Medical Device

1
Medical Device The Israeli Case
2
Objectives

• Drawing a general profile of the Israeli
  entrepreneur and to draw lessons on the following
  issues
•        1.  The origin of entrepreneurs and their
  motivations.
•        2.  Means of financing according to stage
  of development
•        3.   Means of protecting IPR.
•        4.  The dynamics of strategic partnering
•        5.   Recruiting of personnel

3
Medical devices - Definition

• An instrument, apparatus, implement, machine,
  contrivance, implants, in-vitro regent, or other
  similar components, parts or accessories intended
  for use in the diagnosis of disease or in the
  cure, mitigation, treatment or prevention of
  diseases.

4
The world Market for Medical Devices

• 100 billion
• 43 billion in the U.S market
• Expected annual growth 1999-2004 9
• Multinational manufacturers are continuously
  consolidating in order to establish better
  presence around the world

5
The Israeli Market

• 150 companies
• market value 400 million
• 300 million is imported
• 2/3 of the imports are from the U.S.
• Annual growth about 1

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Israels Export and Import
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Export by Category
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Export by Destination
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Research Sample

• 10 case studies of companies
• 3 interviews with incubators
• 4 incubator companies
• 1 public company
• 5 companies employs less then 25 employees
• 4 companies employ more the 50 employees
• All companies exist more the 4 years (av. 6.2)

10
Background of Entrepreneurs

• Incubators entrepreneurs
• Extensive academic background
• Lack of industrial background
• Founding the company alone and not as a team

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Background of Entrepreneurs cont.

• Independent entrepreneurs
• Extensive industrial experience
• Experience in entrepreneurship
• Companies are founded by a team of entrepreneurs

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Triggers

• Incubators entrepreneurs
• Frustration from the academic world
• Self-fulfillment
• Idea directly relates to their academic field

13
Triggers cont.

• Independent entrepreneurs
• People with entrepreneurial lifestyle inventors
  with many ideas who often implementing one idea
  and continue to the next one
• Self-fulfillment as a senior employee
• Firing Either by their employer or by the VC
  who insist to replace them

14
Source of Finance

• Pre-Seed
• Self financing raising money from family,
  friends and personal bank loans
• Angels wealthy individuals who invest in
  start-ups
• Tnufa program of the MOIT

15
Source of Finance cont.

• Seed
• VCs 300-1000K
• Technological incubators
• Self financing
• Personal bank loans (characterize companies
  founded in the early 90s)

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Capital for Company Development beyond Seed

• Strategic investors JJ
• Rounds of capital raising from other VCs
• Combination of VCs and strategic investors
• IPO 60 million

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Contribution of the investors

• Incubators
• Administration
• Management
• Attracting investors and strategic partners
• Allowing entr. to dedicate themselves to RD
  activities
• Learning environment

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Strategic Investors

• Door opener
• Accessibility to information
• Strategic partnership in marketing
• RD assistance is often limited

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Venture Capital

• Management - mainly as board members. Assist in
  issues from daily problems to business and
  marketing
• Human resources assist in recruiting senior
  staff especially abroad.
• Search for strategic partners
• Assist in raising capital
• Limited contribution for experienced entrepreneur

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Profiles of Entrepreneurs

• The academic
• The senior employee
• The serial

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Conclusions

• Incubators are mostly used by the entrepreneurs
  of the academic profile
• Good incubators provide proper framework for
  un-experienced entr.in this field

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Conclusions - cont

• Companies initiated by a team tend to develop
  faster
• Incubators rules do not support start-ups to
  recruit the best team
• In some cases incubators assist in the technology
  transfer process
• The contribution of the incubators is directly
  related to its management quality

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Conclusion cont.

• Un-experienced entrepreneurs tend to benefit more
  from VCs
• The contribution of VCs is a function of their
  specialization in the field.
• More emphasis should be given to IPR issues and
  regulation process. Differences between European
  and U.S law impede companies development.

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Policy Recommendations

• Incubators should enable start-up to recruit best
  management teams. Rules regarding salaries and
  team occupations need to be changed.
• Incubators should give more attention to business
  development
• As success of start-up companies is directly
  related to the quality of the incubator
  management there is a need to build a monitoring
  system to evaluate the incubator mangers
  performance.

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Policy Recommendations cont.

• Incubators are designed to achieve technological
  achievements. More emphasis on business
  development is necessary.
• There is a need to build a best practice model
  for incubation based on the international
  experience in the field
• Support should be given to the creation of
  professional IPR and legal services
• Tnufa program should be expanded and work more
  closely with incubators