Insight Partners and JVP acquire $120M worth of Earnix shares
Insight Partners and JVP acquire $120M worth of Earnix shares
The fintech company presented its first operating profit last year, with its revenues this year crossing the $100 million threshold for the first time
A large secondary share deal recently took place in the Israeli fintech unicorn Earnix, with Calcalist learning that two Israeli venture capital funds, Vintage Investment Partners and Israel Growth Partners (IGP), selling their entire holdings to two significant shareholders in the company: the Israeli venture capital fund JVP, led by Erel Margalit, and the American venture capital fund Insight Partners, represented in Israel by Liad Agmon, as well as to the company itself.
According to estimates, the deal is valued at about $120-$130 million. IGP sold shares for approximately $70 million, marking a significant exit with a sevenfold return on their initial investment, while Vintage sold shares for about $50-$60 million. The exact valuation at which the transaction was carried out is not known, but it was not higher than the value of the last fundraising round in 2021, when the company raised $75 million at a valuation of $1 billion, thus becoming a unicorn for the first time.
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Earnix CEO Robin Gilthorpe (from left), JVP Chairman Erel Margalit, and IGP co-founder Moshe Lichtman.
(Photo: Elad Gershgoren, Eli Dasa, Amit Shaal)
Vintage and IGP, early investors in Earnix, sold their shares because the funds through which they invested in the company had reached the end of their lifecycle, prompting the realization of the investments to return money to their investors. Private investment funds typically have a lifespan of about seven years, with an option to extend to 10 years. During the first 3-4 years, they make investments, then improve the companies, and in the last years of the fund’s life, managers realize the investments and distribute the money to investors, aiming to return multiples of the invested capital.
IGP, managed by former CEO of NICE Systems Haim Shani and former Microsoft Israel CEO Moshe Lichtman, invested in Earnix in January 2017, during a fundraising round of $13.5 million. This means that for IGP, the investment in Earnix is already over seven years old. Up to that time, Earnix had raised $25 million from investors including JVP and Vintage, making it an even older investment for them. Insight and JVP, as well as Earnix itself, saw this as an opportunity to increase their holdings in the company.
Secondary transactions—the sale of shares by existing investors in a private company—have become more common in the last two years, mainly due to increased interest rates intended to cool inflation but also cooling investors' appetite for risk assets like private technology companies. This has reduced the possibility of exits through public offerings. It has also impacted the mergers and acquisitions market, decreasing the frequency of companies being sold entirely to other entities. This has given impetus to secondary transactions, allowing existing investors to realize holdings, new investors to enter the company, or existing investors to increase their holdings, as seen with Earnix.
JVP is one of the first investors in the company, having made its initial investment in 2005 during Earnix’s second fundraising round. Insight first invested in Earnix in 2021, in the fundraising round that turned it into a unicorn.
Earnix is a rather unusual company in the Israeli technology landscape. Established in 2001, it is already a fairly old company but remains private. Unlike many other technology companies, it is profitable. Last year, 2023, Earnix presented its first operating profit (EBITDA). This year, Earnix’s revenues crossed the $100 million threshold for the first time, and the company aims to reach hundreds of millions of dollars in annual revenues over the next few years.
Earnix’s AI Dynamic Platform serves the largest Insurance companies in the world in a North America, Europe and Asia. Its products enable insurance companies to underwrite better and faster, personalize insurance and financial products for customers, adjust product prices, and maintain continuous contact with customers and various databases optimally. Earnix’s technology allows insurance companies to reduce customer acquisition costs, increase profitability per customer, and optimize pricing to boost profitability. Financial companies using Earnix can gain insights into consumption patterns, consumer preferences, and changes in customer tastes, helping bridge the gap between market trends and pricing based on supply and demand considerations.
Earnix has customers in 35 countries worldwide, including the USA, Europe, East Asia, and Australia. Its clients include the Italian financial corporation Generali, the finance arm of automobile giant Toyota, Tesco Bank, and US Bank. Customers pay annual usage fees to Earnix, with agreements typically lasting 3-5 years.
The CEO of Earnix is British national Robin Gilthorpe, who joined the company about a year and a half ago after 20 years in finance and insurance. Earnix currently employs 300 people in Israel, the USA, the UK, and Germany. It was founded by Sammy Krikler and Yoni Cheifetz, the founder of the American-Israeli software company Demantra, which was sold to American giant Oracle in 2006.
