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U.S. Venture Partners eyes Israel hi-tech firms
Wed Jul 20, 2005 11:38 AM ET
By Steven Scheer
TEL AVIV, July 20 (Reuters) - U.S. Venture Partners (USVP) plans to invest in a number of Israeli high-tech start-ups using some of the $600 million in its latest venture capital fund, a USVP general partner said on Wednesday.

"Of the $600 million, we expect a meaningful percentage -- a double digit percentage -- allocated to Israel," Chris Rust told reporters during a visit to Tel Aviv. "We have 18 to 20 active (Israeli) investment proposals ... and I am sure some of those will crossover."

He said USVP is particularly focused on early-stage funding for companies in life sciences, medical devices, semiconductors, software, clean technology, security and telecommunications, sectors heavily represented in Israel. Rust said California-based USVP targets companies with the potential to go public.

Overall, USVP's ninth fund since its establishment in 1981 aims to comprise 55 to 65 companies, mostly in Silicon Valley and Israel, said Rust, noting an average financing round is $4 million, with $8 million the most it invests at one time. It often invests with other funds.

He noted that over the past 24 years, USVP has invested $2.5 billion in high-tech companies, usually taking a 20 to 30 percent stake.

USVP has invested $100 million in Israeli companies over the last decade, including early stage funding in Check Point Software Technologies (CHKP.O: Quote, Profile, Research) and Compugen (CGEN.O: Quote, Profile, Research) .

In recent years, USVP has invested in Dotomi, an Internet advertising management firm, as well as chip maker Mellanox, software maker Imperva and broadband access systems maker Actelis.

"We are drawn to Israel; it has tremendous resources on the people side," Rust said, downplaying an often troublesome security environment, particularly over the past five years of Palestinian-Israeli violence.

"We take a long-term view," he said. "We are not deterred from investing in Israel ... These are issues the whole world is grappling with. Israelis are resilient and productive even when faced with these complexities."

He pointed to similarities between the cultures of the U.S. and Israel, as well as a democratic political system and free markets.

Rust said that although many funds were shifting their focus to hot-spots like China and India, USVP does not plan on significant investments there, despite the fact that China produces more engineer graduates than the rest of the world.

"We expect there to be continued globalisation and competition to the United States and Israel from emerging markets like India and China," he said.

http://yahoo.reuters.com/financeQuoteCompanyNewsArticle.jhtml?duid=mtfh17920_2005-07-20_15-38-08_l20....

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