Mor Assia and Shelly Hod Moyal were amongst the participants chosen to speak at the TechCrunch Tel Aviv conference in June 2018.
The conference gathered together some of Israel’s greatest thinkers, makers and investors to share their insight and expertise on one of the nation’s hottest exports — new mobility technologies. This is the first time the day-long conference was held in Tel Aviv.
Mor Assia and Shelly Hod Moyal say theirs is the venture capital fund of the future – and a 300% return is hard to argue with.
“This technology is no less revolutionary than was the invention of electricity. Our generation grew up with the Internet revolution, but we can already see that the Internet industry is gradually switching to the next revolution: blockchain,” says entrepreneur Mor Assia. Together with Shelly Hod Moyal, she founded the iAngels venture capital investment platform, and the two women launched a fund for investments in blockchain two months ago, after realizing that this was a technological revolution likely to change the financial world, and other things as well.
Blockchain is a system for processing digital currency deals, based on a distributed and encrypted database. What is new about this technology is that it facilitates payments without a central entity (such as a bank or credit card company) supervising the transfers and controlling the database. The system is based on a communications network in which each of the parties is both a customer and a server, and there are no intermediaries between them.
The technology, which is based on “blocks” of deals, is designed for use in a range of industries. Last year alone, blockchain startups raised over $2 billion worldwide. This mighty stream naturally also drew in Israeli investors who spotted the opportunity, with Assia and Moyal among the leaders. They are in fact local pioneers in this red hot sector, which is still relatively virgin ground for investors. The new fund that they founded has already invested $15 million in seven startups.
“We started investing in companies operating in the sector because we realized that there are many funds that are afraid of it because of its controversial reputation. Many companies could not even manage to open a bank account in order to pay salaries, because the banks put spokes in the wheels of entrepreneurs in this field. Entrepreneurs founded offshore companies in order to remain beyond the regulators’ radar, and tried to build interesting technology with extremely limited resources.”
“So far, the fund has a 300% return,” says Moyal. “Such opportunities come along once in a lifetime. It’s risky, volatile, and can go down. We have already experienced sharp dips. This is a crazy world. My husband (Cyhawk Ventures general partner Kfir Moyal, R.K.) sometimes tells me, ‘I can’t talk to you; stop talking about blockchain.’ My whole day revolves around it; it’s addictive.”
“We invented a new animal”
Moyal, 34, has a strong financial background. Before founding iAngels, she worked as a financial consultant at the UBS investment bank, then as an analyst for the Avenue Capital hedge fund in New York, and later as an investment banker at Goldman Sachs Israel. Assia, 36, served in the IDF’s elite intelligence unit 8200 (Israel’s NSA), and has a BSc in mathematics and computer science from the Technion Israel Institute of Technology and an MBA from Columbia University. Before founding iAngels, she worked at SAP, IBM, and Amdocs Ltd.
Moyal and Assia met by complete accident a decade ago in New York at a party held by mutual friends. They hit it off immediately, and have not parted since. They returned to Israel at around the same time, gave birth around the same time, and when they were on maternity leave, each of them did her own soul searching, and reassessed her career.
Thus was their venture capital investment platform born four years ago, based on a crowd financing model in which investors from all over the world can take part in a financial opportunity that would ordinarily be closed to them by investing $10,000. “We have raised $100 million at iAngels to date, and have invested in more than 100 startups. We invented a new animal. We’re actually creating the venture capital fund of the future,” Assia explains. “Entrepreneurs can operate with a single investment concern, instead of being split among various firms, while on the other hand benefiting from a connection to a network of investors from all over the world.” iAngel’s network of investors includes 1,000 people from 50 different countries.
“Globes”: How long did it take you between spotting the potential and founding the blockchain fund?
Moyal: “We started investing in blockchain startups over two years ago, but it took time for things to get going. The feeling was that it was taking more time than people expected. About 10 months ago, I realized that something was going to happen. I felt a very significant change was about to occur with the potential to change the world. It was a moment of inspiration. I knew that this was it, that it was coming now. It was very exciting for me. I haven’t experienced such a sense of conviction as I felt at that moment for a long time.
“It usually takes 12-18 months to found a fund by the time you do all the auditing, especially when you’re dealing with a new asset. We did it in seven months, and we were among the first to establish such a fund, which shows something. This doesn’t mean that we now understand exactly what’s happening in this industry. Everyone is as a point at which they’re preparing themselves for every possibility.”
This is the place to mention the close connection between blockchain and the digital currency stirring up the market – bitcoin. This currency, which has been soaring in recent months, with the price reaching a record $20,000 for a single bitcoin during December, exposed blockchain technology to the world. Even Prime Minister Benjamin Netanyahu recently referred to bitcoin, saying, “Will the banks disappear in the future? The answer is yes. Will it happen tomorrow? Will it happen because of bitcoin? That is the question.”
