But industry officials believe that prospects for 2008 are not as rosy.

“This year will be dependent on the economic situation in the U.S. due to the dependence of the local high-tech industry on investments by American investors,” said Zeev Holtzman, chairman of the IVC Research Center. He predicted investments in startups would be around the $1.6 billion level and not continue to rise as has been the case in the past few years.

The latest survey found that Israeli venture capital firms accounted for 39 percent of the total investment in local startups. This represents a drop from 40 percent in 2006 and 49 percent in 2005. The Israeli venture firms did however account for a much larger percentage of first round investments.

Telecommunications remained the largest single sector, accounting for $371 million, or 21 percent of total investments in startups. This was closely followed by life sciences which include both biotechnology and medical devices with $351 million, or 20 percent of total investment. There was also a sharp rise in investments in the semiconductor and Internet sectors in the past year. They accounted for 19 percent and 15 percent respectively.

The survey also found the highest level of investment in seed companies since 2001. Seventy eight seed stage companies raised $151 million in 2007.

In the fourth quarter 115 Israeli tech companies raised $503 million. This included a $100 million investment in Jerusalem based MobilEye, a developer of camera based systems for automatic driver assistance. The fourth quarter represents a 21 percent increase over the previous quarter and a 5 percent rise over the corresponding period in 2006. The share of Israeli-based venture firms out of the total investment in the fourth quarter dropped to 28 percent.

]]>neal sandlerGeneral newshttp://redherring.com/Home/23457#0Mon, 14 Jan 2008 01:42:47 GMThttp://redherring.com/Home/23457http://redherring.com/Home/23440Demand for technology workers continued to rise in Israel’s high-tech industry in 2007, according to a report.

A survey from Manpower Information Technology on Thursday reported a 2.3 percent increase in the final quarter of the year. For the entire year demand was up by over 2 percent.

The survey by the Tel Aviv-based firm, a subsidiary of Manpower Israel, found that demand was particularly strong for programmers and project managers where growth was three to four times the industry average. There are already shortages in engineers in key fields such as Java, J2EE, dot.net, RF, VLSI, and DSP.

“The trend remains upbeat with demand for new workers continuing strong in most segments,” MIT CEO Erez Benovich said. He predicted that this was likely to continue for at least the first two quarters of 2008 and then would depend on the economic situation in the U.S.

There has been increased concern in recent weeks that a recession in the U.S. would affect the local industry. The consensus view is that Israel’s high-tech industry would be hit though probably would suffer less than in 2001 due to the growing importance of other markets particularly the Far East.

The increased demand for workers in the past year has also led to a 5 percent rise in wages in the local high tech industry. Despite the increase there is still a substantial wage differential compared to the U.S. and some European countries. “The cost of an Israeli engineer is still about three quarters of his counterpart in the Silicon Valley,” said Moshe Zviran, a Tel Aviv University management expert who tracks high tech manpower. By contrast wages are about three times higher than in India and China. Mr. Zviran noted that salary levels in the local high tech sector have been rising by over 5 percent for the past three years.

During much of the 1990s mass immigration from the former Soviet Union kept wages in the high tech industry in check. But immigration has largely dried up in recent years and the supply of new workers is coming almost exclusively from the country’s academic institutions.

]]>neal sandlerGeneral newshttp://redherring.com/Home/23440#0Thu, 10 Jan 2008 10:53:00 GMThttp://redherring.com/Home/23440http://redherring.com/Home/22946Skype co-founder Niklas Zennstrom on Tuesday defended the Internet phone provider he sold to eBay two years ago for over $4 billion, saying the company is on track to pull in "substantial income" in the future. 

Mr. Zennstrom, speaking at Red Herring's ETRE technology conference in Budapest, said the company had 220 million users worldwide and reached revenues of $90 million last quarter. 

"Skype is way ahead of the competition and has introduced new services in the e-commerce field that will in the future produce substantial income," said Mr. Zennstrom, who stepped down as chief executive of the company.

 His remarks came just a week after San Jose, California, online auctions giant eBay announced that it would take a $1.4 billion charge related to Skype. In making the announcement, eBay admitted it had overpaid for the Luxembourg-based provider of Internet telephone services. 

