H/T: The Australian
Shelly Hod Moyal – chief executive of Israeli early-stage technology investment platform iAngels – is turning to Australia to help raise $US70m ($107m) for the firm’s latest fund.
The 10-year outfit’s investors include Alex Waislitz’s Thorney Investment Group and has been backed by a host of other international high net worth players, including Russian billionaire Roman Abramovich.
Ms Hod Moyal, who was in Australia last week, talked up Israel’s tech sector, saying it would emerge stronger from the now five-month long war with Hamas and has already closed $US30m from the raising.
“There’s this saying that I really like, and it also connects to the situation in Israel and that is ‘good times, produce weak people; weak people produce bad times and bad times produce strong people’,” Ms Hod Moyal told The Australian.
Before the conflict erupted with Hamas in October, global tech companies were battling a tightening of VC funding. Israel’s tech sector also protested against new laws passed last July that limited the court’s power to strike down government decisions – a move that was feared to potentially spook investors.
“Now in Israel, there is the additional complexity of the conflict and the war and the knowledge that there were many people in Israel that were mobilised for reserve service – about 350,000,” Ms Hod Moyal said, adding about 20 per cent of tech employees were mobilised.
“The other consideration is what’s going to happen to the Israeli economy. Tech is already high risk, high reward type of investing. So people that invest in tech, they’re not looking for added unnecessary geopolitical risk.
“But on the other hand, this is also what creates incredible opportunity in Israel, because the talent is there, and what we’ve been seeing is incredible resiliency.”
Over the past four months, Ms Hod Moyal said 120 Israeli companies had collectively raised $US1.7bn. At the same time, the Tel Aviv Stock Exchange has rebounded more than 20 per cent.
“The market is actually pricing in that Israel is here to stay. If you look at Israel’s past wars, almost all the wars – with one exception – the economy came back stronger.”
Australia’s biggest tech companies, including Atlassian, have rallied behind Israel, which consistently ranks in the top 10 of the world’s most innovative countries. The technology sector represents 14 per cent of the nation’s workforce and almost 20 per cent of its overall economic output.
iAngels has about $US400m of assets under management across 100 portfolio companies. Ms Hod Moyal said the firm had achieved an internal rate of return of 24 per cent.
“Most of the investors that we have in Australia have already realised everything that they’ve invested … and on an average duration that’s only three years.”
This is in part due to iAngel’s entrepreneur screening process, which included an algorithmic leadership assessment and interviews with psychologists.
“When you’re investing in early stage, you’re actually investing in people,” Ms Hod Moyal said.
“The way the assessment works is what we look at five critical success factors.”
These cover vision, discipline, people management, analytical and listening skills. Ms Hod Moyal said the ability to listen was the most important attribute.
“When you’re building a company, first of all, you’re going into it without knowing exactly how something is going to work. So you need to receive feedback from whoever it is you’re selling to and then make the necessary pivots or adjustments.”
To this end, Ms Hod Moyal said Elon Musk was the perfect entrepreneur.
“Ideally, you’re looking for people who will be able to learn and to evolve quickly based on the market. And so I think Elon Musk would be very good at that because it’s what he’s done his whole life.
“If you look at the stories around SpaceX and Tesla and the amount of times that they almost failed, and he realised that there was a preconception or there was a way that he’d done things then he completely changed the way he did it by 180 degrees and then was able to bring these companies to incredible success.”
Alex Waislitiz’s Thorney Investment Group became a shareholder in iAngels nine years ago. He initially invested up to $15m in a “strategic alliance” to gain a foothold in Israel’s tech sector.
“Many years ago, when we first started thinking about investment in Israel’s vibrant tech sector, we faced the choice of either setting up an office there or forming an alliance with someone already on the ground,” Mr Waislitz said.
“We met Shelly and the iAngels team through the Australia Israel Chamber of Commerce and were immediately impressed with their energy, their networks, their access to deal flow and their focus on due diligence. We made a couple of initial investments with them and that gave us the confidence to take a direct stake in iAngels itself, as well as continuing to invest both alongside them and in some of their funds.
“We’ve been very happy with the outcome so far. Including some exits along the way, we have seen a return of some four times our initial outlay.”
Mr Waislitz believed it was a “very good time” to invest in the Israeli tech sector.
“Notwithstanding the heartbreaking impact of the war in Gaza, the Israeli tech sector remains incredibly robust. But even before the war, tech company valuations had started to come down from previous overheated levels. This has been exacerbated by a drop in incoming capital since the war. As a result, valuations are now looking even more attractive,” he said.
“Obviously the war creates uncertainty, but people often overlook the fact that because Israel itself is a comparatively small market and population, the Israel tech sector’s focus has always been on exporting its product to overseas markets including the US, Europe and Asia.
“If you take the medium to long term view, this export focus will ensure that the Israel tech sector continues to thrive even amongst the most challenging of circumstances.”
JARED LYNCH
TECHNOLOGY EDITOR
FIRST PUBLISHED AT 4:00PM FEBRUARY 19, 2024
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