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Q1 2013 results IL Report Money Tree TM Report Venture Capital Investments Plunge Some $ 196 million VC financing invested in hi-tech companies in Q1 2013 compared with $ 277 million (-29%) in previous quarter Tel Aviv, Israel - May 19, 2013 - Venture capital-backed tech companies (in which at least one investor in a funding round is a venture capital fund) raised $196 million in Israel during the first quarter of 2013, down with 29% from $277 million in the previous quarter and a 19% increase from $165 million in the corresponding quarter last year, according to the latest PwC Israel MoneyTree™ Report. The report also indicates that 51 Israeli high-tech companies raised VC funding in the first quarter of 2013, compared to 52 in the preceding quarter and 48 in the corresponding quarter of last year. The average investment per company in the quarter under review was $3.6 million, down from $5.3 million in the preceding quarter and $3.4 million in the corresponding quarter of last year. During the current quarter, $128 million were invested in 9 deals of over $10 million, compared with $191 million invested in 12 deals in the previous quarter and $70.5 million in 5 deals in Q1 of 2012. Rubi Suliman, PwC Israel's high-tech practice leader pointed out that, "we witnessed a relatively lower VC investment levels in companies during Q1 2013. This is also the trend in the US, where VC investment levels this quarter reached a two-year low. As we see a more prominent presence in the marketplace of other investment players such as angels, private funds, incubators, and accelerators, increasingly more companies raise investments early on from non-VC sources. This leads to a situation where early, small investments are available to companies, allowing many new startups. In later, more significant raising rounds, those companies face difficulties and limited options in the Israeli market, driving increasingly more startups to seek funding overseas". Rubi Suliman, PwC Israel's high-tech practice leader www.pwc.com/il The PwC Israel MoneyTree™ Report for the first quarter of 2013

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Page 1: results Venture Capital Investments Plunge Some $ 196 · PDF fileQ1 2013 results IL MoneyTree TM Report Report Venture Capital Investments Plunge Some $ 196 million VC financing invested

Q 12 0 1 3r e s u l t s IL

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ortMoneyTreeTM

ReportVenture Capital Investments PlungeSome $ 196 million VC financing invested in hi-tech companies in Q1 2013 compared with $ 277 million (-29%) in previous quarter

Tel Aviv, Israel - May 19, 2013 - Venture capital-backed tech companies (in which at least one investor in a funding round is a venture capital fund) raised $196 million in Israel during the first quarter of 2013, down with 29% from $277 million in the previous quarter and a 19% increase from $165 million in the corresponding quarter last year, according to the latest PwC Israel MoneyTree™ Report.

The report also indicates that 51 Israeli high-tech companies raised VC funding in the first quarter of 2013, compared to 52 in the preceding quarter and 48 in the corresponding quarter of last year. The average investment per company in the quarter under review was $3.6 million, down from $5.3 million in the preceding quarter and $3.4 million in the corresponding quarter of last year.

During the current quarter, $128 million were invested in 9 deals of over $10 million, compared with $191 million invested in 12 deals in the previous quarter and $70.5 million in 5 deals in Q1 of 2012.

Rubi Suliman, PwC Israel's high-tech practice leader pointed out that, "we witnessed a relatively lower VC investment levels in companies during Q1 2013. This is also the trend in the US, where VC investment levels this quarter reached a two-year low. As we see a more prominent presence in the marketplace of other investment players such as angels, private funds, incubators, and accelerators, increasingly more companies raise investments early on from non-VC sources. This leads to a situation where early, small investments are available to companies, allowing many new startups. In later, more significant raising rounds, those companies face difficulties and limited options in the Israeli market, driving increasingly more startups to seek funding overseas".

Rubi Suliman, PwC Israel's high-tech practice leader

www.pwc.com/il

The PwC Israel MoneyTree™ Report for the first quarter of 2013

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Average investment per company (in millions $)

Total annual investment 2008- Q1 2013 (in million $)

4.64.2

5

3.54

2.73.2

2.6 2.4

3.4 3.7 3.54.1

4.8 4.5

5.6

3.4

4.3

3.3

5.3

3.8

0

1

2

3

4

5

6

Q1-08

Q2-08

Q3-08

Q4-08

Q1-09

Q2-09

Q3-09

Q4-09

Q1-10

Q2-10

Q3-10

Q4-10

Q1-11

Q2-11

Q3-11

Q4-11

Q1-12

Q2-12

Q3-12

Q4-12

Q1-13

Average investment per company (in millions $)

427

291

393

287

194162

178201

170206

253256

342364

198

324

165

255

171

277

196

0

50

100

150

200

250

300

350

400

450

Q1-08

Q2-08

Q3-08

Q4-08

Q1-09

Q2-09

Q3-09

Q4-09

Q1-10

Q2-10

Q3-10

Q4-10

Q1-11

Q2-11

Q3-11

Q4-11

Q1-12

Q2-12

Q3-12

Q4-12

Q1-13

Total annual investment 2008- Q1 2013 (in million $):

Total annual investment 2008-2012 (in million $):

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Analysis by Geographic Location of Company Registration

Besides the $196 million VC investments in Israeli companies, 12 additional investments in foreign companies were reported to us totaling $180 million. Most of these investments were made in companies in the USA.

