Money Meets Genius
As most start-up companies come to understand, the key to turning an idea into global success lies in capital investment and marketing.
Through the green-tinted spectacles of the investor, in recent years Israel has been transformed into an impressive pool of start-up companies with potential to pass beyond the Nobel-on-paper stage. Capital investment, whether from the government, the private sector, or from venture capital funds, is the key to turning an idea into a global success.The following companies showcase what happens when Money meets Genius - and marketing skill.
Marketing methods differ from field to field: Panorama pitches to large clients one on one; Nanonics trusts in exposure to a focused global market, chiefly by means of demonstrations, meetings and professional literature; ORAD employed "Israeli chutzpah", and became a global success by contacting major relevant entities and announcing their arrival to present their virtual advertising wares.
A Small Point of Light
Nanonics Lithography, born in the JCT incubator, was founded in 1993 by Prof. Aaron Lewis, formerly of Cornell and the Hebrew University. Starting capital was raised in February 1995 from Eurofind and Gemini venture funds; additional cash was raised later from the Inventech venture fund and the original contributors.
Prof. Lewis' breakthrough Near Field Optics technology, on which the company is based, extends optical lithography beyond the diffraction limits of conventional optics, to resolutions of 0.1 (m and below. "There was a technological vacuum in the market, which we filled. Our unique optical lithography tool is more than 'better engineered', it is revolutionary in the field of optics. We can break the laws of optical diffraction, and as a result, we can create light spots that are far smaller than current techology enables," explains Hanan Terkel, CEO, who joined Nanonics in 1995. "Our first application is for high resolution mask repair. The masks are the masters from which the semiconductor devices are manufactured.
As such they must be perfect. The resolutionson the masks are already higher than those on the wafer. The masks are a strategic item that enable extension of optical lithography beyond what was envisioned even a few years ago. We can focus laser beams at a tenth of a micron, while carrying out imaging at resolutions of smaller than 20-30 nanometers," Mr. Terkel elaborates. The company is in the final stages of product development but orders for the system are already accumulating. By May the company expects to install the first system in Silicon Valley.
"Today we are exposing ourselves to the market. Samsung, Toshiba, and other mask makers are waiting in line for our machines," says Mr. Terkel. Applications include mask and DRAM repair for the semiconductor industry, desktop lithography, patterning of exotic materials, and diffractive optics. "As the company matures, it will become a player in the lithography market for mass semiconductor production," Mr. Terkel promises.
Established in 1993, ORAD develops real time video processing technology for a market combining broadcast companies, advertising, and sports. "Our first investment was from two Israeli companies, Aromat and Orbotech, and ISL, a Swiss global leader in sports advertising," says Avi Sharir, CEO. Marketing itself aggressively, the company has penetrated networks around the world - WDR, NTC Babelsberg, and Nitro Films in Germany, ORF in Austria, B-Sky-B and BBC in UK, TF1 in France, RAI in Italy, three leading Japanese networks, and Brazilian GloboTV.
ABC America showed the presidential elections using ORAD technology. Israel Broadcasting used CyberSet, ORAD's "virtual studio" in the 1996 national elections. The uniqueness of the CyberSet is that it works on the principle of pattern recognition, meaning there is no need for sensors, and calibration is done automatically.
The company's newest product, IMadGINE, a "virtual billboard" is already being installed in sports games. "The signs can be adapted so that each country viewing games over TV will see different billboards, and billboards can be inserted into all kinds of empty places in the field," explains Mr. Sharir. Other sports oriented technologies include Virtual Replay and Digital Replay.
Other clients include the Brazilian carnival, the Venetian film festival, Rio de Janeiro's New Year marathon, America's soccer championship, German basketball and soccer games, and more. Mr. Sharir attributes ORAD's success to its ability to meet demand for innovation - and the rapid establishment of an international marketing array including German and American subsidiaries and strategic marketing partnerships, such as in Japan.
Luck, Lucre and Timing
Medis-El CEO Tsvi Rahavi attributes the company's success to luck, timely money, dedicated people - and marketing skills. The latter may seem obvious but is all too rare.
Medis-El was born of a Israel Aircraft Industries (IAI) project, and received partial financing from the office of the Chief Scientist at the Ministry of Industry and Trade. "However, if the project had remained under the auspices of IAI, it would have stagnated," Mr. Rahavi explains.
Enter Mr. Robert Lifton, an American investor who became a partner and chairman of the new company, now detached from IAI. Thus was Medis-El established at the end of '92 and went public in New York at the end of '93 - another inadvertent stroke of luck. The company raised $9.4 million against 13.5% of its stock. "If we had waited for January '94, as many advised, when the stock market slumped, we wouldn't be here today," says Mr. Rahavi. The issue was a hit and the company began bringing in more IAI experts.
Medis-El sells two core products: CellScan, used in diagnostics research in cancer and other immune system diseases; and Nuritor, an advanced, compact and portable analog/digital EEG. The company's newest breakthrough product is a twin-piston reciprocating linear compressor, with unmatched reliability and maintenance-free operation - all of this with low-power input and acoustic noise. This system can be used for refrigeration, air conditioning, and also for cryosurgical medical applications, notes Moshe Oren, company cofounder and consultant.
One on One
Ms. Rony Ross, CEO and owner of Panorama Software Systems, pragmatically notes that the company had the right product in the right place at the right time. The company focuses on OLAP (on-line analytical processing) technology to develop executive information systems, specializing in business intelligence products and solutions: data warehouses, decision support systems, data mining, executive information systems, multidimensional databases and OLAP and ROLAP systems.
"Development began in late '94 with capital raised from private Israeli investors. We didn't even have time to try to raise raising additional capital or go public," tells Ms. Ross. At the end of '96 the company approached Microsoft and convinced the higher echelon to meet. Three hours later, Panorama's OLAP technology was sold to Microsoft. Panorama customers include the cream of Israel's industry, as well as financial institutions and governmental and judicial bodies. The company's marketing policy is as straightforward as it comes: "Our clients are large organizations. We approach them one on one, and sell directly," Ms Ross explains.
From Ultrahigh to Ultrasound
In 1994, a group of Israeli fighter pilots well versed in the use of flight simulators established MedSim together with Israeli and American physicians. MedSim was founded with venture capital financing from Yozma, Arison, Challenge Fund, Medica VC fund, and several private American and Israeli investors.
The proliferation of ultrasound technology in medicine has increased the need for trained operators, but teaching fledgling physicians and sonographers by scanning real patients is becoming increasingly difficult and costly. MedSim's first product, UltraSim, simulates ultrasound analysis of patients using sophisticated simulation software and a mannequin, thus solving the problem of training ultrasound personnel on live patients. UltraSim comes with several different training modules, and provides a cost-effective, immediate solution to the training problem. MedSim also develops specialized educational programs for its clients.
The company is young but is selling strong and has an enviable backlog of orders. One American partner established a marketing office in the USA; after surveying the options, MedSim chose a distributor for the UK, and the company is now starting to sell in the Far East. "Our investors are just beginning to smile," Nimrod Goor, CEO, sums up.