Next Investors logo grey

These Israeli tech stocks are winning the market-disruption game, part 1


Published 23-JAN-2019 15:10 P.M.


10 minute read

Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.

In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.

The below articles were written under our previous business model. We have kept these articles online here for your reference.

Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.

Click Here to View Latest Articles

If you’ve been tuned in to the tech innovation frontline, you’d likely know that the vibrant Israeli tech scene is renowned as an industry-leading force.

With early successes in the 1990s dot-com days and a long-standing reputation as a ‘startup nation’, it’s clear that Israeli tech has a razor-sharp edge, with a dominant position in fields like robotics and drones, cybersecurity and medical cannabis.

And in recent times, it’s also become a highly lucrative conduit for forward-focused Australian investors. The past few years have seen a crop of bright Israeli sparks moving into the ASX tech corridor.

The trend began around three years ago with the mergers of small Israeli companies with stock exchange shells in Australia, raising capital and going public. More recently, however, most Israeli companies looking to trade on the ASX are doing so through IPOs.

There are now some 17 Israel-born companies on the ASX, most of which are small caps, playing in a diverse range of tech-heavy markets, from telecommunications and digital media through to innovations in agriculture and legalised weed.

We have scoped out 10 you should keep an eye on, and start with the following five.

Sky and Space Global (ASX:SAS)

Market cap: $113.6M

According to the infinite wisdom of Star Trek, space is the final frontier. Yet for a ‘new space’ company like Sky and Space Global, it’s only the beginning.

SAS has decidedly interstellar ambitions. It works to provide communications via innovative nano-satellite technology to the world’s equatorial regions, and it’s the first company to build and operate a commercial telecom network via nano-satellites.

Its vision is to provide affordable communication coverage and services to anyone, anywhere, anytime, with relatively low maintenance costs. This, in turn, will enable the company to deliver cost-effective communications infrastructure and services to those who need it most and to disrupt the telecommunications and international transport industries.

SAS has European and Israeli centres of aerospace, satellite and software industry experts. It’s UK-based but has an Israeli brains trust, which is already well-versed in the creation of satellites for low-orbit. In fact, it’s backed by a team that previously launched Israel’s first nano-satellite, that’s still operating now.

Nano is now the most popular type of satellite for diverse commercial usage. Their low mass and high capabilities make them a preferable choice for constellations and applications in the new space industry.

SAS has developed a disruptive solution based on routers on nano-satellites, coupled with unique and proprietary management software, enabling autonomous deployment, orbit control, and communication between satellites, not to mention significantly cheaper narrow-band communication services.

The tech itself has won a swathe of awards, including Global Excellence (2017), People’s NewSpaceCompany (2016 & 2017), Frost & Sullivan Innovation Award (2016), and Frost & Sullivan Global Nano-satellites Company of the Year.

The company successfully launched its first three nano-satellites, the so-called ‘3 Diamonds’, into space in June 2017, and is preparing for the launch of a constellation of 200 more by 2020.

Security Matters (ASX:SMX)

Market cap: $29.7M

ASX newcomer Security Matters is transforming brand liability, authentication, tracking and proactive quality assurance with technology that permanently ‘marks’ any object in solid, liquid or gas form.

The tech was originally developed by the Israeli Government, at the Soreq Nuclear Research Centre. It’s based on three components: a chemical-based hidden ‘barcode’ system, along with a unique ‘reader’ to identify the codes, and use of a blockchain record to store and protect ownership data.

Co-founders Haggai Alon, David Rosenblatt and Ed Hofland bring decades of experience in building successful companies within both Israel and Silicon Valley. The company’s advisory board is also fronted by Major General Ami Shafran, who chairs fellow Israeli tech stock, Elsight (ASX:ELS).

CEO and co-founder Alon said that the company’s vision is to be “the link between the digital economy and the ‘real economy’, providing a ‘digital twin’ on the blockchain of physical goods.”

“We have developed a suite of integrated solutions to solve both authentication and track and trace challenges in order to uphold supply chain integrity, and provide quality assurance and brand accountability to producers of goods.

“We’ve already got agreements in place with companies across different sectors, including diamonds (brand liability), plastics (product authentication), protecting proprietary raw materials (quality assurance). Plus there are a number of potential applications that are already in the pipeline including electronics, gold, art, food and agriculture.”

Haggai Alon, Security Matters co-founder and CEO

The tech is providing a viable solution to a number of high-value sectors, including the global counterfeit market, which is worth around US$1.77 trillion.

Security Matters is working with Israel-based Kafrit Group (TASE:KAFR), which has invested US$500k and is a channel distributor of partnerships for manufacturing and selling solutions to the plastic and packaging market. It’s also working with Intel (NASDAQ:INTC) on its Intel Ingenuity Partner Program and with BASF (ETR:BAS) on a proof-of-concept in its performance chemicals division.

It’s also dipping its corporate toe into the thriving medical marijuana space. This week, Security Matters inked an agreement with CliniCann to provide its proprietary tech for medicinal cannabis packaging. CliniCann was established in 2017 by the founders of ASX pot-stocks AusCann (ASX:AC8), CannPal Animal Therapeutics (ASX:CP1) and Zelda Therapeutics (ASX:ZLD).