Companies Receiving Grants from the Office of the Israel Chief Scientist

14 companies, representing 27% of all companies raising VC capital in the first Quarter of 2013, are supported by the Office of the Israel Chief Scientist. Some 21$ million of total investment funds went to these companies.

Percentage of funds making no investment

24%

35%

26%30%30%29%

34%32%36%

42%46%46%

43%39%

34%41%

52%

32%

46%45%51%

0%

10%

20%

30%

40%

50%

60%

Q1-08

Q2-08

Q3-08

Q4-08

Q1-09

Q2-09

Q3-09

Q4-09

Q1-10

Q2-10

Q3-10

Q4-10

Q1-11

Q2-11

Q3-11

Q4-11

Q1-12

Q2-12

Q3-12

Q4-12

Q1-13

Percentage of funds making no investment

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Communications and Networking sector

Analysis by Leading Technological Sector

272 256

206 204

437

45 50 55 63 86

-50

100 150 200 250 300 350 400 450 500

20122011201020092008

Communications and Networking Number of Companies and total annual investments

2008-2012 (in millions $)

Total Investments

Number of companies

Number of Companies and Total Quarterly investments 2011- Q1 2013 (in millions $)

18

123

71

16

626766

35

88

6

1611 6

1212111215

0

20

40

60

80

100

120

140

Q1-13

Q4-12

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Q2-11

Q1-11

Communications and Networking Number of Companies and Total Quarterly investments 2011- Q1 2013 (in millions $)

Total Investments

Number of Companies

Software sector

272 256

206 204

437

45 50 55 63 86

-50

100 150 200 250 300 350 400 450 500

20122011201020092008

Communications and Networking Number of Companies and total annual investments

2008-2012 (in millions $)

Total Investments

Number of companies

Number of Companies and Total Quarterly investments 2011- Q1 2013 (in millions $)

63

42 39 41 31 43 22 46 39

12 1513 111095

1417

-

10

20

30

40

50

60

70

Q1-13

Q4-12

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Q2-11

Q1-11

Software SectorNumber of Companies and total quarterly investments 2011- Q1 2013 (in millions $ )

Total Investments

Number of Companies

Internet Sector

272 256

206 204

437

45 50 55 63 86

-50

100 150 200 250 300 350 400 450 500

20122011201020092008

Communications and Networking Number of Companies and total annual investments

2008-2012 (in millions $)

Total Investments

Number of companies

Number of Companies and Total Quarterly investments 2011- Q1 2013 (in millions $)

46 53

18

83 25 72 23

109

75

11 1111

1798

12

1315

-

20

40

60

80

100

120

Q1-13

Q4-12

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Q2-11

Q1-11

Internet SectorNumber of Companies and total quarterly

investments 2011 - Q1 2013

Total Investments

Number of Companies

Semiconductors Sector

272 256

206 204

437

45 50 55 63 86

-50

100 150 200 250 300 350 400 450 500

20122011201020092008

Communications and Networking Number of Companies and total annual investments

2008-2012 (in millions $)

Total Investments

Number of companies

Number of Companies and Total Quarterly investments 2011- Q1 2013 (in millions $)

5 14

3

62

2

42

6

54

47

5 32

5

24277

-

10

20

30

40

50

60

70

Q1-13

Q4-12

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Q2-11

Q1-11

Semiconductors Sector Number of Companies and total quarterly

investments 2011- Q1 2013

Total Investments

Number of Companies

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Life Sciences Sector

272 256

206 204

437

45 50 55 63 86

-50

100 150 200 250 300 350 400 450 500

20122011201020092008

Communications and Networking Number of Companies and total annual investments

2008-2012 (in millions $)

Total Investments

Number of companies

Number of Companies and Total Quarterly investments 2011- Q1 2013 (in millions $)

