What's next? "If in 2021 every second company could raise money, now the standard is much higher"
What's next?
"If in 2021 every second company could raise money, now the standard is much higher"
Lee Moser, Managing Partner of AnD ventures, spoke with CTech as part of the project “Where do we go from here?”, which aims to examine how the Israeli VC industry is dealing with the crisis in the sector
“The slowdown in investments from international funds has created a complex landscape for the Israeli ecosystem. However, local Israeli funds like us at AnD Ventures are finding opportunities within this challenge," says Lee Moser, Managing Partner of AnD ventures. “With our recent fund closure, we are uniquely positioned to step in and provide the vital funding and support that local startups need and we see more startups than ever.
“As international funds pull back, our readiness to invest enables us to bridge the gap and ensure that promising young startups can continue to thrive. In this way, while the broader ecosystem is affected, we play a crucial role in sustaining growth and innovation within Israel."
Moser spoke with CTech as part of the project “Where do we go from here?” trying to find out how the Israeli VC industry is dealing with the crisis in the sector.
Over recent months, we have witnessed one of the most serious crises to hit Israeli high-tech in recent decades: on the one hand, a global economic slowdown, and on the other hand, a local political crisis that sent the industry into deep stagnation. Since the general assumption is that the situation will not change in the near future, the big question is what can still be done to minimize the damage to the Israeli high-tech industry and how should we act so that when the crisis passes - all those involved can take a leap forward. Therefore, as part of this on-going project, we spoke with senior executives from the local venture capital industry to try and understand from them what needs to be done now to justify the reputation Israeli high-tech has earned as being creative, adaptive, innovative, agile and cunning.
Name of fund/funds: AnD Ventures
Total sum of fund: $70 million
Partners: Lee Moser, Roy Geva Glasberg, and Ariel Cohen
Notable/select portfolio companies: Connected Insurance, Onebeat, InfiniGrow (IG), OviO, Novacy, VineSight (VS), Queue, Ludeo, Fincom, and Astrid Entertainment
"As international funds pull back, our readiness to invest enables us to bridge the gap"
How long do you think the global economic slowdown will last?
"I can't tell how long it will take, what I can and need to do as an investor is to make sure we navigate the right way and with the right tools through the economic slowdown. An experienced LP of ours told me that times of slowdown can be the best vintage of your fund as opportunities will raise. We at this point are open to making investments and are looking for new companies to invest in."
Do you see a significant decrease in the number of new startups in the sectors you cover?
"We don't see a decrease in startups, the opposite, we see more startups looking for funding these days, and what we see is a higher quality of startups that are raising. If in 2021 every second company could raise money, now the standard is much higher.
"AnD Ventures has a sector-agnostic approach, allowing us to engage with a diverse spectrum of startups ranging from Fintech, to cyber to Gaming and everything in between. What we see today is startups with more revenues and lower valuations which create an opportunity for investors." Do you support the general assumption that AI can rescue the industry from the current crisis?
"As a venture capitalist based in Israel, I recognize the transformative potential of AI in reshaping industries, especially in light of the advancements we've witnessed during the Covid-19 era. The pandemic has accelerated the adoption of technology across various sectors, including remote work solutions, healthcare innovations, and digital transformation.
"Israel has a strong track record of producing cutting-edge technology startups, and AI is a field where Israeli entrepreneurs have excelled. The country's innovation ecosystem, characterized by a robust startup culture, a pool of skilled engineers, and close ties between academia and industry, positions Israel well to contribute to the AI-driven transformation of industries.
"While I see immense opportunities for AI to play a crucial role in addressing industry challenges post-crisis, I also acknowledge that AI is not a panacea. It requires strategic investment and thoughtful implementation. I am optimistic about AI's role in reshaping industries. However, I recognize that successful transformation requires a nuanced approach that balances technological advancement with economic, social, and ethical considerations."
Which investment strategies or financial tools have entered your tool-kit of solutions? Are there any that are no longer suitable to offer to startups?
"AnD Studio led by my partner Roy Geva Glasberg, is launching these days its program '200 in 30 days’' which commits to investing up to $200,000 in companies within one month. Throughout our process, we equip our portfolio companies with the highest quality of in-house domain expertise, including CTO, CFO, CPO, Head of HR, and business development. The fund also gives professional support and creates strategic partnerships with their LPs to execute go-to-market strategies. AnD strives to position the fund and its team as co-founders of portfolio companies and to share ownership of their growth path."
How should the venture capital industry conduct itself in the immediate and medium term?
"With their investors the approach is to always be transparent, this is a challenging time and the best advice as a fund manager in a time like this can come from your LP’s. Be transparent with numbers, with situation, and show the entire picture all the time.
"More then ever, today entrepreneurs need more then just money. Be the added value investor that you can, they need your time and advice, especially early-stage founders. Help them build their companies, help them with strategic connections, and make sure they have enough runway when they start raising money."
And with the government?
"I’m very proud to be a part of a sector that is standing and fighting for it values. I’m optimistic regarding the direction in which the political situation in Israel will evolve. I’m proud of my colleagues and our founders."
Are there positive sides to this crisis?
"Absolutely, there can be positive aspects to economic slowdowns, although it's important to note that these positive points often come in the context of challenging circumstances. We see today more rational valuations in financial markets in contrast to two years ago during periods of rapid growth, asset prices can become inflated, leading to market bubbles.
"Economic slowdowns often result in market corrections that weed out speculative investments and encourage a focus on fundamentals. This can lead to a healthier investment landscape with a greater emphasis on sound business models and solid financials.
"We also see a natural selection process, causing poorly managed or unsustainable companies to fail. While this can be painful in the short term, it allows more efficient and innovative businesses to emerge and thrive in the long run."
