MoneyTreeTM. Report. results. IL Report. The PwC Israel MoneyTree Report for the fourth quarter of Mr. Rubi Suliman, Partner, High-Tech Leader

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www.pwc.com/il The PwC Israel for the fourth quarter of 2 TM 2 1 2 Decrease in Venture capital Investment Some $8 million VC financing invested in hitech companies in 2 compared with $1.

1 The PwC Israel for the fourth quarter of 2 TM Decrease in Venture capital Investment Some $8 million VC financing invested in hitech companies in 2 compared with $1.2 billion in 211 Tel Aviv, Israel February, 213 Venture capitalbacked tech companies (in which at least one investor in a funding round is an Israeli venture capital fund or a fund with an Israeli representative) raised $8 billion in Israel during 2, a decrease of 29% from $1.2 billion in 211 and a decrease of 2% from $884 million raised in 21. The average investment per company in 2 amounted to 4.1 $ million, compared with $4. million in 211 and $3.3 million in 21, according the latest PwC Israel's. In the fourth quarter of 2, venture capitalbacked tech companies raised in Israel $2 million an increase of 2% compared with the previous quarter, during which companies raised $11 million and a decrease of 14% compared with the corresponding quarter last year, during which companies raised $324 million. The report also indicates that 2 Israeli hightech companies raised VC funding in the fourth quarter of 2, the same number as the preceding quarter and 8 in the corresponding quarter of last year. The average investment per company in the quarter under review was $.3 million, up from $3.3 million in the preceding quarter and $. million in the corresponding quarter of last year. During the current quarter, $191 million was invested in transactions of over $1M, compared with $82 million invested in transactions in the previous quarter and $198 million in 9 transactions in of 211. During 2, $4 million was invested in 31 transactions of over $1M, compared with $8 million invested in 3 transactions in 211 and $31 million in Mr. Rubi Suliman, Partner, HighTech Leader IL Rubi Suliman, Partner, HighTech Leader, PwC Israel said "the Israeli hightech industry has experienced a continued shift in the financing landscape over the last few years. Israeli VC funds, which used to dominate almost every significant transaction in Israel, have been recently losing ground to alternative investment entities such as private investment firms (mainly foreign), international VCs (with no representation in Israel), angels, microfunds, etc. Yet, this is not to say that local VCs are out of the game. Israeli funds continue to have a pivotal role in the local industry. By cooperating with foreign investment entities, they provide the extra confidence that foreign investors need when making their first steps in this market. In fact, Israeli funds sometimes actively attract foreign investors to join them in their portfolio and by that help bring more investment to Israel in the longer run. The key change now, however, is that we see those foreign investment entities acting increasingly independently in the Israeli market, making investments in Israeli hitech without involvement of an Israeli fund, and those investments are naturally outside the scope of the report. Given that this trend is poised to intensify, in conjunction with less money in local funds, it is small wonder then that VCbacked investments are in decline. The total investment in 2 was 29% lower than 211 and 28% lower than the average of $1. billion in annual VCbacked investment over the last decade. Recently we published the 2 PwC Israel Exit, presenting an impressive $. billion in exits in 2. This figure will translate into better returns for funds, making it easier for some of them to raise additional capital in 213. However, peering forward into 213, it is fair to assume that we will not see an increase in VCbacked companies and that the trend towards alternative investment entities is set to continue".

2 2 1 2 IL Total annual investment 2 (in million $) 1, 1,4 1, 1,22 1,11 1,21 1,19 1,398 1,22 סך השקעות 1, ממוצע 1 שנים Percentage of funds making no investment % % 4% 4% 3% 3% 2% 41% 28% 24% 3% 29% 2% 31% 32% 24% 2% 32% 31% 3% 3% 29% 34% 2% 2% 23% 2% 24% 3% 2% 3% 3% 29% 34%32% 3% 4% 4% 43% 42% 39% 34% 41% 2% 32% 4% 4% 2% Q13 Q23 Q33 3 Q14 Q24 Q34 4 Q Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q18 Q28 Q38 8 Q19 Q29 Q39 9 Q11 Q21 Q31 1 Q111 Q211 Q Q1 Q2 Q3 2 TM

