Vertex raises $150m for early-stage Israel fund

Vertex fund partners

The firms fourth fund initially hoped to raise $120 million but demand for Israeli innovation exceeded expectation.

Israeli VC firm Vertex ventures announced Wednesday morning it had raised $150 million for its fourth fund nearly a decade after it raised capital for its last fund. Vertex exceeded the expectations it set six months ago, when it first announced it would raise $120 million for a fund.

The fund will be managed by Vertex Ventures Israel founder Yoram Oron and partners Yanai Oron, Emanuel Timor, David Heller, and Ran Gartenberg. The investors, as in previous Vertex funds, are financial institutions and businesses from Asia and North America. In its announcement, Vertex mentioned a few of the backers, including Murata, SBI FujiFilm, and VVH.

The fourth fund has already invested in four ventures: Argus, which provides cyber security for the auto industry, raised $26 million; cyber intelligence firm WireX raised $9.3 million; E8 Storage; and WebyClop.

Emanuel Timor told Globes the fund was close to securing a fifth deal in the investment stage for Vertexs third portfolio company.

According to a firm announcement, Vertex Venture Holdings (VVH) group president and CEO Kee-Lock Chua said, Vertex Israel is one of the supporting pillars of the global Vertex group, which is active in the ICT sector in Silicon Valley, China, India, and Southeast Asia. The Vertex group is also active in the healthcare industry. Vertex fund managers across the world are working together to support entrepreneurs and help them grow and build successful companies.

To conquer new industries

Were you surprised by the demand for investment in the fund? After all, six months ago you were hoping to reach $120 million.

Surprise is a bit strong. We had high hopes and they were achieved. Israel is one of the most interesting places in the world for high-tech investment. Every person we meet mentions Israel and Silicon Valley in the same breath. Its only natural financial institutions would show interest in Israel. The whole industry benefits from this vote of confidence as do we.

The financial storm keeps picking up speed. Will high-tech be immune, specifically early stage firms?

First of all, now industry is immune to a global crisis. For what its worth, I dont believe we are going to see a global crisis, but I am not the one that should be making predictions. If there is such a crisis, it will affect every sector, but it is reasonable to assume high-tech will be the least affected.

The need for Israeli innovation and invention increases even during global crises. The demand for Israeli developments will continue to be high. However, with that in mind it still must be said if there is a crisis, then there will be fewer companies that raise less money and there will be a greater emphasis on financial efficacy. When it rains, everyone gets wet both in the US and here it will not be a local phenomenon. But overall we are very optimistic. They say that crises breed the most successful companies.

Are valuations changing these days because of the market conditions?

We invest primarily in earlier stages, where we rarely see any changes. They have yet to fly very high, so they cannot tumble too much. If there is drama, it is in the later stages of unicorn companies. Those are mostly in the US, though Israel does have a few highly conspicuous examples.

Do you not have those? The fund may be new, but the firm is not.

So far, we have yet to feel any significant movement in valuations. Its too early to tell. But we havent seen a significant drop. Everyone is more careful, but there isnt a significant change. The sharp jump was in the unicorn club and they will feel the market volatility the most.

In how many companies will you invest?

We will likely invest in 20 companies.

Potential in the healthcare industry

What areas are you following most closely these days?

We are looking at a wide variety of sectors from the Internet of Things to the auto industry and also everything related to computing infrastructure and cloud services.

In the healthcare industry we had one major success DB Motion was sold for a quarter of abillion dollars and we were its first investor. I think Israel has great potential in the healthcare industry in which we invest and in all aspects of digital health, which includes medical information technologies.

Vertex was founded in 1997 and has since managed $750 million in its funds. Its three previous funds were investors in some of Israels most high-profile exits. In the last two years, the fund had three exits worth more than $4 billion SolarEdge, CyberArk, and Waze.

Published by Globes [online], Israel business news - www.globes-online.com - on February 11, 2016

Copyright of Globes Publisher Itonut (1983) Ltd. 2016

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