Axis Tel Aviv 2020
The event began with Ibex Investors Founder and CIO Justin Borus’s keynote presentation, “Get Funded Now: What VCs are really looking for in Start-Ups”, where he emphasized the need for realistic expectations and building credibility. Start-Ups need to be priced to sell, with realistic projections and justification of the amount they seek to raise by presenting milestones they expect to reach with it. Individuals must be coachable, open to advice and questions, shouldn’t “have all the answers”, and need to acknowledge the risks and concerns.
Borus underscored the Art of Storytelling: In addition to being well-prepared, articulate, and passionate, entrepreneurs need to hone a perfect elevator pitch that can be understood by an 80-year-old granny in 3 minutes. This lesson was later illustrated when several panelists offered critical feedback to presenting Start-Ups to sharper their pitch and focus on their product rather than their technology.
Entrepreneurs must realize that accepting funding is a relatively long-term commitment (10–15 years), so any drama in the organization, such as interpersonal conflicts, needs to be resolved beforehand. Litigator Michael Rosen from Kobre & Kim (Israel), representing hi-tech clients in cross-border IP disputes and investigations, said he and his firm exist to dispel “the drama”. He also announced that they had launched a $30m fund to cover litigation for Israeli firms.
StartUps and Big Business don’t always speak the same language, so Lars Bohnisch, Investment Manager at Evonik (Germany), serves as a mitigator/translator between them in his arena. He was a panelist in the discussion on Corporate Models for Engaging with StartUps, which featured representatives from VC, CVC, and independent funds owned by Corporates. There was agreement that a lot of investment opportunities exist, but few really good ones.
Many of the Corporates, like Kimberly Clark, are focusing on Strategic investments, and the collaboration is much more important than financial. Eilat Cohen Basat, Managing Director of their Global Digital Innovation lab, is on the constant lookout for any disruption in order not to be surprised by their competition. When investing in a company, they help with the R&D, head the business unit, and she sits on board of the startup.
Nevertheless, there is a conflict of interest when the investment is only strategic, as Ulrich Seitz, Managing Director at BayWa (Germany) pointed out, and the relationship has a limited life, since the bottom line is always financial, so when the StartUp matures, they may become competitive.
Miles Kirby, Managing Director of Allianz’es independent AV8 Ventures (UK) warned StartUps not to spend too much time and focus working with Corporates on R&D when these are people who have no connection to the decision-making. Too many resources can be wasted if they are not careful.
While some entrepreneurs in the audience voiced their concerns that the Corporate’s fundraising process can be too slow, it was explained that one with a dedicated fund allows for a much speedier process.
A significant change in investment requirements over the last decade is the reduction of limitations or punitive measures. For example, VCs no longer demand First Rights Refusal or exclusivity. Many of the panelists throughout the event, such as Dede Goldschmidt, VP & Managing Director at Samsung Catalyst Fund, the #3 most active CVC globally, #2 in Israel, said they offer term sheets with no strings attached.
Although many investors from outside of Israel are concerned with how to break into this ecosystem, those that operate here have a lot of praise for the easily-accessed geographically-concentrated terrain and culture.
