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Innovation Drives Israel’s Economy

July 5, 2019

By: Yoram Ettinger

Straight from the Jerusalem Boardroom #239

Pratt & Whitney – one of the three largest helicopter and airplane jet engine manufacturers in the world, accounting for a substantial portion of United Technologies’ activity – concluded a long term contract with Israel’s Bet Shemesh Engines. The contract will extend Bet Shemesh’s manufacturing jet engine parts for Pratt & Whitney until, at least, 2039, yielding an $800MN revenue for Bet Shemesh, which brings its total revenues during the 35 year association with Pratt & Whitney to $2.6BN (Globes Business Daily, June24, 2019).
Intel’s Senior Vice President and President of Intel Capital, Wendell Brooks: “Innovation drives economies, and the two best places of this are Israel and the US.” He added that Israel was one of three tech hubs that Intel Capital (Intel’s investment arm) is intently focused on (alongside China’s Beijing/Shanghai and the Silicon Valley). Moreover, often Israeli entrepreneurs have “better ideas than in the Silicon Valley.” Intel Capital capped 2018 with $120MN invested in 14 Israeli startups and companies – a record year of investments in Israeli startups. Intel is building a new plant in Israel (Kiryat Gat) involving an $11BN investment. (Israel Today, April 25).
Israel’s Kornit Digital, which manufactures digital systems for printing on textiles, is raising $146MN on NASDAQ, which is five times more than its initial expectation. The underwriters are Citigroup, Goldman Sachs, Berkleys, William Blair, Stifel, Needham and Craig-Hallum Capital Group (Globes, June 12). Israel’s SentinelOne Cybersecurity raised $120MN in a round of private placement led by the $23BN NYC-based Insight Partners, with the participation of the South Korean giant Samsung Venture Investment, NYC-based Third Point Ventures, Menlo Park-based Redpoint Ventures and NextEquity, Palo Alto-based Data Collective, etc. (Globes, June 6). Israel’s BrightWay raised $25MN in a round of private placement led by Japan’s Koito Manufacturing and the Japanese-Israeli venture capital fund, Magenta Venture Partners (Globes, June 26).
According to Adam Reuter, Chairman of “Financial Immunities” and the author of Israel – Island of Success: the flow of foreign investments to Israel, and the robust state of Israel’s economy, have produced a stronger-than-ever New Israeli Shekel (3.575 per dollar and 4.034 per Euro) against the index of the 26 major currencies of the countries trading with Israel. Bank of Israel foreign exchange reserves have risen to $118BN – 31.9% of Israel’s GDP (Globes, July 4).
Integrating the Ultra-Orthodox sector into Israel’s hightech, and responding to the growing Israeli demand for hightech engineers/workers, KamaTech supports 40 Haredi startups, and employs over 500 persons since its establishment in 2013. KamaTech was founded as a coalition of 30 leading hightech companies and venture capital funds, such as Cisco, Intel, IBM, Google, Microsoft, Amdocs, Checkpoint, CitiBank, Innovation Center, Pitango VC, Canaan Partners, etc. The Israeli government and KamaTech have launched a national program – together with the Hebrew University, the Technion and Lev Institute – to recruit more Ultra-Orthodox into the hightech sector. At this stage, the Ultra-Orthodox sector makes up 12% of the Israeli population, but just 1% of Israel’s hightech workers.