Startup Investing

How to choose a winning startup (hint, start with the founders)

How to choose a winning startup (hint, start with the founders)

Jan 21, 2013 |

The 3 M’s angel investors consider before investing As an investor (whether angel, VC, or seed) arguably the most essential element in identifying a promising investment is the management team.  This idea led to the famous mantra that just like in real estate there are 3 L’s – Location, Location, Location; in the startup investing world there are 3 M’s – Management, Management, Management. In fact, many VCs prioritize talented, creative, and experienced management over a great idea, product, or booming sector.  Carlos Eduardo (not the European soccer player) is the co-manager and partner of Seedcamp (a leading micro-seed investment fund in Europe) — he claims that: “A startup’s management team is its lifeblood… no amount of awesome ideas will ever overcome a fundamentally flawed management team.”  (Source) Still not convinced?  Why do startups with great ideas fail? According to research from the University of Tennessee, while almost all startup failure is due to some sort of mismanagement, 30% of all startup failures can be directly attributed to what it describes as Unbalanced Experience or Lack of Managerial Experience....

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

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

Jan 7, 2013 | , ,

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,...

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

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

Nov 27, 2012 | ,

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...

Read More
Crowdsourcing the next big M&A with Merjerz

Crowdsourcing the next big M&A with Merjerz

Nov 26, 2012 |

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...

Read More
Who invests in Israel?

Who invests in Israel?

Nov 20, 2012 | ,

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 Face.com, 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...

Read More