June 17, 2016
3 Keys to Momentum in the Startup Nation
This week, I traveled to NYC to participate in a panel discussion for the Israel Alternative Investing Summit, hosted by the Israel Economic Trade Mission. The purpose of the Summit was to connect American VCs with venture funds, private equity firms, and hedge funds from Israel. A special thanks to Lou Kerner of Second Shares for moderating our panel. Our friends from FF Ventures and Magma Partners participated, and I had the pleasure of meeting folks from StageOne Ventured and lool Ventures as well.
In case you haven’t read Start-up Nation, here’s a brief primer: For the last 7-10 years, technology companies and global investors have been beating a path to Israel and finding unique combinations of audacity, creativity, and drive everywhere they look. Why? Israel – a country of 7.1 million people, only ~60 years old, surrounded by enemies, in a constant state of war since its founding, with no natural resources – produces more successful start-up companies than almost every large, peaceful, and stable nation. How is this possible? As Plato says, mater artium necessitas: necessity is the mother of invention.
- The Venture Landscape has matured and is an ideal balance of dedicated funds plus outside capital:
- Fund of Funds have been prevalent in Israel since 1992, and are now on their sixth wave: 30+ funds have raised $3B in the last 3 years alone.
- There are 10 funds over $100M: Aleph, Carmel, Genesis, 83North, JVP, Magma, Marker, OrbiMed, Pitango, Sequoia, & TLV Partners
- 2015 proved to be a record year: 1,250 new tech companies were formed, a 36% increase!
- OurCrowd consists of over 12,000 accredited investors, with 100 companies that have raised > $230M
- Recognition of innovation attracting more foreign investment and M&A:
- There are now over 350 multinational companies and tech acquirers in Israel
- The Chinese have created a staggering $300M fund for life sciences
- Large U.S. tech companies like Apple, Google, Microsoft and Cisco have huge cash positions overseas, and they are buying up companies in response to spending pressures
- Startups are thinking BIGGER and pursuing LARGE exits:
- Israeli startups raised $237M in the first week of June 2016 (13 companies)
- Website guide developer WalkMe led the way in June with a $50 million financing round. Not far behind was image retail recognition company Trax, which raised $40 million and data storage company Weka.IO, which raised $32 million. Smart video company SundaySky raised $30 million and mobile cyber security developer Zimperium raised $25 million.
- In May, 2016 ridesharing app Via raised $100M and taxing hailing app Gett (formerly GetTaxi) brought in a $300M investment from Volkswagen.
- In 2015, there were 104 exits totally $9B
Questions? Comments? Have a great weekend, and Happy Father’s Day!