This move means Security Matters will have exclusive rights to incorporate its track-and-trace technology into primary and secondary packaging of all products manufactured by CliniCann customers across the globe, excepting the US.

Mobilicom (ASX:MOB)

Market cap: $18M

Mobilicom designs, develops and markets solutions for mission-critical applications without the need for any existing infrastructure. No satellites or phone towers are required — all it needs is broadband data and an IP network.

The company’s diverse product portfolio and finely honed tech under its two business divisions – Mobilicom and SkyHopper – are based on an innovative approach that merges together 4G communication with mobile mesh private networking technologies into a unified solution.

This technology has been used in government, military and enterprise applications, offshore oil and gas, homeland security and public safety sectors.

It’s attracted strong partnerships with government and major global players, including the likes of Israel Aerospace Industries, Rafael Advanced Defense Systems, ExxonMobil, Honeywell, NTT Group, Eca Robotics and Elbit Systems.

MOB’s tech, which is backed by the company’s patent holding and know-how, has also won ten innovation grants from Israel, the EU and international consortiums. The solution has already been successfully field-tested and deployed in Israeli federal government and homeland security operations and has been validated by the Israeli Ministry of Defence.

Co-founders, Oren Elkayam and Yossi Segal, each have an expansive history working in the tech space. The duo worked together at Segal's former telecommunications business, Runcom, which won powerhouse clients like Mitsubishi, Motorola and Alcatel-Lucent, and grew to some $24 million in revenue under their leadership.

MOB’s tech also comes into play in its earlier stage, rapidly growing SkyHopper business, which provides end-to-end hardware and software solutions for the commercial and industrial drones and robotics sector.

SkyHopper is used as a communication solution for control, telemetry and video or payload sharing to and from the drone platform to the ground control systems and users. SkyHopper’s holistic approach enables drone manufacturers and service providers to focus on their own business objectives by reducing time-to-market, minimising resource expenditures and increasing their chances for success.

Last year, aerospace giant Airbus (EPA:AIR) selected the SkyHopper solution to be integrated into its drone innovation platform.

Just this week, Mobilicom revealed it has been chosen by the Israel Ministry of Defense and the Israel Innovation Authority to execute an R&D project valued in excess of $1.8 million. The project will focus on the development of cyber technologies using artificial intelligence (AI) as an add-on module for drones and unmanned platforms.

MOB is planning to develop an anti-hijacking and anti-spoofing system for commercial and industrial drones and robotics, which will enable autonomous drone cybersecurity without intervention by an operator in real-time — a game-changer for commercial drone deployment.

Fuelled by mounting demand in the commercial and government sectors, the global drone opportunity is expected to hit US$100 billion by 2020, according to Goldman Sachs.

In this short video, MOB’s Oren Elkayam talks to CNBC about the drone industry’s potential:

Next Investors Image


Market cap: $15.3M

HeraMED only debuted on the ASX in December last year, but was founded by CEO David Groberman, a biomedical engineer, and COO Tal Slonim in 2011.

Funds raised from the company’s $6 million IPO are primarily being used to accelerate commercialisation of its proprietary HeraBEAT device – a smart pregnancy monitoring solution.

HeraMED has developed a small monitor for home use designed to track foetal heartbeats. The device, which is connected to a smartphone and the cloud, makes it possible to save and share the date with the attending physicians.

Here’s the pitch:

This tech aims to provide the reassurance and peace of mind of a medical-grade fetal wellness test without the cost or discomfort associated with repeated visits to the OB/GYN or hospital.

According to the company, about 50% of expecting mothers in the United States don't have access to an obstetrician, where the cost of pregnancy and newborn care is estimated at about US$30,000.

HeraBEAT has received TGA (Therapeutic Goods Administration) approval, allowing it to expedite its product launch into the Australian market. This adds to the company’s existing regulatory approvals for the product, which include CE (Europe) and AMAR (Israel). It’s also made meaningful steps towards FDA approval to enable it to sell into the US.

In Israel, HeraMED has a distribution agreement with Teva Pharmaceutical Industries (NYSE:TEVA | TASE:TEVA) whose subsidiary Abic is the exclusive distributor of the product in Israel. HeraMED’s partnership with TEVA allows the company to earn US$2+ million over the first three years, delivering product validation, market scope and significant early revenue generation.

ParaZero Drone Safety Solutions (ASX:PRZ)

Market cap: $6.96M

Another ASX newcomer, ParaZero, was founded in 2014 in Israel’s Be’er Sheva region by a team of avionic professionals and drone operators to solve what it sees as the industry’s primary challenge – safety.

Its flagship SafeAir system independently monitors the flight operation of the drone in question, and if the drone fails, it triggers a patented ballistic parachute to provide a controlled descent rate, warns bystanders underneath and communicates with the UTM (unmanned traffic system).

SafeAir uses independent sensors to constantly monitor and analyse the drone’s flight data and flight patterns.

So far, ParaZero has supplied 1000 different drone systems with its technology, ranging from safety chutes for units weighing 2kg to security systems for 350kg drones.

Here’s ParaZero CEO, Eden Attias, speaking to the Finance News Network about the company’s partnerships and product portfolio:

Tomorrow, we’ll round out this look at Israeli tech stocks making the grade on the ASX.

General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

Publication Notice and Disclaimer

The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.

This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.