institutional investment 28 Nava Swersky Sofer

Culture Breaking old habits Encouraging entrepreneurship Learning to embrace failure. It’s part of the package Culture 29 Nava Swersky Sofer

Thank you for your attention nava@swersky. com @Nava. Swersky. Sofe 30 Nava Swersky Sofer