33

12

26

9

27

59 56 63

45

7 1 9 7 11

10

7

13 15

-

10

20

30

40

50

60

70

Q1-13

Q4-12

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Q2-11

Q1-11

Life Sciences SectorNumber of Companies and total quarterly

investments 2011- Q1 2013

Total Investments

Number of Companies

Miscellaneous Sector

272 256

206 204

437

45 50 55 63 86

-50

100 150 200 250 300 350 400 450 500

20122011201020092008

Communications and Networking Number of Companies and total annual investments

2008-2012 (in millions $)

Total Investments

Number of companies

Number of Companies and Total Quarterly investments 2011- Q1 2013 (in millions $)

31 33

13

44

18

41

25

58

49

10 66

13

4

157

1714

-

10

20

30

40

50

60

70

Q1-13

Q4-12

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Q2-11

Q1-11

Miscellaneous Sector Number of Companies and total quarterly investments 2011 - Q1 2013 (in millions $ )

Total Investments

Number of Companies

Cleantech sector (Cross sectoral)

272 256

206 204

437

45 50 55 63 86

-50

100 150 200 250 300 350 400 450 500

20122011201020092008

Communications and Networking Number of Companies and total annual investments

2008-2012 (in millions $)

Total Investments

Number of companies

Number of Companies and Total Quarterly investments 2011- Q1 2013 (in millions $)

22 16

8 2

18

59

10 11

26

6 4 4 3

3 4 3 5 8

-

10

20

30

40

50

60

70

Q1-13

Q4-12

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Q2-11

Q1-11

Cleantech sector (Cross sectoral)Number of Companies and Total Quarterly investments 2011- Q1 2013 (in millions $)

Total Investments

Number of Companies

Total investment by sectors – first quarter 2013

Communications &

Networking 9%

Software 32%

Life Sciences 17%

Internet 23%

Semiconductors 3%

Cleantech 11%

Other 5%

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100 75

42

91

58 76 65

146

91 22 19 20 27 20

22 15

29 26

-

20

40

60

80

100

120

140

160

Q1-13

Q4-12

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Q2-11

Q1-11

Early RoundNumber of Companies and total quarterly investments 2011- Q1 2013 (in millions $ )

Total Investments

Number of Companies

Early round

Analysis by Investment Round

Number of Companies and total quarterly investments 2011- Q1 2013 (in millions $)

Third round

Number of Companies and total quarterly investments 2011- Q1 2013 (in millions $)

100 75

42

91

58 76 65

146

91 22 19 20 27 20

22 15

29 26

-

20

40

60

80

100

120

140

160

Q1-13

Q4-12

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Q2-11

Q1-11

Early RoundNumber of Companies and total quarterly investments 2011- Q1 2013 (in millions $ )

Total Investments

Number of Companies

39

82

34 42

18 21

63

21 49 4 6 6 8 4 5 9

2 7 -

10 20 30 40 50 60 70 80 90

Q1-13

Q4-12

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Q2-11

Q1-11

Third RoundNumber of Companies and total quarterly investments 2011- Q1 2013 (in millions $ )

Total Investments

Later Round

Number of Companies and total quarterly investments 2011- Q1 2013 (in millions $)

Bridge Loan

Number of Companies and total quarterly investments 2011- Q1 2013 (in millions $)

100 75

42

91

58 76 65

146

91 22 19 20 27 20

22 15

29 26

-

20

40

60

80

100

120

140

160

Q1-13

Q4-12

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Q2-11

Q1-11

Early RoundNumber of Companies and total quarterly investments 2011- Q1 2013 (in millions $ )

Total Investments

Number of Companies

44

95 65

95

42

206

53

163 152

8 11 7 8 5 14 5 15 15 -

50

100

150

200

250

Q1-13Q4-12Q3-12Q2-12Q1-12Q4-11Q3-11Q2-11Q1-11

Later RoundNumber of Companies and total quarterly investments 2011- Q1 2013 (in millions $ )

Total Investments

Number of Companies

100 75

42

91

58 76 65

146

91 22 19 20 27 20

22 15

29 26

-

20

40

60

80

100

120

140

160

Q1-13

Q4-12

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Q2-11

Q1-11

Early RoundNumber of Companies and total quarterly investments 2011- Q1 2013 (in millions $ )

Total Investments

Number of Companies

100 75

42

91

58 76 65

146

91 22 19 20 27 20

22 15

29 26

-

20

40

60

80

100

120

140

160

Q1-13

Q4-12

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Q2-11

Q1-11

Early RoundNumber of Companies and total quarterly investments 2011- Q1 2013 (in millions $ )

Total Investments

Number of Companies

14 25

31 26

46

21 18

33

49

17 16 19 16 19 17

15

30

35

-

10

20

30

40

50

60

Q1-13Q4-12Q3-12Q2-12Q1-12Q4-11Q3-11Q2-11Q1-11

Bridge LoanNumber of Companies and total quarterly investments 2011- Q1 2013 (in millions $ )