The 41-year-old entrepreneur said he was now focusing his efforts on Joost, a technology for distributing television and video content over the web.  The system is based on peer-to-peer technology developed by the startup.  Joost claims to have signed up one million beta testers and is hoping to launch initial service at the end of the year. 

In addition to Joost, Mr. Zennstrom said he was involved in venture investment through his own fund. 

 "We've invested in 20 startups in the past year with over half in Europe," he said. But he said that there was still a need for more venture investment in Europe, especially at the seed stage.

Freescale Semiconductor CEO Michel Mayer, who spoke at Red Herring's ETRE technology event in Budapest on Monday, thinks so.

"The intense pressure on chip prices combined with high research and development costs have put a squeeze on the bottom line," Mr. Mayer said. He said that industry growth had dropped in recent years from a 25 percent clip to single digits. 

Cell phone chips are now made by 16 companies. Mr. Mayer predicts in this field alone the number will probably drop to 4 or 5 before long.  He hinted that Freescale would be among the companies looking to make acquisitions.

Austin, Texas-based Freescale went public in 2004.  In 2006, Freescale was taken private in a $17.6 billion buyout by a consortium led by private equity beast Blackstone Group.  The company is private for now, but that could change.  Mr. Mayer said that Freescale could be trading again within three to four years time.

"The best engineers at Microsoft are working on our answer to win back the search market," Microsoft International President Jean Philippe Courtois on Monday told attendees of the Red Herring ETRE European technology conference in Budapest. 

The Microsoft executive said the company was focusing its efforts on a highly competitive advertising platform, though he did not reveal when it would be released.  He said that it would not be an easy task to succeed.

Mr. Courtois also said that Microsoft was planning an even greater emphasis outside the United States. 

He said Russia is the fastest-growing market, followed by China, India, and several other Asian countries.  For these markets, he said, the software company is experiencing double-digit growth.

Mr. Brody, speaking on Sunday at Red Herring's ETRE, the annual European technology conference, this year in Budapest, said his company was relying enitrely on citizen journalists to cover news events.

"We are building the next generation Reuters,"  Mr. Brody said.

Now Public was founded two years ago and is based in New York and Vancouver, Canada.  The company claims to have the largest so-called citizen news network in the world with 130,000 contributors in 140 countries. Very few of them are actually paid. 

The site posts some 600 stories on an average day and already has 1 million unique visitors a month. The company has also signed a partnership agreement with The Associated Press to supply the news agency with images. Now Public claims that it had the first images out of Myanmar during the recent wave of demonstrations against the military government.

The content at Now Public comes from citizen journalists who are witnesses to events and are equipped with cell phones and the ability to take pictures or record.

Mr. Brody said that the growth of citizen journalism is due to an inability of news organizations to be on the scene of most breaking news events and increasing reliance of those under 35 on the Internet as their main source of news.

In July, Now Public raised $13 million, in a first round of funding, from investors led by Rho Ventures.

That was the assessment of Sachio Semmoto, founder and chairman of eMobile, a new entrant into the Japanese mobile market who spoke on Sunday at the opening session of Red Herring's ETRE European technology conference in Budapest.

"The three companies control a $73 billion a year market that is highly uncompetative,"  Mr. Semmoto said. 

eMobile is trying to take on the three existing Japanese mobile companies: NTT DoCoMo, KDDI and Softbank. But unlike his competitors, eMobile is initially focusing on the mobile data market that accounts for only 1 percent to 2 percent of revenue for mobile operators. The company is offering a $49 flat rate a month service, a fraction of the price of its giant competitors.

"The sharp drop in the price of 3G network equipment will help us succeed in rapid penetration of the market," said Mr. Semmoto, a serial entrepreneur who previoiusly founded telecommunications giant KDDI and eAccess, a broadband service provider.

He expects that the low rates will lead to sharp growth in mobile data usage by Japanese consumers. The company launched its mobile data service three months ago and already has 130,000 customers. eMobile plans to offer voice services early next year.

Japan has one of the highest average revenue per user rates in the world and this has led to a low minute usage rate by Japanese consumers. Mr. Semmoto said that these high rates contrasted with other segments of the Japanese telecommunications market that were highly competative. For example, he said that in the broadband field there were some 300 players and this led to low rates and high penetration levels.