Hi-tech and start-ups in Israel require special attention and treatment, says Yifat Oron
By YUVAL PAIS/ MA'ARIVHi-tech employees attend Nvidia’s GPU Technology Conference in Tel Aviv last month, held for the first time in Israel(photo credit: Courtesy)
Israeli hi-tech, like most of the world, knows excellent years. More and more technological companies are emerging, some of them sold after only a short time. And every few weeks we see in the papers another company exit – a few more young people who sold their idea to a large company and made millions.Bank Leumi understood the potential in the hi-tech market and established Leumi Tech four and a half years ago, which specializes in working with technology companies and start-ups.Maariv , a sister publication of The Jerusalem Post , spoke to Leumi Tech CEO Yifat Oron at the Maariv Leaders Conference. She lives the hi-tech world and knows it from the inside out.“The hi-tech industry in the State of Israel is crucial,” she said. “It is the growth engine of the economy, significant in many parameters. [Hi-tech] constitutes about 40% of the production, something like 10% of GDP and 10% of the workforce. We have quite a few hi-tech companies here, even in absolute terms [as opposed to by population.] We have about 6,500 companies of all sizes.” From your familiarity with the field, what is the state of hi-tech today? “The hi-tech industry has become very stable, very well known in the world. We are one of the first three places worldwide in terms of innovation, and the industry itself is very strong because it has many legs that strengthen it: government involvement that constantly takes care of filling the gaps in places that private money does not fill and a strong and supportive business environment. For example, the legal world and the accounting world that help the field: it may sound trivial, but not all places in the world speak the accounting language that Americans can understand, so we are very American in this sense.”What is the annual investment in hi-tech as a whole? “Every year we see a new peak in the volume of investments that flow to Israeli companies, and we are now at a pace of more than $6 billion annually invested in Israeli technology companies, which is a lot of money. Billions a year, and these are numbers we have never seen before.”How are you different from other banks? “They understood this whole thing at Bank Leumi four and a half years ago, when our CEO, Rakefet Russak-Aminoah, noticed that there is a huge, strategically important industry for the State of Israel, but that it wasn’t being reflected in banking activities. No bank has designated a system that supports these hi-tech needs. There were accounts, etc., but when these companies need - ed credit, they would simply go over to the other side of the ocean. America has an understanding of these things and their banks knew how to lend the money – something that just didn’t happen here in Israel. Our CEO said, ‘We have to bring a new and real message here; we have to set up an organization inside the bank that is a bank, but one that works differently, looks at things differently. A bank that talks to the companies in their own language, understands them and is not afraid when a company loses money and is going through some difficulties. We had to create a very strong avenue of bankers who understand the industry, learn it, stay informed about what’s new, what’s not interesting, etc. We were lucky that the structure of Bank Leumi is very global and can serve companies in the US and Europe.“We currently serve about 4,500 hi-tech companies worldwide. We loan them money; this is a world of credit that was not developed in Israel, and it is very necessary. Because a company that grows should bring in a lot of investments as part of its growth. The more it can bring some of that money in credit rather than equity, [the less it will] dilute its investors and entrepreneurs. Bank credit does not dilute. We came and told the companies, ‘let’s help you side by side – your equity near our credit.’”
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