Did you ever consider Israel as an investment opportunity? If not, you are about to find out what you’ve been missing.
Israel has been called a “startup nation.” It received this name from a well-known book written by Dan Senor and Saul Singer called, what else, Start-Up Nation. The book explains how creative Israelis are when it comes to technology.
Over the last few years, a handful of Israeli startups have cropped up and been acquired by bigger companies. But in the past year, owners of these businesses started setting their sights on IPOs.
Why? To make more money of course!
There are already as many as 20 companies that could end up on the New York, London, or Tel Aviv exchanges.
Wix.com was the first one that showed Israelis what they could really do with their businesses. Wix.com is a website design and publishing company. When it went public, it was able to raise $127 million. It was such a success that the market value increased as much as 70 percent with a valuation of $1 billion. This is quite a difference when sites had been making about half that by selling to a company interested in taking them over.
Wix.com isn’t the only one that cashed in this past year. There is an app you may have heard of by the name of Waze. It’s a social maps and traffic app. Google took over that one and has plans to double the company’s workforce over the course of 2014. Apple recently acquired Israeli company PrimeSense, and they paid $350 million for it.
It’s not only Internet-based technologies that are getting bought up in Israel, medical device technologies are too. Covidien (NYSE: COV) bought a company by the name of Given Imaging for $1 billion.
Why Invest in Israel
Israel is growing by leaps and bounds. It’s a leader in software and telecommunications and in pharmaceuticals. As an investor, you know these are the areas of development that will be increasing the most in the coming years.
With Israelis looking for more money with bigger businesses, it’s obvious the nation will continue to grow in wealth. They have a good thing going right now with startups and the ball has just started rolling. As it gains momentum, so the economy will improve with it.
How to Play Israeli Business Ventures
Israel used to create startups and sell them off as soon as possible to make a quick few million dollars. However, they have learned that if they build it bigger, they will be able to get more money for them. This is where Israeli startups are headed. They are holding on longer in hopes for being profits.
As an investor, you may want to pay attention to the new startups that will surely come up in the new year. While not all startups will end up succeeding like Wix.com or Waze, there will many that will end up getting a good buyout.
You can get into this industry by looking for startups that need people to help get them started. By researching investment opportunities there, you may be able to get in on the ground level to end up profiting big when it’s sold.
Alternatively, you can keep your eyes on IPOs that come out of Israel. These will end up entering at a decent price, and quickly rise when they start gathering attention from potential buyers.
ETFs and American Depository Receipts (ADR) are possibilities too. You can diversify your portfolio greatly with an ETF, which could expose you to many stocks at one time (financial and pharmaceutical). ADR enables you to invest in individual companies traded on U.S. exchanges. Some examples are Teva Pharmaceutical Industries Ltd (NYSE: TEVA), Cellcom Israel Ltd (NYSE: CEL) and Nice Systems Ltd. (NASDAQ: NICE).
Risks to Be Aware Of
While Israel can be a worthwhile investment opportunity, it does have great risk. There are some geopolitical and political issues that could end up affecting the investments in the nation. While 2013 was a good year, there’s no telling what will happen with these factors in 2014. Keep your eyes on the news, as you consider investing to stay on top of any problems that may affect your investments.
With that being said, it’s a new realm to get into, and it will likely be a great one. Start researching now for possible investments in 2014. It will probably end up exciting you more than you ever imagined.