“I agree with a lot of what Netanyahu said. The banking world will undergo a transformation, and the role of the bank will change,” Moyal says. “Bitcoin was created in response to the 2008 financial crisis as an expression of rebellion against the authorities printing money and diluting its value for us, the average citizens, in order to save huge irresponsible companies.
“If bitcoin becomes a substitute for gold, as many speculators are hypothesizing, the value of bitcoin currency could reach $300,000 much more quickly than people think.
“There is a libertarian and anti-establishment kernel in the community that uses the currency, similar to the free-of-charge software culture in the 1990s. This community has strong anti-commercial and anti-establishment values. Despite the dominant commercial aspect, there’s something deeply ideological here.”
Is blockchain an expression of a world in which consumers try to break free of the corporations’ chains?
Assia: “The center of power is passing to the consumers, and they want to be the ones who decide. Consumers are demanding transparency, immediacy, added value, and autonomy in relation to their money. A consumer who has already been exposed to cryptographic (digital) currencies usually wants to increase exposure to these financial assets, and is not inclined to convert them back to ordinary currencies. A new market has been created here of consumers who do not consume services from the conventional banking system.”
How will it change the financial world?
Moyal: “Blockchain infrastructure enables people to cooperate, conduct deals, and trade directly, almost free of charge, and without any prior knowledge. This infrastructure is already partially available to us through the banking systems, some of which will become superfluous when blockchain penetrates the market in depth. This doesn’t mean that the banks will disappear, but it certainly means that their role, as we know it today, is going to change. Blockchain will do to the financial and regulatory system what the Internet did to the media and advertising companies.”
Everyone wants bitcoin
Moyal has a simple clear answer to the question of why companies are issuing new digital currencies: “The capital market is broken. Companies don’t want to offer shares on the stock exchange now; they prefer to remain private companies. The offering process is lengthy, expensive, bureaucratic, and involves a lot of exposure. Trading volumes on stock exchanges are falling, while a multi-billion dollar trade is now taking place in digital currencies. For example, if a company wants to raise capital from investors all over the world, each of whom will invest $50,000, it can’t do it through an offering on the stock exchange. Blockchain is giving companies options for a global offering.”
What is the average profile of a blockchain investor?
Assia: “Most of the money in the industry today comes from a few dozen billionaires who made a great deal of money from bitcoin, and are seeking to enrich their portfolio with other types of currencies. At the same time, new investors are entering the market every day.”
Moyal: “It’s terribly difficult to characterize the new investors, because they are people from all walks of life – even my babysitter asked me how to buy bitcoin – which adds another layer of risk. I get calls from a lot of people who want to take part in what’s happening. Almost everyone I know bought bitcoins in the past month.
“This market has passed the $500 billion mark, and we’re seeing a major rise in prices at a time when the technology is not yet being used in our daily lives. Its value has risen far more than the value it delivers right now, so you have to be cautious. Everyone has to sit and think about what is appropriate for him or her, because the market can go down the same way it’s going up now. We have already invested in currencies that have fallen 80%, then went back up even more.
“On the other hand, there’s something exciting about this, like the first Internet technology revolution. There are things here that have always have always attracted the most brilliant minds, talented entrepreneurs, and big investors. We’re investing in infrastructure technologies that we believe can survive a crash.”
Can we already speak of a bubble in the digital currencies market?
Assia: “Like the Internet revolution and the dot.com bubble that burst in the late 1990s, there are also signs of a bubble now in blockchain. There’s hype, there’s fear of missing the boat, and there’s a gold rush. People hear success stories about those who invested in bitcoin six or seven years ago, when it was worth less than a dollar, and the currency has since increased its value thousands of times over, and they think that if they invest in a new digital currency, maybe it will succeed like bitcoin. Even when the bubble deflates, a lot of good successful companies stay successful, and there are important companies that will probably remain stable.”
How is an investment in a blockchain company different from an investment in an internet startup?
Moyal: “Here, you don’t invest in a company; you invest in a network, and you buy a token, not a share. In a company, a shareholder has rights, such as voting rights and profit rights. You don’t have those rights in blockchain; you’re in the same boat as the entrepreneurs, the users, and the other investors. It’s like investing in a cooperative economy, and this technology has enormous potential.”
The level of information security of the blockchain platform also carries risks. For example, due to the anonymity of the platform, it is also useful for criminals, who use it as a convenient refuge for realizing dubious businesses. “There were recent cases of a digital currency offering in which money was stolen during the offering,” Assia says. “It happened because a hacker planted a wrong digital address on the website of the company making the offering, and participants in the offering unknowingly transferred their participation money to that address. This is another good reason for investors who are not well acquainted with this market to avoid taking part in offerings that have not been checked out, and where steps have not been taken to prevent any possibility of such a situation occurring.”