Total Investments

Number of Companies

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Total investment by investment round

Early Round,

51%Third

Round, 20%

Later Round,

22%

Bridge Loan, 7%

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Analysis by Company Development Stage

23

33

3 4

29 29

14

22

15

8

15

3 5

6 8

3 10 8

-

5

10

15

20

25

30

35

Q1-13

Q4-12

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Q2-11

Q1-11

Seed/Start Up StageNumber of Companies and total quarterly investments 2011- Q1 2013 (in millions $ )

Total Investments

Number of Companies

Seed/Start Up Stage

Number of Companies and total quarterly investments 2011- Q1 2013 (in millions $)

Intermediate stage

Number of Companies and total quarterly investments 2011- Q1 2013 (in millions $)

23

33

3 4

29 29

14

22

15

8

15

3 5

6 8

3 10 8

-

5

10

15

20

25

30

35

Q1-13

Q4-12

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Q2-11

Q1-11

Seed/Start Up StageNumber of Companies and total quarterly investments 2011- Q1 2013 (in millions $ )

Total Investments

Number of Companies

170 170

108

249

129

175 139

296 234

39 29 42 52 38 41 36 59 63

-

50

100

150

200

250

300

350

Q1-13

Q4-12

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Q2-11

Q1-11

Intermediate stageof Companies and total quarterly

investments 2011- Q1 2013 (in millions $ )

Total Investments

Number of Companies

Later Stage

Number of Companies and total quarterly investments 2011- Q1 2013 (in millions $)

4

74 60

1 7

120

45 46

93

4 8 7 2 4 9 5 7 12

-

20

40

60

80

100

120

140

Q1-13

Q4-12

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Q2-11

Q1-11

Later StageNumber of Companies and total quarterly investments 2011- Q1 2013 (in millions $)

Total Investments

23

33

3 4

29 29

14

22

15

8

15

3 5

6 8

3 10 8

-

5

10

15

20

25

30

35

Q1-13

Q4-12

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Q2-11

Q1-11

Seed/Start Up StageNumber of Companies and total quarterly investments 2011- Q1 2013 (in millions $ )

Total Investments

Number of Companies

23

33

3 4

29 29

14

22

15

8

15

3 5

6 8

3 10 8

-

5

10

15

20

25

30

35

Q1-13

Q4-12

Q3-12

Q2-12

Q1-12

Q4-11

Q3-11

Q2-11

Q1-11

Seed/Start Up StageNumber of Companies and total quarterly investments 2011- Q1 2013 (in millions $ )

Total Investments

Number of Companies

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0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q1-13Q4-12Q3-12Q2-12Q1-12Q4-11Q3-11Q2-11Q1-11

Split of the Intermediate stage between early and expansion stage

expansion stage

Early stage

Total investment by company development stage

Split of the Intermediate stage between early and expansion stage

Seed/Startup, 12%

Early Stage, 60%

Expansion Stage, 26%

Later Stage, 2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q1-13Q4-12Q3-12Q2-12Q1-12Q4-11Q3-11Q2-11Q1-11

Split of the Intermediate stage between early and expansion stage

expansion stage

Early stage

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q1-13Q4-12Q3-12Q2-12Q1-12Q4-11Q3-11Q2-11Q1-11

Split of the Intermediate stage between early and expansion stage

expansion stage

Early stage

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© 2013 Kesselman & Kesselman. All rights reserved. In this document, “PwC Israel” refers to Kesselman & Kesselman, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. Please see www.pwc.com/structure for further details.

PwC Israel helps organisations and individuals create the value they’re looking for. We’re a member of the PwC network of firms in 158 countries with more than 180,000 people who are committed to delivering quality in assurance, tax and advisory services. Find out more by visiting us at pwc.com/il

This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. It does not take into account any objectives, financial situation or needs of any recipient. Any recipient should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, Kesselman & Kesselman, and any other member firm of PwC, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it, or for any direct and/or indirect and/or other damage caused as a result of using the publication and/or the information contained in it.

The MoneyTree™ Report is published quarterly by PwC Israel, in conjunction with the reports published in the United States and Europe by the global financial services network, PwC. This quarter,35 Israeli venture capital fund or funds with an Israeli representative participated in the production of the Report. The findings of the Report are widely used each quarter by Israeli and foreign venture capital funds, commercial banks, investment banks and other financial institutions both in Israel and abroad, high-tech companies, government departments, the Office of the Chief Scientist and others.

For further information

Karin Gattegno, Business Development Manager Hi-Tech department, PwC [email protected]