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Israeli high-tech firms may benefit from security concerns
From: InfoSec News <isn () c4i org>
Date: Wed, 24 Oct 2001 02:17:51 -0500 (CDT)


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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