Predictions 2010 – The Israeli Version

As I promised last week, I am keeping my tradition (second time in a row) and trying to lay out some predictions towards the new year. Since so many people give predictions for the industry as a whole (check out my favorite: Jeremy Toeman), I am going to focus on Israel:

1. VC Consolidation will continue BUT some funds will be raised for local VCs. As we enter 2010, there is still a big (global) question mark around the venture capital. Some are still believers, but others keep talking about the broken model. In 2010 we will see a trend similar to the US, where we some funds are over subscribed (Greylock, Accel) and others won't be able to raise at all. Same in Israel - I would expect to see some of the bigger Israeli funds with fresh money, but some funds will go away.
2. 2010 will be great for Israel M&A. I am very optimistic regarding the overall “exit” market for 2010. The IPO window is open, and the M&A pace is increasing. Q4 was excellent for Israel, with companies like Dune, Jajah and Guardium being acquired for nice amounts. The M&A trend will continue (Even this quarter), but we will see a small number of Israeli companies going public this year. In other words, the big Israeli IPO will wait for 2011.
3. Internet Acquisitions will increase. I just KNOW that Google will buy here at the end. But I don’t think it will happen in 2010. However, Microsoft is a bit more aggressive in Israel. As such, I expect Microsoft to acquire, but Google will not make their move before 2011 (or maybe Q4 2010). In general, I do expect one large web acquisition in Israel, unrelated to Microsoft and Google. It could be a startup company, or maybe a large spin-off …
4. Global tech leaders will continue visiting Israel. In the past couple of years we had the honor of seeing Larry Ellison, Steve Ballmer, Sergey Brin, and others. I would expect this trend to continue, and I am definitely waiting for Eric Schmidt to fill the new Habima. Steve Jobs and Apple? Not in 2010.
5. AOL. AOL has been the most active global internet company in Israel. Similar to the US story, some local AOL assets will be sold BUT new ones will be acquired. In other words, AOL will be exchanging their local asset base.
6. Angels will increase investments. As markets improve, the angel activity will increase, with some Silicon Valley angels investing in the local market. The angels have been a real alternative for the VCs in the past 2-3 years, and that trend will increase.
7. Deal Flow. I expect our deal flow pace to rise (More entrepreneurial activity), more focus on Europe/Asia, and some companies being started by returning Israeli entrepreneurs.
   

Overall, and without being over optimistic, I expect 2010 to be a good year for the Venture. I hope it will be a good year for the Israel Venture, and specifically for the web scene.

Comments

[Yoyo]

OK, so what are your Israeli IPO predictions for 2010?

[Daniel Cohen]

I think there will be very little Israeli tech IPOs in Nasdaq. Maybe Eyeblaster? Still, need to make sure the stock can hold post IPO, something that was quite difficult for the Israeli IPOs of 2006/2007

[yoyo]

I think Imperva will do it in 2010.

[adi]

dani
great stuff. thanks. anything wild?
here are some of my thoughts:
1. vertical applications will take off, as opposed to general ones. so vertically specific companies will get funded
2. an iPhone specialized fund will be set up by one of the existing players
3. a big name VC will close doors. not just rumors a la benchmark which i think are wrong
4. IBM will buy a bunch of cloud companies, same as they did in 2008 in storage

now, i hope at least one is right

[Jeremy Toeman]

thanks for the link Danny!! yours are quite good too. :)