Follow (the) Seed, a new Chinese-Israeli-US-Australian global venture capital fund, has been formed and is planning to raise $50 million for funding companies between their seed and A financing rounds. The fund has already obtained commitments for $30 million, 60% of this amount, and will invest $500,000-$2 million per company. The fund, which calls itself global, will invest mainly in Israeli, Chinese, US, and Australian startups.
Sources inform "Globes" that the fund has already made eight investments, two of them in Israeli companies. Follow (the) Seed has already raised money for its first Australian fund (which invested in US company WorkSpot and Australian company ClassCover), and is now raising money for its global fund.
The fund has four founders: Curt Shi, an experienced Chinese telecom and media investor; Andrey Shirben, an Israeli who emigrated to Australia and has been investing in high-tech companies for the past decade, including 24 Australian companies; Ajoy Mallik, an Indian enterprise specialist, who formerly managed the corporate venture capital funds of Tata and Cognizant; and Eliav Alaluf, who will handle the fund's investments in Israel, which will be mainly in consumer behavior companies. The $160 million that Mallik invested in 33 companies for Tata, are now generating $1 billion a year in revenue for the Indian corporation.
Alaluf is known as a leading figure in Israeli digital marketing. He founded and managed the social media department at "Globes." Later, in partnership with Rani Rahav, he founded Rahav Social Media, where he handled brands like Isracard, Bank Hapoalim (TASE: POLI), Steimatzky, Zara, and Ofer Malls. Alaluf is also a 25% partner in Like and Share, and leads marketing through online opinion leaders. Four years ago, he founded an independent consultancy whose clients include US television channel The Weather Channel, Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA), Santa Monica University, Mentor's Channel, and the Breslev Israel group. Alaluf lectures on consumer behavior, and gives workshops on devising marketing strategy. In the more distant past, he occupied senior marketing positions at Comverse Inc. (Nasdaq: CNSI) and Axis Mobile. He als reported on high-tech for "Globes."
"The Follow (the) Seed fund bridges the yawning gap between financing rounds of $500,000 and those of $2 million – a stage at which it is very difficult for many companies to raise money, because they are already too big for angels, but too small for venture capital funds that want to invest in an A round," Shi says in the fund's announcement.
How will the fund attempt to find the next Facebook or Waze? It has developed an algorithm named RavingFans that analyzes the usage patterns of people using a product, and searches for usage patterns that indicate out of the ordinary usage. The fund calls this irrational use, meaning that the user has really fallen in love with the product and uses it every day, such as a game app, instant messaging, ecommerce, fintech, and so forth.
According to the company, this could be any product that can be categorized as habit forming. Most companies checked by the fund will therefore be those developing consumer web and cellular apps that provide a service that is part of every user's daily experience. According to a study by the L2 company, over the past five years, most of the companies that came out well ahead of the S&P 500 Index, based on their revenue growth rate, were 'algorithm companies' – companies whose product becomes better the more it is used, such as Facebook, Google, Amazon, and Netflix.
Published by Globes [online], Israel Business News - www.globes-online.com - on March 16, 2017
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