Financial ServicesFinancial Services--Early Adopter of IT InnovationEarly Adopter of IT Innovation

January 13, 2004IBM Haifa Labs

Avi Zeevi, General Partner, Carmel Ventures

Financial Services Trends

� Largest industry segment for IT spending � In 2003 reached $370 billions, expected to grow to $437 billion in 2007

(Gartner Aug. 2004)� Banking represents 45% of spending � Insurance and Investment Services represent 25-30% each

(Gartner Aug. 2004)

� IT is one of the top five priorities among CEOs � Consider IT as an enabler for business � Yet, focus on maintaining tight IT budgets

� Looking to improve communication between IT and Business managers

� Making room in IT budget for new projects in 2005� VoIP, ECM, Web services, Standardization

� Building out IT outsourcing

Financial Services Trends (Cont‘d)� Integration

� Back office efficiency and productivity � BPM consolidation and automation- straight-through processing (STP)

� Regulatory and compliance challenges � Risk management, compliance, e-mail archiving and discovery, security,

Basel II & AML regulations� Transformation into more customer-centric business models

� Customer facing processes to drive loyalty and growth� Increase focus on distribution channels to achieve competitive

advantage � Portal Technologies and Web Services

� Key Technology Projects for 2005 (IDC Dec. 2004)� Custom application deployments� Networking � Storage� Data warehousing � Business Intelligence

Examples of Israeli Success Stories (I)

� Fundtech (NASDQ: FNTD)� Founded: 1993� IPO: 1998, $132MM � Financial transaction processing software solutions: Payment

Processing, Settlement & Cash Management � Customers: BofA, Citibank, First Security Corporation, Deutsche Bank

etc..� Market Cap: $124.94M � Revenues (ttm): 53.71M

� MINT Technologies � Founded: 1980� EAI solutions for financial institutions � Customers: USB, Natwest and others � Revenues run-rate: >$25m� Acquired by SunGard Business Integration in 1999

Examples of Israeli Success Stories II� Nice (NASDAQ: NICE)

� Founded: 1986 � Products:

� Voice Recording solutions for Financial Contact Centers (for compliance, dispute management, quality monitoring and analytics)

� Voice Recording solutions for trading & brokerage houses

� Video Surveillance and recoding solutions for physical security

� De-facto standard for compliance recording� Used by the top 10 global banks � 85% of the top 50 global banks

� Customers: ABN AMRO Bank, BofA, Barclays, CIBC Oppenheimer, Citibank, Deutsche Bank, Dresdner Bank, JP Morgan Chase, GoldmanSachs, Lehman Brothers, Morgan Stanley, Tokyo Mitsubishi Bank and others

� Market Cap: $502M � Revenues (ttm): $244.84M

� Significant percentage derived from financial institutions

Israeli Emerging Players- Examples I

� FIS- Formula Insurance Solutions � Founded: 1984� Packaged-based solutions for Insurance � Investors: Genesis, Giza, Clal, Formula Group� Customers: AXA, SwissLife, Fidelity, CNP Assurances, BrightGrey,

Merrill Lynch, Phoneix, Clal� Revenues: Tens of millions of $

� Traiana� Founded: 2000� Post trade processing support for banks and brokers � Customers: ABN Amro, JPMorganChase, Deutsche Bank, AIG

Trading Group � Total Capital Raised: $27.5m � Investors: Gemini, Sequoia, Evergreen, Eastman Ventures

Israeli Emerging Players- Examples II� Actimize

� Founded: 1999� Active, real-time analytical application platform for enterprise

operational risk management � Customers: A.G. Edwards, Bank Of America, Fidelity, Bank

Hapoalim, Bank Leumi, First International Bank of Israel, Jefferies Securities, Lehman Brothers, Morgan Stanley, Merrill Lynch, NASD, UBS…

� Total Capital Raised: $ 24m� Investors: Carmel Ventures, FT Ventures, Giza Ventures Capital,

Vertex Management� Cyota

� Founded: 1999 � Anti-fraud solutions for e-commerce, pishing and online banking for

financial institutions� Customers: US Bank, Bank of America, Chase, Llyods, Europay

Austria, RBC, E-Funds, First USA, CIBC…� Total Capital Raised: $ 33m� Investors: Israel Seed Partners, Giza Ventures Capital, Poalim

Ventures, Bessemer Ventre Partners, Dresdner KlienwortCapital, Quan Ventures

Israeli Emerging Players- Examples III

� SkyBox Security� Founded: 2002� Exposure Risk Management solution for compliance to identify and

eliminate enterprise security vulnerabilities � Provides a continuous measurement of security risk profile and

its impact on regulated assets, as well as a proactive and automated process to eliminate out of compliance exposures

� Customers: Lehman Brothers, E-trade, Bank Hapoalim, Emporiki� Total Capital Raised: $ 21 m� Investors: Carmel Ventures, Lightspeed Venture Partners, Benchmark

Capital, Mofet Ventures

Key Success Factors

� Unique Technology� Packaged as a solution for the business units

� Niche solutions � Cope with rapid changes which the big players can’t always cope

with

� Talk to the target customers� In-house domain knowledge

� Understand financial business processes at all levels

� Reference accounts� Go after opinion leaders � Ensure successful implementations

� Be close to the market

Key Success Factors� Go-to-market Strategy

� Start with direct sales, partner with strategic partners immediately after

� Get ASAP to significant level of revenues

� Excellent account control and partnership with customers

� Strategize to exceed the $20 millions bar� Scalable product and organization

� Israeli financial institutions are a great places to start with, but the ability to use them as a reference is questionable

The Investors Contribution

� Up-to-date domain knowledge� Proven access to relevant decision makers and partners� Established credibility with potential customers � Strong ecosystem in the Financial markets through past

experience, other portfolio companies etc.

Thank YouThank You