|
[TRANSCRIPTION OF ENGLISH]
I want to start with an apology. I have been participating in this event almost every year in the last few years, and I was always excited and honored to have the opportunity to speak to you and to share with you my views and my admiration for what you are doing, and for your contribution to the Israeli economy, and I am very grateful to you as well today. This is the first time that I make this speech to you in my new capacity as Prime Minister, and in order to honor this occasion I decided to deliver my speech in Hebrew. So I am ready to wait a couple of minutes until they provide you with the headphones for those who need them, because I see many Americans that speak better Hebrew than English. Anyway, here is someone who will distribute headphones if you need them. Next year if you invite me I promise to speak to you in English as well.
[TRANSLATION BEGINS]
Vice Prime Minister, Minister for the Development of the Negev and the Galilee, my friend Mr. Shimon Peres,
Chairman of the Israeli Organization for Venture Capital Funds and Director-General of Vortex, Mr. Yoram Oron,
Members of the Presidency,
Members of the Venture Capital Funds Organization,
Distinguished Guests,
I am pleased to be here this evening, at the annual conference of the Israeli Association of Venture Capital Funds, and to celebrate with you the "Bar-Mitzvah" of this exciting branch of Israeli economy.
13 years ago, in 1993, the "Yozma Project" was launched, and while only one single fund existed prior to that, 10 new venture capital funds began operating in this framework, in the amount of $20 million each – 40% from "Yozma" government funds and 60% from foreign investors.
I take this opportunity to thank those who expressed this idea, assisted in realizing this idea, thereby laying the groundwork which was so crucial to the growth of Israel’s glorious hi-tech industry:
Yigal Erlich, former Chief Scientist,
Moshe Nissim, former Minister of Industry and Trade,
Yitzhak Modai z"l, former Minister of Finance.
"Baiga" Shohat, former Minister of Finance,
And two good people who were not ministers, and in my opinion will not be ministers, but who made great contributions, and still do, to the Israeli economy, Eitan Raf and Yossi Vardi, who greatly contributed to the development of this model, which exerted tremendous power over the development of the Israeli economy.
In the 13 years that have passed, the Israeli venture capital industry acquired a leading status in the global business world – second only to the American venture capital industry, raising a capital of over $10 billion.
The rate of venture capital investment out of the overall GDP in Israel is the highest in the world.
The Yozma Project quickly captured the attention and money of prominent global investors in the field of venture capital, such as Advent, MVP, CMS and Walden from the United States, Daimler-Benz, DEG, the Van-Leer Group and TVM from Europe, and Axton, AVX, Vortex and KYOCERA from the Far East.
The best proof of the success of the "Yozma" funds is the fact that 9 out of the 10 funds established seized the opportunity and purchased the government's share of the fund.
We followed the same winning pattern in another highly successful government initiative – the technological hotbeds, a unique Israeli program for the creation of start-up companies.
After we invest in advancing the initial idea, and during the critical beginning stages, when the project begins to stand on its feet independently – we, as the Government, give it our blessing and slide out of the picture.
This is exactly what happened with the venture capital industry. The "Yozma" start-up gave the first needed push, and once the seed turned into a fruit-bearing tree, we watched from the side, happily and proudly following the unprecedented growth and expansion of the branch.
Last year 80 venture capital funds operated in Israel, with an investment of $10 billion in over 1,000 Israeli start-up companies. 70 of them are traded on NASDAQ and 30 on various European stock markets.
Little Israel is rated second, after Canada, in the number of non-American companies traded on NASDAQ.
In the 13 years of the branch’s existence, the average size of an Israeli venture capital fund grew by 1250% - from an average of $20 million to $250 million.
These funds’ experts, particularly foreign investors in Israeli venture capital funds, are neither adventurous nor gamblers. They know very well what they are doing when they invest in Israel. They invest here because their investments yield the best fruit here.
This is also what attracted the highest number of participants ever seen at a venture capital conference in Israel.
With your permission, I will switch to English:
[BEGIN TRANSCRIPTION]
I want to take this opportunity to again thank all our guests from overseas. I see here among us the Comptroller of the State of New York, Alan Hevesi. He is not only a personal friend whom I respect, but he is also one of the biggest investors in the State of Israel – in the economy of the State of Israel – for a period of time. He set the pace for many others, for many of the pension funds in America and for many other funds in America, because when they watched his very sophisticated investments in the economy of Israel and the very remarkable yields that he made for his funds, they said: “What is good for Alan Hevesi is good for our funds!” And it turned out that what is good for the Israeli economy is good for the funds of the State of New York, and the funds of many other states in the United States of America. And these days, Alan heads a very powerful mission of the Pension Funds Forum for the United States, and I was honored and privileged to meet with this powerful group. Can you imagine? In one single room in Jerusalem, there were more than a trillion dollars assembled together. It is not bad. So you, Alan, and all the other foreign investors we have here today represent many of the pension funds and many of the other investors. I cannot tell you how proud I am of your concern, interest and involvement in the Israeli economy. I cannot tell you how proud I am of our venture funds that are capable of creating this interest in you, and how proud I am of the Israeli hi-tech industries that have been so successful in justifying your interests and your investments in them. and now I will switch back to Hebrew…
[BEGIN TRANSLATION]
This is not only a record number of participants, but also unprecedented quality – American and Canadian institutional investors, who are responsible for the management of accumulated investment in the amount of over 1 trillion dollars.
