Doubling Down on Israeli Technology with $300m
I’m excited and honored to share on behalf of Entrée Capital that we have closed $300m across two new Israeli Funds — Early Stage IV and Early Growth II, bringing our total funds under management to $1bn.
We’d like to thank our investors, team, and founders for believing in Entrée’s mission of partnering with exceptional founders to build the impossible.
Over the past decade, we are proud to have backed over 130 startups, many of which are now successful (27 exits, 15 unicorns, and most growing strongly with only 11 losses). The companies that we’ve invested in employ over 35,000 people directly and over 100,000 more as contractors and partners. They have contributed to the global economy, whether it be by making significant scientific achievements, creating new products, or improving livelihoods. They have changed people’s lives for the good in the areas of health, finance, security, productivity, the environment, and more. Today, our portfolio companies have a combined value of over $335bn. 😲
Since 2011, Entrée Capital’s Israel Funds have invested in pre-seed and seed financing rounds of successful Israeli startups, including monday.com, Riskified, Rapyd, Breezometer, HiBob, Identiq, Authomize and more. Our conviction in Israel as a global technology hub remains the same — read our thesis from August 2019, here.
Our global footprint and Global Funds have been a unique differentiator and advantage, both to us as managers in understanding the market and building international relationships, as well as for our Israeli portfolio companies. Non-Israeli portfolio companies such as Stash, Stripe, SeatGeek, Gusto, and Vyne have helped our Israeli portfolio companies and vice versa.
💲 What we are funding and how:
Our new Israel funds are generalist in nature, in keeping with our past funds. We’ll continue to have a greater focus on specific areas such as DeepTech, FinTech, SaaS, Web 3.0 (Crypto/Blockchain), and Data/Cloud Infrastructure and DevOps/B2D, as well as specific contrarian, consumer and foodtech opportunities where we’ve built unique expertise.
Israel Early Stage Fund IV will provide pre-seed and seed funding to Israeli startups targeting deals of $500k to $6 million. Israel Early Growth Fund II will focus primarily on Series A and B, with investments of $5 million to $20 million, allowing Entrée Capital to both join and lead deals.
One may ask why two funds, and why relatively small funds? Our rationale is as follows:
(i) Small funds, as data has shown, produce greater returns (as a multiplier) than large funds. We have tried to find a balance between fund size and a market that has grown in deal size and valuation by over 100% in 8 years. In 8 years, our first Israel fund has returned over 40x (DPI).
(ii) Smaller funds mean that we as partners have fewer core investments to manage and can thus apply our time in a more concentrated fashion. We have seen a direct correlation between the time we spend in the first 18 months of us investing in a startup, and the results it achieves. Local presence and critical mass of a VC team matters at the early stage.
(iii) Splitting the funds into two distinct funds provides us with some advantages:
- The first is stage: pre-seed and seed investing is different to Series A and B investing. From the measurements used, the cadence of interaction with founders, to the maturity of teams and more. We believe this stage is very much driven by founders, timing, and ideas i.e. qualitative vs quantitative measures.
- The second is opportunity set: the Early Growth Fund can make decisions to invest in our own maturing early stage companies as well as investing in anti-portfolio opportunities. Being human, we are often wrong or simply miss a deal. So this gives us another bite at the cherry 😉. An advantage we have with the latter is that we have seen the companies, interacted with them, watched them grow and we can thus move quickly bringing our later stage global tier-1 VC partners to the table as and where needed.
Ultimately, we want to be “partnering with the exceptional to build the impossible.” And to do this we invest relatively early to enjoy the results of the value we bring.
👥 Growing the Team
We are also growing the team with new additions each month and we are taking the opportunity to announce the promotion of Adi Gozes to Partner in the Israel funds. Adi’s stellar career began with her serving in Israel Defense Forces’ 8200 Intelligence Corps, followed by a B.Sc. in Computer Science and an MBA from Tel Aviv University. Adi worked as a product manager and then as a startup co-founder, eventually moving into the venture capital world four years ago. We could not have found a better fit to join the partnership. Adi is passionate, empathic, combines technical and founder experience, and has been a big contributor to Entrée Capital.
🧬Our values and ethos of Teamwork, Reputation, Transparency, Diversity and Passion have served us well. Combined with patience, our founder backgrounds, and a strongly held belief system, we’ve managed to build a firm with top 5th percentile fund returns, proving that by putting our founders and companies ahead of us, we can produce great outcomes for all.
We are serial entrepreneurs — believing in people who want to change the world is in our DNA.
We look forward to continuing to grow and become a global leader in our field, working with all our stakeholders, who believe in our vision, mission and values.