Angel investor Barak Rabinowitz started blazing a new trail last month. But Genesis is by no means the first chapter in his high-tech career. He has already been recognized as a CEO and an entrepreneur, sold a number of notable startups like Amuso (to the BBC) and Mytopia (to 888), and managed the $37 million exit of Crossrider as an angel investor. But, beginning in September, Rabinowitz has now become a partner at a venture capital firm.
Two months ago, Genesis Partners announced that 37-year-old Rabinowitz would be joining the firm, alongside existing partners Eddy Shalev, Eyal Kishon, Jonathan Saacks, Gary Gannot, and Hadar Kiriati. The Rabinowitz ‘acquisition’ is a refreshing change for the veteran firm, which is likely trying to present a more youthful face ahead of its launch of a new $125 million fund.
“My goal for a long time was to join a fund, and I was looking for the right one,” said Rabinowitz in an interview with “Globes”.
“At first, I thought of starting my own fund, but I realized the value that I could add to an existing firm.”
G: Why did you choose Genesis?
“The people there are approachable and practical from chairman Eddy Shalev, to the partners, and the whole team. They are very unique. It almost feels like a family, people who have worked together for 10-20 years. It is a strong squad.”
“I am the youngest”
Genesis is considered to be among the most veteran funds in the field, but it has been trying to better connect to developments on the ground in recent years. In 2010, it added Eden Shochat, who was the youngest partner in the local VC scene.
The following year it launched one of Israel’s first accelerators The Junction in south Tel Aviv. Shochat, who managed the accelerator, left in 2013 to start the Aleph fund; the veteran Genesis needed another young partner to fill in his shoes.
“It’s true, I am the youngest person there, but entrepreneurs are getting younger and younger, and that’s why the fund is looking for a more youthful face,” said Rabinowitz. “I found a forward-looking fund that has committed to creating the infrastructure of the future. They see me as an addition. I’m well-versed in the Internet and technology worlds; I will help the startups we invest in to enter the US market with the help of my professional networks that’s part of what I bring to the table.”
G: What’s the difference between investing as an angel and as a partner in a VC firm?
“Angel investing is more of a hobby; it’s something you do on the side. I always managed a company and then invested on the side. As a partner in a fund, it is more organized when you decide to invest in a startup and the funds are also far more selective we only invest in 0.5% of the firms that the partners see. Decisions take longer.
“Furthermore, angel investments carry different risks. Recently I realized that as companies grow through the stages of funding, the initial investors are affected. They are watered-down. The angels hold less of the company and find it hard to protect their interests. As a fund, you hold 20-30% of the company and a seat on the board you can better protect your interests.
“A fund will invest a million dollars based on a value of $2 million and receive 30% because they write a bigger check, it lowers the risks at an earlier stage.”
Rabinowitz is not a brand-name in the angel world like Gigi Levy, Tal Barnoach, or Zohar Gilon, but he has already invested in more than a few notable startups, including Ubimo and Labpixies (the latter was Google’s first acquisition in Israel.)
He was also one of the investors in Crossrider, started by Koby Menachemi and Shmueli Ahdut, which was sold in less than two years to Teddy Sagi’s markets.com for $37 million. He invested in Bizzabo, which developed an event management platform; R2NET, which sells jewelry online; and Totems, which was sold to FinTech startup Stripe at a value of $5 billion.
He is also joining Genesis as a successful entrepreneur and manager in the gaming world, given his experience with Amuso (sold to the BBC), win (which received investment from Bwin.party, an acquisition target for the Israeli firm 888), and Mytopia, which was sold to 888 for $18 million in 2010.
“I need to live as an entrepreneur in order to become an investor,” said Rabinowitz.
“It’s not an exact science”
G: What do you look for in a startup?
“There needs to be a good concept and a team, and it’s important that there is more than one founder. Business is tough, so you want to see two people that are technically savvy or one that is good with marketing.
“When there is only one founder, he needs to pay other people to do certain work, and they have less motivation than someone who is the second or third founder and has that drive.
“What matters at the outset is the crew. If Steve Jobs were to walk out of his grave and pitch an idea, then 99% of people would invest. Thus, there is a value to have an entrepreneur with a proven track record.
“So I look for a team that assures me they can actualize their vision, that can tell me about their past work, their skills, whether they can become commercial and how they can make money from the idea. But, in truth, it comes down to intuition. It’s not an exact science. Investing is something you learn over time.”
(Almost) missed opportunity
Every investor eventually has investments that are more successful than others, but the ones that hurt the most are the missed opportunities. Rabinowitz recalled one such example that he managed to fix down the line.
“In 2002, I met with four geeks working hard on some development in a rented apartment in Tel Aviv. It looked very promising but I hadn’t yet made the switch having just arrived from Wall Street to thinking as an angel,” he remembered.
Eight years later, those same guys sold their company, Labpixies, for $25 million to Google,which was making its first acquisition in Israel. “When I saw that I told myself right away that if they ever start another company I must invest in them.”
In 2011, he sat for coffee with a friend, who told him about a crew familiar with Labpixies which was raising funds for a new startup. “I wrote to them that we had met in the past and that I had been very impressed with the team, but they were a bit cold. I had to give a whole pitch to convince them because they had almost closed the round of funding with Pitango and Eyal Gura. But in the end I managed to get in with them.”
Published by Globes [online], Israel business news - www.globes-online.com - on October 2, 2015
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