This proves Israel’s significance as a global center of venture capital investment.
Throughout the first quarter of 2006, Israeli hi-tech companies backed by venture capital raised $318 million. It is an increase of 44% in comparison with the previous quarter.
The scope of investment by Israeli venture capital funds throughout this quarter stood at $161 million, which constitutes 51% of the overall investment in financial terms in hi-tech companies.
In 2005 the direct investment of foreigners in the Israeli economy reached an unprecedented record of over $6 billion. These are investments from all over the world. Last year, the overall foreign investment in Israel, including financial investments, reached over $11 billion.
These investments are, of course, a salute to the spirit of Israeli entrepreneurship, to the quality and ingenuity of our hi-tech industry and to the level of the Israeli engineer and programmer, but it is also a vote of confidence in the strength, stability and future of Israeli economy.
Even more, it is the winning answer and crushing defeat of terror – which is attempting to sow fear and incite panic.
The international economic community says to terror in a clear voice – we are not afraid to invest in Israel. Anyone who wants to know how the Israeli economy really looks to strangers, how international economic wizards view it – can look to Intel’s decision to invest $5 billion in establishing a new factory in Israel, and upgrading existing factories. They can also look at Warren Buffet’s decision to purchase 80% of Yiskar for $4 billion, just by examining its performance, without even visiting Israel and seeing the factory. And we cannot accuse Warren Buffet of being a frivolous or inexperienced investor, and we cannot even claim – much as I would like to – that he did so out of Zionism or love of Israel alone. Warren Buffet knows how to make money, and likes making money, and if he invested $4 billion – and is leaving the operation of the factory in Israel – by investing $4 billion, he is saying to the world: “I believe in the Israeli economy and I believe in the State of Israel. We can, although it is not acceptable here, but we can take this opportunity to say Kol Hakavod to the Wertheimer family, which also accomplished something.
Of course, it is impossible to think of this tremendous stream of investment removed from the general picture of the Israeli economy, an economy with high growth rates, of which there are few like it among developed nations.
Last year, we achieved a growth rate of over 5.2% – and we aroused wonder in the world. The updated forecast for 2006 is 5.3%, after incredible growth of 6.6% in the first quarter of 2006, a rate which is hard to find even among the leaders of growth in the global market.
In the same way, it is impossible to sever the state of the economy and its present growth rate from the shift in the general atmosphere in Israel, a shift created following the bold political step of disengagement, which Ariel Sharon initiated and implemented.
It was a move which created a new openness in the international arena towards the State of Israel – and new opportunities for the Israeli economy, accompanied by an increasing willingness to cooperate with Israel in all fields.
During my visits to the United States, Britain and France, I announced that we would invest every effort in exhausting the possibility of reaching an understanding with the Palestinians – of course with Chairman Abu Mazen, and not with the Hamas Government – to advance the Roadmap.
I repeatedly emphasized that only if and when it became clear that we had no partner on the other side – only then would we take other, necessary steps vital to ensuring the Jewish character of the State of Israel, even if unfortunately, and I repeat with regret, it seems that the natural partner on the other side is not ready to be a partner already at this stage of the process, which we are convinced is essential for our future.
These efforts to renew the negotiations and reach understandings with the Palestinians which benefit both sides will be made regardless of our war on terror, a war which will continue without hesitancy and with our full force.
We will strike at anyone who tries to carry out acts of terror, fires Kassam rockets, prepares explosives or sends terrorists. We will reach them wherever they are – and will thwart every effort to harm citizens of Israel.
Allow me to take this opportunity to say something to the residents of the south, residents of Sderot and Yad Mordechai, Kfar Gaza and Nahal Oz, and the other communities in the south. For ten years, I served as mayor of Jerusalem, and I saw a lot of blood, I saw many victims, I saw many families shattered and destroyed, I saw lives destroyed, and I cannot begin to explain how hard and painful it is. I know a little of what you are going through in the south, in Sderot and the other communities. I know how difficult it is to live in an uncertain atmosphere, how hard it is to go to sleep when you do not know where the next rocket will fall and where the missile will land. I am familiar with the anxiety of the parents who send their children to school without knowing if the school will protect the children. The reality prevailing in the south of the country is unbearable. There is no country in the world which allows its towns to be shelled day after day by people who wish to harm and kill innocent civilians, and we are not willing to accept this. It is true that it is not possible, nor does anyone expect, that we can overcome this in an instant, not in a day and not overnight. However, I say to you, and primarily to the residents of the south, we will not stop for one moment, we will find every place and everyone, we will consider it nothing short of our duty to protect the residents of the State of Israel from those who want us dead, and we will continue to act thus, as long as it takes and no matter how difficult it is. I believe we will succeed in stopping these murderers who want the residents of the State of Israel dead.
