VCPaper_ResearchPaper

VCPaper_ResearchPaper - 2002 October VENTURE CAPITAL START...

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October 2002 VENTURE CAPITAL – START UP CO-EVOLUTION AND THE TECH CLUSTER Part 1: Macro-Background and Industry Analysis * Gil Avnimelech and Morris Teubal * This paper is an outgrowth of participation in the IFISE project supported by the European Commission. A related early version will appear in The Growth of Venture Capital: A Cross Cultural Comparison, D. Cetindamar (ed); and a more extensive one in a forthcoming book on Israeli High tech. Thanks to Motty Karp, Yigal Erlich, Ed Mlavsky, Chemi Peres, Eddy Shalev, Zeev Holtzmann, Yoram Oron, Jon Medved, Ron Heifetz, Allen Bloch, Michael Eisenberg, Danny Fishman, Meir Dayan, Nir Linchevsky, Shlomo Kalish, Yaffa Kreindel and Gal Hayut for the opportunity to interview them and for the insights we obtained. We also thank Vittorio Modena, coordinator of IFISE, The Office of the Chief Scientist (Ministry of Industry and Trade) for institutional support, and the Jerusalem Institute for Israel Studies for financial support. In addition we thanks Michael Avnimelech, Dan Breznitz, Dilek Centidamar, Dan Gelvan, Giancarlo Giudici, Stanley Metcalfe, Jay Morrison and three referees for their helpful comments; and Shai Goldberg for OCS data. . This paper is divided into two parts. Part 1 is reported here. It sets the stage for Part 2, which analyzes Microeconomic aspects of the VC industry (to appear shortly .( 1
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Abstract This paper provides an account of the emergence and development of a Venture Capital Industry in Israel, and the role it played in the recent successful growth of Israel’s high tech cluster. The paper focuses on Israel’s Venture Capital Industry, its emergence and operation during the 90s, in which period the number of VC Funds increased from 2 to over 100. The context is the transformation of Israel’s high tech industry from the Defense-dominated Electronics industry of the 70s/80s to the ‘Silicon Valley’ model of the 90s characterized by large numbers of SU companies. During this period the share of high tech in manufacturing industry; and ICT's share in the Business Sector increased considerably attaining one of the highest levels worldwide. Given the importance of Venture Capital an analysis of the waves of new SU companies should (and vice-versa .( operation’ of a mature Venture Capital industry, which has been more frequent in the VC literature. We focus on the Dynamics of Venture Capital particularly of the emergence and of subsequent development of the industry. We link these with core Evolutionary concepts such as variation, selection and reproduction (Nelson 1995 ( . The paper discusses the co-evolutionary and dynamic process involving the
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This note was uploaded on 02/19/2009 for the course NBA 5930 taught by Professor Goldman,melvin during the Spring '07 term at Cornell.

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VCPaper_ResearchPaper - 2002 October VENTURE CAPITAL START...

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