Start-Ups For Sale … Abroad

When faced with a decision to go public or sell out, 95% of them sell to foreign investors, says an interim report submitted to the Israel Securities Authority (ISA) on Tuesday.

The report, prepared by the The Committee to Promote Investment in Public Companies, made recommendations to the government for helping Israeli companies fund themselves locally instead of seeking capital outside the country.

In 2012, Israel high-tech companies raised only 27% of their funds from Israeli Venture Capital funds, while the rest came from abroad or other sources.

It proposed that the Tel Aviv Stock Exchange establish a special “Elite Tech” listing for high- tech companies, which will offer exemptions and reduce reporting requirements to make listing easier, and offer tax breaks to investors who buy shares of research and development companies during their Initial Public Offerings (IPO).

The report also suggested tax incentives for the start-ups, for instance, not taxing the company’s assets until they were sold, on condition that the company invested 70% of publicly raised funds in locally-traded high-tech.

ISA Chairman Shmuel Hauser said keeping technology companies in Israel was important due to their significant contribution to economic growth and job creation.

“The need to undertake measures to help Israeli R&D companies raise capital is unquestionable, whether this be through public offerings on TASE, through TASE-traded venture capital funds and R&D partnerships that invest in high-tech companies, or through off-exchange financial mechanisms,” he said.

The CEO of the exchange, Ester Levanon, promised to follow the committee’s recommendations and do whatever was necessary to carry them out.

This article appeared in print on page D26 of the June 5th, 2013 edition of Hamodia.