Is there way of making sure that the companies offering a digital currency fulfill their obligations to the buyers?
Assia: “You can ask exactly the same question about an investment in a startup that has only a prototype product, and wants to raise $1 million. How do we know that the entrepreneurs won’t take the money and go to the beach? That’s why we conduct due diligence before any investment, assess the entrepreneurial team, and also test the sentiment in the blockchain community towards that startup. Where companies that already have a beta product are concerned, we meet with the teams and see how the product works and who’s working there. If we believe in the product, we expect its value to rise after the ICO.”
“I got my life back”
“When we founded the fund, we came into it with a lot of naivte,” Moyal says. “We thought that we’d set up a website, do marketing on Facebook, and people would come and invest $1,000, but it doesn’t work like that. Building a business is a challenge. You have to build networks of relationships and trust with people. We began everything from the cellar of my home. Every morning, we thought, ‘What will we do today?’, and set targets for ourselves.”
You left a comfortable job with a safe income for your business.
Moyal: “Before I became self-employed, I worked around the clock. It was normal to go home at midnight. When I gave birth, I got my life back. I gained perspective; it opened me to the world. I realized that this was an opportunity to take my life to the next stage. I took time out to ask myself what I wanted to leave behind me as a legacy. These are acute points in life at which you can do soul searching.”
Entrepreneurship is a gamble that takes courage. Weren’t you afraid?
“At the beginning, we worked without any capital. We slowly began to build a product. It was difficult to raise the first investment capital. We did a pitch and went all around the industry. We met with Gigi Levy-Weiss. He didn’t know us, and it took a long time for him to free up time for us. I remember that at the end of the meeting, after we spoke of the vision and the dream, he said, ‘Good, I’ll invest.’ We were in shock. We asked how much, and he said, ‘$50,000.’ We were so excited that someone believed in us and wanted to invest in us. We raised $300,000 more immediately afterwards, and got going. As we see it, above all we’re entrepreneurs.”
Are you entrepreneurs or investors?
“Both. When we’re taking to entrepreneurs, we can connect with them on a different level, because we know what they’re going through. They appreciate us being on the same level as they are, and see in us the hunger and the ability to take on board and understand situations.”
Over the past four years, the two women have managed to expand their families as well as their business. Assia has four children (the youngest is five weeks old), and Moyal has three. “There’s a division of labor between us in births,” Assia laughs. “When one of us is on maternity leave, the other works like crazy.”
“I met my spouse when we were 20. I saw a lot of women in New York who said, ‘We’re spending 10 years on a career now, and then we’ll invest 10 years in a family.” From my point of view, it can’t work like that. That’s even truer in high tech, where you can’t even take six months off. So there’s no choice; you have to do things simultaneously. There’s private life and there’s work, and we run 200 kilometers on two tracks simultaneously. We’re deeply into this. We live, dream, and even think all day how to make the business grow.
“This juggling act of doing it all – both raising three or four children and putting all of ourselves into entrepreneurship – is non-stop insanity and adrenalin. In one week, I experience several super-amazing and super challenging things all at the same time, and it makes me mentally tough. We’ve learned to cope and acquire talents that help us deal with the life of an entrepreneur.”
What, for example?
“Staying cool. If you were to take me back four years and tell me to deal with the situations I face today, I wouldn’t be ready for it. We’ve learned to keep on top of the things that happen to us. Even if there’s a very difficult day at work, we’re able to put it aside and be with our families, and even to sleep at night.”
The average exit
Assia’s father, Amdocs cofounder Dr. Daniel Keret, and Moyal’s husband, Kfir Moyal, cofounder of the Matomy media company, are on the board of directors. Assia’s husband, Yoni Assia, son of Magic Software founder David Assia and cofounder of the eToro investment platform, is also closely accompanying iAngel’s growth.
How is your activity today different from the way you started?
Assia: “Over the past year, we have become a leading investor in the early rounds of startups, and the volume of our activity has grown. While we formerly invested up to $500,000 in a company, today we are already investing $2-3 million. Since we started by working on a joint investment model, many entrepreneurs in the industry are still unaware that we can invest $2 million in a startup. The investments we led over the past year, however, have had an impact around us, and the industry is starting to realize that we can lead financing rounds.”
Moyal: “95% of the companies that iAngels have invested in to date are still active. Five companies in which we invested have already had an exit, and 30 more have had a round-up – another financing round at a value higher than the one at which we invested. In addition to that, we have enabled our investors to sell their investments in four portfolio companies between the first and second financing rounds at returns of 2.5-5 times in a year. We have other companies in advanced stages of being sold.”
Move, and quickly
iAngel’s profit model is based on a 2% annual management fee for four years from the entire investment portfolio – a total of 8%. “In addition, we receive 20% of the profits from each investment, but that’s only after an exit or IPO,” Assia says. “When we make an investment in the early financing stages of a startup (seed or A round), our expectation is an investment horizon of at least five years. This is a long-term strategic investment.”