3 2 1 2 IL Annual investment levels of Venture Capital Funds (in millions of dollars) Q13 Q23 Q33 3 Q14 Q24 Q34 4 Q Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q18 Q28 Q38 8 Q19 Q29 Q39 9 Q11 Q21 Q31 1 Q111 Q211 Q Q1 Q2 Q Average investment per company (in millions of dollars) Q13 Q23 Q33 3 Q14 Q24 Q34 4 Q Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q18 Q28 Q38 8 Q19 Q29 Q39 9 Q11 Q21 Q31 1 Q111 Q211 Q Q1 Q2 Q3 Analysis by Geographic Location of Company Registration A total of 21 companies, representing 9% of companies raising VC capital during 2, are registered in Israel. These companies raised $831 million or 9% of total investment. The remaining companies are mostly incorporated in the US. Companies Receiving Grants from the Office of the Israel Chief Scientist 2 companies, representing 2% of all companies raising VC capital in 2, are supported by the Office of the Israel Chief Scientist. Some 181$ million of total investment funds went to these companies. 2 TM

4 2 1 2 IL Analysis by Leading Technological Sector Communications and Networking sector 82 (in millions $) מ 21 (in millions $) Q Q Q Q1 2 1 Q Q Internet sector 82 (in millions $) (in millions $) Q1 211 Q Q Q Q Q TM

5 2 1 2 IL Life Sciences sector (combines medical devices and biotechnology) 82 (in millions $) (in millions $) Q Q2 211 Q Q1 2 9 Q Q Software sector 82 (in millions $) (in millions $) Q1 211 Q2 211 Q Q1 2 Q2 2 Q TM

6 2 1 2 IL Analysis by Leading Technological Sector Semiconductors sector 82 (in millions $) 21 (in millions $) מ מ Q Q Q Q1 2 2 Q2 2 2 Q Miscellaneous sectors (companies operating in the Cleantech sectors) 82 (in millions $) 21 (in millions $) Q Q Q Q Q Q TM

2 1 2 IL Total investment by sectors fourth quarter 2 Semiconductors % Other % Internet 19% Communications & Networking 4% Life Sciences 4% Software % Total annual investment

7 2 1 2 IL Total investment by sectors fourth quarter 2 Semiconductors % Other % Internet 19% Communications & Networking 4% Life Sciences 4% Software % Total annual investment by sector 2 3 Million US$ Internet Communications & Networking Lifesciences Software Semi conductors Other TM

8 2 1 2 IL Analysis by Investment Round Early round 82 (in millions $) (in millions $) 2 בין השנים 211 מ Q1 211 Q2 211 Q Q1 2 Q2 2 Q3 2 2 Third round 82 (in millions $) (in millions $) Q Q Q Q Q Q TM

9 2 1 2 IL Later round 82 (in millions $) 21 (in millions $) Q Q Q Q Q2 2 Q Bridge loans 82 (in millions $) (in millions $) Q1 211 Q Q Q Q Q TM

10 2 1 2 IL Analysis by Investment Round Total investment by investment round Bridge Loan, % Later Round, 34% Early Round, 29% Third Round, 3% Total annual investment by investment round Million US$ 4 3 Early round Third round Later round Bridge Loans TM

11 2 1 2 IL Q 4 TM 2 TM

12 2 1 2 IL Analysis by Company Development Stage Seed/startup stage 82 (in millions $) מ 21 (in millions $) Q Q Q Q1 2 4 Q Q Intermediate stage (early/expansion stage) מ 82 (in millions $) 1, 1, 8 4 1, (in millions בין השנים (211$ Q1 211 Q2 211 Q Q1 2 Q2 2 Q TM

2 1 2 IL Later stage 82 (in millions $) 21 (in millions $) מ 3 3 2 229 43 8 4 32 9 14 2 21 34 33 211 142 21 2 14 8 4 2 93 4 Q1 211 Q2 211 4 Q3 211 9 211 4 Q1 2 1 2 Q2 2 Q3 2 4 8 2 Total investment by

13 2 1 2 IL Later stage 82 (in millions $) 21 (in millions $) מ Q1 211 Q Q Q Q2 2 Q Total investment by company development stage Seed/Startup % Later Stage 2% Expansion Stage 23% Early Stage 38% Total annual investment by company development stage Million US$ Seed/Startup Early/Expansion Stage Later Stage TM

14 2 1 2 IL The 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,42 Israeli venture capital fund or funds with an Israeli representative participated in the production of the. The findings of the 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, hightech companies, government departments, the Office of the Chief Scientist and others. For further information Karin Gattegno, Business Development Manager HiTech department, PwC Israel 394 karin.gattegno@il.pwc.com 213 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 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 8 countries with more than 18, 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. 2 TM

MoneyTreeTM. Report. results. IL Report. The PwC Israel MoneyTree Report for the first quarter of 2013

MoneyTreeTM. Report. results. IL Report. The PwC Israel MoneyTree Report for the first quarter of 2013 www.pwc.com/il TM 0 1 Venture Capital Investments Plunge Some $ 19 million VC financing invested in hitech companies in 1 compared with $ million (9%) in previous quarter IL The PwC Israel for the first