I admire the patience, and understand the expressions of pain. They too are a natural and recognized part of the complex reality the State of Israel deals with, and will continue to deal with, with courage and without hesitation.
Dear Friends,
From a macro-economic viewpoint, the Israeli economy is today in the best condition it has been since the establishment of the state. Today, Israel does not have a large external debt. It has decreased in the last few years, and will continue to decrease. The deficit in balance payments has been reduced to insignificant dimensions. We have an enormous surplus of foreign currency reserves, inflation rates are among the lowest in the developed world, and the deficit in the Government budget is much lower than that of developed countries.
Israel’s economy is considered one of most advanced in the world in terms of technology. This is the hi-tech industry in the full meaning of the word.
The rate of production in the “technology of science and media” industries – out of the total production of the Israeli economy – is the highest in the world.
Many global countries – like IBM, Motorola, Microsoft, Cisco, HP, Intel and others – established centers here, which take advantage of Israel’s largest natural treasure – the quality of our human resources.
What draws so many global financial giants to Israel? First, an excellent workforce: “Israel has the finest engineers in the world”, Harry Bosco, the president of the giant company Opnext, said in an interview, and he is not the only one to say so.
Our inventors, developers and managers are all young, brilliant, creative Israelis – and they are also experienced. The hi-tech industry in Israel benefits from the unique experience of excellent engineers, who are graduates of the Israel Defense Forces, who utilize the knowledge, skills and technological advances they achieved during their service in our quality security industries in civilian spheres.
No less important is the character of Israeli society and culture – an open society, marked by a spirit of entrepreneurship and thirst for innovation, which presents rich cultural variation. It is an informal society with easy access to decision makers of the highest echelons, a general, national tendency to take risks, excellent international relations in the academic field, international export relations, an uncommon ability to raise funds and the climate and values of the modern business world.
To these advantages should be added – extended and continuous national support in the fields of research and development.
In the future we will not be content with the current research and development investment rate, which is relatively high compared to anywhere else in the world – 4.6% of the GNP which are invested here in these fields. We aim to raise it to 10% of the GNP, invested in research and development.
This may sound pretentious, but it is the basis for our aspiration to realize the State of Israel’s enormous economic potential and turn it into a genuine economic power.
We will continue to invest in technological greenhouses while not only benefiting from the successes. Investments in unsuccessful initiatives are not lost as far as the national economy is concerned. Each start-up, each attempt at innovative development, enriches our accumulative experience and know-how and prepares the ground for the next successful start-up.
This accumulated experience – the fruit of both success and failure – is an inseparable part of Israel’s relative advantage in the field of advanced technology.
In conclusion, I would like to congratulate all participants of the Red Herring Magazine Israeli start-up entrepreneurs contest, and of course the 9 winners of this contest.
The winners represent both the quality of ideas and the ability to implement them which have turned the Israeli hi-tech industry into one of the best in the world.
I also convey my warmest congratulations to the winners of the Israeli hi-tech Badge Award – which is awarded by the Israeli Organization for Venture Capital Funds.
I know one of the winners very well, and although I am no expert in the field of venture capital – I can attest to the fact that it was a correct and just decision. Of course I mean the Vice Prime Minister and Minister Responsible for Development of the Negev and the Galilee, and Regional Economic Development, Shimon Peres. You have certainly heard, and will hear many exciting, inspiring things which add a special flavor to what we are trying to accomplish here.
Despite the fact that Shimon has many visions, it is always the same vision – the vision of a modern, developed, enlightened, advanced, 21st century, or perhaps even 22nd century Israel.
Shimon is receiving this award for his tremendous contribution to the Israeli hi-tech industry, in all the various positions he filled since he served as David Ben-Gurion’s Deputy Minister of Foreign Affairs.
Shimon knows how to recognize a quality start-up and is willing to take the risk when asked to provide encouragement. He proved it not long ago when Ariel Sharon presented him with a start-up called “Kadima”. He recognized its potential and invested the entire capital of his political career in it.
I thank him for that.
And thank you, members of the Organization of Venture Capital Funds in Israel and distinguished guests, for everything you have done with the money you invested in the Israeli economy.
Thank you for your faith in the Israeli economy, and I wish you even greater success in the future.
Thank you.
|