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U.S. moguls give Israeli venture fund a hand
Finding the right niche is key in any business, and Neil Cohen, Michael
Eisenberg and Jon Medved seem to have found it. They run a Jerusalem-based
venture capital firm called Israel Seed Partners that specializes in tiny
Internet start-ups. Since it was founded in 1996, the company has been a
success in Web-obsessed Israel. Now, however, it is sizzling, after some
high-profile U.S. billionaires decided it was a good investment.
Over the summer Marc Andreessen, Jerry Yang and Pierre Omidyar, who are
among the founders, respectively, of Netscape, Yahoo! and eBay, announced
that they were making a "substantial" investment in the $40 million fund.
Although it is not unusual for Silicon Valley companies to back Israeli
start-ups, the decision of these three moguls to commit their personal money
to Israel Seed gave the enterprise an immediate boost. Suddenly, says Cohen,
"the awareness among entrepreneurs in Israel about how well connected we are
in Silicon Valley has made us the first stop for many of the local Internet
start-ups looking for funding." Several institutional investors, including
Silicon Valley Bank, Deutsche Banc Alex. Brown and Nomura Securities, have
also taken notice and bought stakes in the fund.
Cohen, 34, Eisenberg, 28, and Medved, 43, stand out in the burgeoning
Israeli venture capital community for several reasons. Unlike many of their
peers, they are not former military men looking to exploit their connections
in the government. All are early-'90s immigrants to Israel - Cohen from
London, Eisenberg from New York and Medved from Los Angeles. And all three
are Orthodox Jews and therefore chose to locate their business in the holy
city of Jerusalem, site of only one other venture capital firm. Most of
Israel's venture capital industry occupies a ten-kilometer strip along the
Mediterranean Sea between Tel Aviv and Herzliyya.
The three partners generally invest in tiny companies at a preliminary stage
of development and play a strong role in their management. Eighteen of the
24 companies in their portfolio are Internet-related, and Cohen, Eisenberg
and Medved hope to take two of them public early next year. The field of
IPOs could be crowded by then. According to Israel's Ministry of Trade &
Industry, the country has 1,000 Internet companies, nearly half of which
started up in the past year. As a group they attracted $50 million in
investment in the first six months of 1999 alone - a huge influx of capital,
by Israeli standards, that analysts expect will increase. Says Arie Gorlin,
a vice president at investment bank Jerusalem Global, "It's like a
California gold rush." |
