Third Point Ventures, the startup investment arm of hedge fund Third Point LLC, announced today that it had opened an office in Tel Aviv. This is the first office opened by Third Point Ventures outside of the US, and comes after six investment by the firm in Israeli startups since 2015.
Third Point was founded in 1995 by Daniel (Dan) Loeb. Loeb started the fund with $3.3 million raised from family and friends; today, it manages $14 billion. Loeb himself has become a billionaire with a net worth of $3.5 billion according to Forbes magazine.
Loeb and Third Point became known for acquiring holdings in public companies and taking an activist stance in them, pressuring boards of directors to make decisions that would unlock value. Loeb is known for having on several occasions sharply and publicly criticized companies that he perceived as inefficient. His detractors will argue that his strategy is to put pressure on company managements in order to make a quick profit for the fund at the expense of a company’s long-term success.
One of Loeb’s most successful investments was in Internet company Yahoo!. Within a little over a year, he exited with a profit of $1 billion from the company. Loeb joined the Yahoo! Board in 2012. He pushed for the dismissal of CEO Scott Thompson, who was appointed against his wishes, and managed to bring about his resignation after exposing irregularities in the reporting of Thompson educational record.
Thompson was replaced by Marissa Mayer, who was previously at Google. During the time that Loeb was an investor in Yahoo!, the company sold its holdings in Chinese company Alibaba for $7 billion, and carried out a share buyback that boosted its share price, resulting in a bonanza for Loeb.
In another case, Third Point bought shares in Japanese company Sony Corp, and pushed the electronics company to spin off its entertainment division. Loeb attacked the management of Sony’s entertainment division, which prompted actor and producer George Clooney to spring to its defense. Clooney accused Loeb of being "a carpetbagger, and one who is trying to spread a climate of fear that pushes studios to want to make only tent poles," that is, blockbuster movies.
In August this year, Third Point reached a holding in Walt Disney Co worth some $1 billion. Loeb called on Disney to carry out major changes, such as spinning off sports network ESPN into a separate company. He eventually reached agreement with Disney on the appointment of a director, promising not to increase his stake in the company. Another well-known holding of Third Point is in Amazon, where Loeb claims that the value of the company could be substantially raised by splitting it between its online merchandising business and its AWS cloud computing business.
Loeb has not come to Israel to invest in public companies but because of his interest in Israeli startups. Third Point Ventures is co-managed by Loeb and Robert Schwartz, who has led the firm's venture investments for 22 years. Third Point’s announcement states that it has raised dedicated capital in standalone funds that will allow it to enter investments, typically at Series A or B, in its core areas of focus: Cybersecurity, Enterprise Software, and Data Infrastructure.
The new Tel Aviv office will be managed by Sapir Harosh, who joined from Israeli venture capital firm Pitango earlier this year, where she was a principal.
Among Third Point Venture’s six investments in Israeli companies to date are cybersecurity company SentinelOne, which has since been floated on the New York Stock Exchange, AI-powered transcription and captioning company Verbit and fraud prevention solutions company Forter, which have both attained unicorn status, and processors company Next Silicon.
"TPV's permanent presence in Israel is a natural extension of the commitment we have had to the country for many years, evidenced by previous early-stage investments made from our hedge fund. We are excited to invest in the next generation of innovative Israeli companies via our dedicated venture funds, and to have a presence on the ground in Tel Aviv," Loeb said.
Published by Globes, Israel business news - en.globes.co.il - on October 24, 2022.
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