Startup Investing

Venture capital in Israel: What is it, who’s winning, and the future of startup investing

For small companies to grow, they need access to capital (how much money they need is a whole OTHER subject). Cash-strapped startups have a tough time growing.  While the landscape is currently changing, startups traditionally turn to venture capital firms for funding. What is venture capital Venture capital is a very important source of funding for startups and small businesses that don’t have access to capital markets. As part of the Israeli startup ecosystem, venture capital is institutionalized in the sense that it is done by professional organizations focused on investing in startups. These firms, in turn, have to report to their own investors and work to provide a positive return for them. Before they make a single investment, venture capital firms (VCs) raise investment funds from accredited investors (US definition here) and from other asset managers. These funds have specific mandates — rules and frameworks that define the types of startup investments they make. These mandates can be sector-specific (eg biotech fund) or focused on maturity (eg. late stage startups) or follow general investment criteria (eg. strong team,...

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What’s the average Israeli M&A look like?

As investors in Israeli startups, we get asked this question a lot. In fact, we’ve dedicated significant slide-age to it in our presentations about why invest in Israel. The environment for Israeli M&A But here’s the hard facts according to the numbers: First, in the aggregate Over the past decade, $15 billion has been invested in Israeli tech companies $37 billion take-out value in M&As and IPOs Average of 80 Israeli M&A deals per year (5 year average) Israeli M&A environment for 2011 average M&A deal: $60M (nearly double the $32.5M average in 2010) 15 deals over $100M, 5 deals over $300M, and 1 deal over $500M 5 IPOs (down from 11 in 2010) raised $126M  Multinationals come to Israeli to partner, acqui-hire, and acquire mostly early-stage technology companies. If you’re investing in Israeli ingenuity, then your investment model must reflect what’s going on on the ground. We believe OurCrowd’s new hybrid model — screening/due diligence for good deals and giving total discretion to our investors to decide which deals they’d like to participate in — is a better...

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Crowdsourcing the next big M&A with Merjerz

I had the privilege of meeting Arye Schreiber, an Israeli entrepreneur and founder of a new startup Merjerz. Optimizing the M&A experience Merjerz is an online “dating” site for prospective acquirers and targets to meet and enhance the M&A experience. It works by users of the site proposing M&A deals, and then other users commenting on the specific deal. For example, Jon Smith puts up a link that says “Cisco should acquire OurCrowd.” Merjerz’s users then can add their insights, creating a stream of up-to-date data, opinion, and crowdsourced sentiment. Now the acquirers are far better informed on specific companies and can make a better and more optimal choice and decision. This information is extremely hard to obtain, and the plan of the Merjerz is to charge large businesses and corporations yearly membership fees. The site also has a Corporate Review page, where the pros and cons of any hi-tech company can be discussed. Everyone can use this information for current, credible, and professional perspectives on a hi-tech corporation. One of the best traits to have when starting a company is experience in the field. Arye...

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Who invests in Israel?

Investing is Israel has become more popular ever since Warren Buffett, the world’s most prominent investor, started investing in Israel. Buffett is known not to invest on foreign countries, but he too sees the promise in Israel. In May of 2006, Buffett bought Iscar, an Israeli metalworking company, for $4 billion. This marked the most Buffett ever paid for a foreign investment. In fact, this was Berkshire Heathway’s first ever purchase of a non-American company. Since that investment, Buffett has called Israel the best place to invest and has said “We’re interested in more investments in Israel.” Here are some other notable investments by American businesses: Stanley Black & Decker’s CEO John F. Lundgren bought AeroScout, an Israeli company that created chips to track objects over the internet, for $240 million Facebook’s Mark Zuckerberg bought, facial recognition software, for $60 million. Zuckerberg also bought Snaptu, an Israeli internet design company, for $70 Million IBM’s CEO Ginni Rometty invested in Worklight, an Israeli IT and Enterprise Software company, for $95 million Microsoft’s CEO Steve Ballmer invested an R&D center...

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Israeli Startup SweetPacks acquired for $43 million

Israeli company SweetPacks, founded in 2000, was just recently acquired by Perion Network, an Israeli digital media company. The acquisition, worth $43 million in cash and stocks, took place on November 12th, 2012.[bra_blockquote align=””]“This combination provides meaningful scale and adds improved back-end systems that will strengthen our competitive advantage,” said Josef Mandelbaum, Perion’s CEO. “This acquisition further accelerates our own efforts to scale, adds 22 million new users, creating a larger and more profitable company.”[/bra_blockquote] SweetPacks is a company that provides users with easy to use tools to enhance the digital experience, such as SweetIM, a messaging tool that allows users to express across messaging, Facebook, and Email. The company also has other cool apps. Ginger is an app that saves you from embarrassing typos and horrible grammar. The app underlines words that don’t fit in the sentence based off the sentence’s context and structure. SweetPacks was founded in 2000, and generated almost $30 million in 2012, almost double the profits the company saw in 2011, which came in at $15.7 million. SweetPack’s CEO Nadav Goshen will join Perion...

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