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Angel Law – A Significant New Method for Start Ups to Raise Money Locally

March 11, 2012

The Israeli government has launched a new law to encourage investments in Israeli start-ups. An Israeli taxpayer who invests up to 5 million NIS per Israeli R&D company will be entitled to a deduction from taxable income, which can be spread out over 3 years. After 3 years the investor can withdraw his investment from the company and is taxed according to capital gain taxes.

JBNF will be holding a special event where the Ministry of Industry and Trade will be presenting the regulations for “Angel Law” for the first time. The JBNF event on Angel Law will be sponsored by the Business Promotion Department of the City of Jerusalem. Deputy Mayor Rabbi Yitzhak Pindrus will present why the Angel Law is so important for the economic growth of Jerusalem. A panel of experts has been invited to inform investors and entrepreneurs on how to take advantage of the new procedures and in a practical manner.

Program:

Moderator: Michael Horesh, JBNF

Greetings from

Deputy Mayor Rabbi Yitzhak Pindrus

Opening: Mr Avi Salman, Director, Business Development, Business Promotion Department

Participants on the Special Panel regarding the Angels's Law:

Mr Amos Efrati, Deputy Chief Scientist, Ministry of Industry and Trade, Mr Joel Stein, PCZ law group Mr David Krisman, KPMG Mr Haim Kravitz, Angelnet Mr Zev Savion, A to Z Israeli R&D

Enclosed is a link (in Hebrew) to the Angel law (p152-156):

http://www.knesset.gov.il/Laws/Data/law/2271/2271.pdf

The regulations from the Israel tax Authority have been posted on the JBNF site:

http://files.meetup.com/807042/Taxes%20Authority%20-%20Israel%20Angel%20Law.pdf

Mr Amos Efrati will be announcing for the first time the regulations from the Ministry of Industry and Trade for the Angel Law at the JBNF event. These regulations have just been published on the site of the Office of the Chief Scientist and can be seen at:

http://files.meetup.com/807042/OCS%20application%20procedures%20-%20Angel%20Law.pdf

In order to qualify according to the new law, the following criteria need to be met:

  1. The Israeli R&D company must be Israeli and managed in Israel.

  2. Operations must be in Israel.

  3. The shares must not be registered on a stock exchange during the benefit

period.

  1. 75% of the Research and Development budget is performed in Israel.

  2. The company’s revenue is less than 50% of R&D in the investment year.

  3. R&D is at least 70% of total company expenses.

  4. The company’s revenues cannot exceed 50% of revenue for the investment

year and one year to follow.

  1. The company has to report to the Office of the Chief Scientist but does not

need OCS grants to be eligible.

  1. The investor should be an individual.

Bios of our Panelists:

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Amos Ephrati, deputy Chief Scientist, Ministry of Industry, Trade and Labor, is a lifelong Jerusalemite and a graduate of the Hebrew University of Jerusalem who has played a major role in the development of the Israeli hi-tech industry in his work at the Ministry. He is currently responsible for the Angel Law implementation.

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Joel (Jody) Stein is a Partner in the Corporate and Patents Groups in PCZL’s Herzlia office. Jody focuses his practice on High-Tech transactions and intellectual property law, with an emphasis on representing technology companies. In his international practice, Jody represents numerous multinational companies doing business in Israel in fields such as semiconductor equipment, pharmaceuticals, banking and homeland security. Jody has a JC/MBA from Columbia University. Before coming on Aliyah in 1993, he worked as a corporate associate at the firms of Morgan Lewis & Bockius and Shearman & Stirling.

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David Krisman joined KPMG Somekh Chaikin in 1983 and was appointed a partner in 1998.

David serves as engagement partner responsible for major clients including publicly traded and private companies, government-owned, not-for profit organizations and educational institutions.

David heads KPMG Somekh Chaikin’s branch in Jerusalem and also heads our Israeli government and not-for-profit sector. The branch employs 60 people and enjoys a prestigious list of clients from various sectors of the economy

David’s key clients: Intel, Applied Materials Israel Ltd. , BAE Systems Rokar, BioCancell, Yissum, Bank of Israel, Iscor, Jewish Agency, Hadassah Offices in Israel, The Israel Museum, etc.

http://photos1.meetupstatic.com/photos/event/4/7/d/8/event_99378392.jpeg Haim Kravitz- repatriated to Israel in 2011 and founded AngelNet – a California style “Angel Investors Group”. Prior to founding AngelNet, he spent 20 years in California where he was an active member of the Keiretsu Forum Angel Investors Group. Haim Kravitz is the founder and CEO of three California based start-ups: Top Team, Inc; SmartDB Corporation, which was sold to a private equity group; and Advanced Systems U.S.A (ASU) of San Mateo, CA an Enterprise Software company, which went public on NASDAQ (LVEL) in 1995. Haim has a M.Sc in Life Sciences from the Hebrew University of Jerusalem (1981).

http://photos2.meetupstatic.com/photos/event/5/0/0/2/event_99500482.jpeg Zeev Savion is one of the first to use the Angel Law in two of his investments: Solo-Or and a military R&D start-up. Zeev Savion is an experienced entrepreneur with two major exits during the eighties and nineties. During the last few years, he is sharing his experience with start-ups and large industrial companies: Plazit group, Meccalte (Italy), Leviathan Energy. Zeev Savion does expert R&D management of multidisciplinary (electronics, mechanics, printing and chemistry) projects.

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