[ISN] Israeli high-tech firms may benefit from security concerns

From: InfoSec News (isnat_private)
Date: Wed Oct 24 2001 - 00:17:51 PDT

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    By JASON KEYSER, Associated Press 
    TEL AVIV, Israel (October 23, 2001 10:00 p.m. EDT) - In the doldrums
    for the past year, Israel's esteemed high-tech firms are hoping a
    nervous world will turn to their security-minded products.
    Some 1,000 participants, including 200 from overseas, came to the
    three-day Israel Hi-Tech Summit this week. Among them were those
    selling software that converts Microsoft Windows applications to a Web
    form, allowing companies to make documents available to clients on the
    "To our clients remote access is very important, especially if you
    want to work from home, especially under the extreme security measures
    we're seeing now," said Rinat Gersch, spokeswoman for AppSwing Ltd.,
    the Israeli company which made the software. "So there is a definite
    opportunity here."
    Israel's technology sector, one of the world's most active, has taken
    a hit during a worldwide recession and a year of fighting with the
    Palestinians. Before then, it had been the country's engine. Now,
    high-tech firms are hoping the country's mindset of constant security
    - and thus its related technical expertise - will be a benefit in the
    aftermath of the Sept. 11 terror attacks in the United States.
    "The terror environment in the world does not help people to adopt new
    technologies and take risks," said Amir Gal-Or, a partner in Infinity
    Venture Capital and co-chairman of the conference.
    "Having said that, Israel is in a unique situation," he added. "We are
    used to crisis, pressure and terror. People have the capability to
    focus on business while all these things are happening."
    The industry crisis is apparent in the investment figures. Last year,
    venture capital firms in Israel raised a record $3.2 billion and the
    technology sector accounted for most of the 5.9 percent growth in
    gross domestic product. So far this year, $1.7 billion has been
    raised, said Joel Maryles, managing director of Salomon Smith Barney's
    Israel Investment Banking Group.
    Gal-Or said Israeli security companies will also seek to capitalize on
    the growing need for their services.
    In a positive sign, the Yokneam-based Given Imaging Ltd. on Oct. 4
    became the first company to go public on the Nasdaq exchange since the
    September attacks. The company makes a tiny video camera encased in a
    pill that takes pictures of the gastrointestinal tract.
    Israel is making other moves to ward off the effects of the Sept. 11
    attacks on an already wounded high-tech sector.
    As American capital markets try to rebound after the attacks, Israeli
    companies will likely begin to look to Europe's capital markets for
    funds, said Michel Habib, head of investment banking for ING Barings
    Trying to bring back investors who have left the Israeli market over
    the past year, Israeli Finance Minister Silvan Shalom last month said
    foreigners investing in Israeli venture capital funds would be exempt
    from all capital gains taxes.
    Speaking at the conference, Shalom said he was confident that
    investors would still be drawn to Israel. He said the country's
    technology sector is nurtured by the yearly arrival of thousands of
    highly skilled immigrants from the former Soviet Union and the
    advanced computer training offered in Israel's military service.
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