Venture capital in Hebrew literally translates to “danger capital”. However, many Israeli entrepreneurs will tell you, that Israeli VC funds do all but taking risks. Despite the wealth of startups, Israel typically has a lower volume of deals. In the past month, three Israeli venture funds have announced financing rounds.
This is not a coincidence and is a result of three reasons:
1) The volatility in the market is causing investors to pull their funds out of the stock market, and surprisingly, money is more available for venture capital and private equity funds today.
2) In addition, successful portfolio companies that would have provided liquidation events and exits in normal market conditions, may run out of money during the downturn in the next couple of years. Despite layoffs and cost cutting efforts, capital injection might be the only way for them to stay above water.
3) Finally, venture capital funds are now a ‘safe’ investment. They tend to invest mainly in B and C rounds at the moment, focusing on growth and revenue producing companies. LPs know that, and they are happy to commit funds for safer bets.
Israeli Venture Capital Funds Announce Funding
Jerusalem Venture Partners (JVP) has announced a $100 million round for its fifth fund. With $770 million under management, this is the fund’s first round since 2001. JVP’s latest exit was the acquisition of Israel’s Zoomix by Microsoft. Erel Margalit, JVP’s founder and MP, commented that the new fund will be focused on delivering new media technology to the end user, with an emphasis on user experience.
Greylock Israel has completed a modest $50 million round on September 30. This will add up to the $150 million that Greylock raised in 2006. According to several sources, the fund has only invested $50 million to date. Since 2002, Greylock Israel has invested in about 20 Israeli companies including: Imperva, Payoneer, PLYmedia, Camero and Webcollage. Greylock Israel is part of Greylock Partners which manages $2.2 Billion worldwide. Greylock’s largest exit to date in Israel was the sale of Port Authority to WebSense for $100 million at the end of 2006.
Genesis Partners has received commitments of $100 million towards its fourth fund. Genesis’ goal is to raise an additional $50 million, similar to its third fund of $155 million. Genesis, founded by Eddy Shalev and Eyal Kishon, currently has $618 million under management. In the past year Genesis provided funding to Worklight, Primesense, Correlix, Commex as well as modu. Exits in 2008 included Kidaro ($100M sale to Microsoft) Yedda ($12M estimated sale to AOL) and FilesX ($80 sale to IBM).
Take away for entrepreneurs
If you are out there raising money, know that these funds and many more are sitting on a lot of cash. The cash comes from investors that expect a better return from what they can already get from the bank.
Now get out there and pitch!