Entrée Capital, a venture capital fund that invests in Israel and abroad, announced today (Tuesday) that it will raise an additional $ 300 million for investments in Israel. Of this amount, $ 140 million will go to investing in Israeli start-ups at very early stages (pre-seed And 160 million and another 160 million will be directed to investments in companies in the early growth stages.The Early Investment Fund will invest $ 500,000 to $ 6 million in start-ups, compared to $ 5-15 million in early growth investments.
Entry Capital is one of the most active funds in Israel in recent years and has raised about $ 600 million to its funds, which invest in Israeli start-ups. At the same time, Entri is strengthening its investment activity in foreign companies as part of funds that have raised $ 400 million to date. To date, Entry has made over 130 initial investments in companies. The new funds will invest in diverse worlds that range from podtech, through fintech to crypto.
According to Avi Eyal, founder of Enter Capital, the investors behind the fund are mainly institutional entities from abroad, with a small portion of the money coming from Israeli entities, but it does not name names. The fund has invested $ 100 million in six Israeli venture capital funds, including the current Entree funds.
Entri and Avi Eyal are personally known as the first investors inMonday , Which was issued last year at a value of $ 6.8 billion. Entry was also an early investor in the online fraud prevention company Risked , Which was also issued last year at a value of $ 3.3 billion. While Monday is currently traded at a value of $ 9.5 billion, still above the issue price even less than its peak, Riskipade has plunged since entering the stock market and is currently worth only about $ 1 billion.
In both cases the changes in the share price since the issue are less relevant to the returns of Enter Capital, since the fund’s policy is to distribute to the investors behind it the shares in the company at the time of the issue or even before it. This is an accepted method in the world of venture capital funds that removes from the fund the responsibility for managing the holdings after the company has become public and passes these on to investors who will decide when to sell the shares.
But is Riskipade, which as mentioned has not been celebrating since it was issued in New York, an example of a company that made a mistake when it went public? Eyal does not think so. “I think the companies that entered the stock exchange at Spock made a mistake because there was an overestimation of the companies and they were all kidnapped. It will take these companies three years to return to the level they entered the market with,” he says. “On the other hand, among the companies that went into a regular IPO, such as Riskipade, there were some that were snatched but I believe they will go up again. That people have left Riskipade. “
“The pace of investment has dropped and it will also affect the value of companies”
Other Israeli unicorns in which Entri has invested include Fundbox, Hi-Bob, Rapid and Open Web. Outside of Israel, Entri has invested in a number of big names such as the fintech stripe startup, the South Korean online trading giant Coupang, which was issued last year, and the restaurant delivery company. Delibro (Deliveroo). Bantry has six partners, four of them in the country, including Adi Gozs, who is currently being promoted to partner.
Bantry does not specify the returns of the funds and is content to point out that their first Israeli fund, the one that invested in Monday among other things, has grown more than 40 times for investors in eight years. The investment in Monday was the most profitable Entry has made to date in terms of the amount of money it has generated for the fund. The fund invested about $ 15 million in Monday, which translated into about $ 1 billion in the offering.
Despite the large raising, in recent months Avi Eyal, a founding partner in the Enterprise Capital Fund, predicts that the Israeli start-up market is facing a period of bubble burst with a decline in the rate of transactions and the value of companies in the market. Such an aggressive correction in the value of technology companies has been taking place for a long time on the stock exchanges in New York and is already beginning to trickle down to the world of investing in start-ups. “I already see the impact of the declines in the public market on investments in start-ups with a value of over a billion dollars and it’s progressing back to smaller deals.”
There is an argument that venture capital funds have already raised a lot of money, like you for example, and therefore we do not see a fall in investments in start-ups. What do you think?
“I disagree with my friends in the market on this issue and we’ll see who is right. I think if funds got used to completing initial investments from a fund within a year to 18 months and then raising another fund, now that range will go back to two or three years. At the same time, entities whose shares have fallen will invest less money in high-tech because they have less money in the balance sheet. This is something that will mainly affect investments in the later stages but also seems to be a 20% drop in the value of start-ups in the beginning. The growth of start-ups will also slow down because large companies will buy less and save more money for important things. “