TechShield's reverse-fund model hopes to kickstart Startup Nation for investors overseas
TechShield's reverse-fund model hopes to kickstart Startup Nation for investors overseas
The initiative will be launching a series of 'reverse-fund syndicates', an investment model where a group of investors commits capital to a selection of startups pre-determined by VCs in Israel
A number of Israeli and American VC funds have united to launch an emergency, mission-critical fundraising operation designed to ensure that Israeli-related companies whose founders and managers are defending the country can continue operating and drive Israel’s innovation forward.
Sarona Partners, Ibex Investors, and Altair Capital have established TechShield to extend the runway of impacted companies to 15 months or more and provide dozens of Israeli companies with needed capital to survive this period with operating capital until March 2025.
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From left - Moris Cohen, Philippe Bouaziz, Toot Shani, David Debesh.
(Photo: Menash Cohen)
The initiative will be launching a series of reverse-fund syndicates, an investment model where a group of investors commits capital to a selection of startups, allowing individual investors to choose which companies they want to back rather than investing in a traditional fund that makes those decisions for them. It is understood that each syndicate will consist of 5-10 pre-selected eligible companies, and the partnering VCs behind the initiative will allocate first capital to each one before opening it up to vetted Jewish and Israel-supporting investors from around the world. At the time of writing, roughly 40 companies have already applied.
“Our LPs and family offices, both Jewish and non-Jewish, express extreme interest to support us,” said Toot Shani, managing partner at Sarona Ventures. “Everyone understands that the economy of Israel has to prevail and has to stay strong. It is our responsibility to help the Israeli economy survive and come out stronger from the other side. Businesspeople from around the world understand it but, at the same time, they’re far away and they do have concerns. Here comes the mechanism that we came up with.”
Speaking to CTech, Shani explained that many in the tech community wanted to help Israel from overseas but were unsure how to spend their money and where it would be best placed. “Usually it’s hard for people to mix their philanthropy money with their financial money unless they have an impact fund… The mechanism we structured is addressing the financial side but with the emotional motivation.”
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To qualify, companies need to have been directly impacted by Israel’s ongoing war with Hamas with founders, managers, or staff members called up to reserve duty thus causing operational restraints. Companies must also have raised at least Seed or Series A rounds and maintain service to at least three active customers.
Investors will be able to invest as little as $25,000 or as much as $5 million per syndicate, acquiring indirect equity positions in the syndicated companies and helping the critical cause of protecting the Israeli economy.
The Israeli tech scene has historically showcased remarkable resilience. After the second Lebanon War in 2006, Israel saw an increase in venture capital financing with investments skyrocketing to $1.76 billion by 2007. In 2014 following Operation Protective Edge, Israel didn’t just recover - it flourished. By the following year Israeli startups had raised a record-breaking $4.43 billion. It’s evident that adversity only fuels Israel’s drive to innovate and excel.
The investments are made on Fundit, an alternative finance platform and a wing of the Headstart Group. “This is more than just a collaboration. It’s about safeguarding the future of the Israeli economy,” added Fundit CEO Rinat Berman.