How is the experience of working with Israeli entrepreneurs different in comparison with US entrepreneurs?
Assia: “Israeli entrepreneurs have flexibility in thinking and business. If an Israeli entrepreneur runs into a wall, he turns right and bypasses it. Our need for constant renewal and movement is inherent. Many investors prefer an entrepreneur who makes a decision and moves quickly, even if the decision isn’t always right, to an entrepreneur who doesn’t make decisions.”
What have you learned in the past year that has changed how you do things?
Moyal: We learned a lot about management the hard way. We learned that when you provide employees with a pleasant and liberating environment and let them create, they are more effective, loyal, and happy than employees whom you constantly supervise, and whose mistakes you correct all the time.”
Only three of your 20 employees are men. That is quite rare on the capital market scene.
Assia: Since we’re more open to accepting women, more successful women tend to be attracted to us. The women working at iAngels are all ‘sharks’. Everyone who comes to the company feels the energy of the office immediately. We’re looking for superstars.
“We’re the firm that has invested in the most women’s startups to date. Still, women are a minority among entrepreneurs. Only 10% of the startups we have invested in have women among their founders.”
Many in Israel have been bitten by the startup bug, and jump into the deep end.
“Israel has the most engineers and managers per capita. When you look at LinkedIn, everyone has startups. Women are less inclined to take risks, but I tell them to challenge themselves. I work many more hours today than I worked as an employee, but now I’m the one who sets the rules of the game and my priorities, and that puts a lot of power in my hands.”
The full Hebrew version of this article appeared in “Lady Globes” magazine.
Published by Globes [online], Israel Business News – www.globes-online.com – on January 18, 2018
iAngels is raising a dedicated blockchain fund that has already invested $20 million, co-founder Shelly Hod Moyal said in an interview with Calcalist on Monday. The fund is currently going after additional investors, targeting $100 million in commitments by the end of 2018.
Founded in 2013, iAngels operates as an equity crowdfunding platform that allows accredited investors from around the world to invest in Israeli startups. “We conduct similar due diligence processes when we seek out a Blockchain company,” explained co-founder Mor Assia. “We look for strong teams, scalable tech solutions and initiatives that will help this new ecosystem grow.”
The firm intends to invest in blockchain-related startups immediately before or through their ICO (initial coin offering). It seeks to make long-term investments, Ms. Assia said.
“We started investing in this industry two years ago,” Ms. Hod Moyal said. “We decided that since this industry has a slightly different economy, we need a fund that will focus solely on this kind of technology, and we have witnessed an amazing growth spree in this field, things we assumed will take years are being done within months.”
As cryptocurrency gained popularity, domain-specific investment vehicles were created, including MetaStable Capital, established in 2014, and Polychain Capital, established in 2016. Menlo Park, California-based Sequoia Capital, hedged their bets by investing through these cryptocurrency funds. In December, TMT Investments, a tech-focused venture capital firm, launched a blockchain focused fund.
iAngel’s new fund will not be limited only to Israel-based companies, and the two intend to look for investments globally, with a specific focus on China.
ICOs have been steadily gaining popularity, but recurring frauds, lack of regulation and speculative investments have reflected poorly on the domain. “We can’t have a conversation about Blockchain without someone asking us whether it’s a bubble. There are indeed plenty of indications to the existence of such bubble, but I believe we will see a lot of growth before we see a correction,” Ms. Assia replied.
“Wherever there is innovation, or financial awakening speculation will soon follow, and our economy needs these speculations because they attract the most brilliant minds and the most sophisticated investors,” Ms. Hod Moyal added. “This is the economy’s way to grow, and this is how companies like Facebook or Amazon were created. It’s natural. A lot of the time the technology is moving faster than the regulators, but they will catch up.”
Like many other young people who decide to go on a trip after the army, Shelly Hod Moyal decided to pack and fly to the United States. But instead of selling mud from the Dead Sea in malls, she enrolled in a bachelor’s degree in economics and philosophy at Hunter College. Her journey led her to UBS, where she was involved in portfolio management. Her second job was working at one of the world’s largest hedge funds. This period coincided with the economic crisis in the United States and the hedge fund specialized in “special situations and distressed companies,” so Hod Moyal found herself examining and investing over $1 billion in the most high profile companies of the time, such as AIG, GM and Citigroup. As part of her job, she also volunteered to provide advice to the US government on the TARP program.
At the end of this exciting period she decided to return to Israel, where she joined Goldman Sachs, Investment Banking where it was her first time in diving into the VC and tech world in Israel as part of a team consulting funds and high tech companies regarding mergers, acquisitions and strategic investments. Three years later, in parallel to the decision to establish a family, Hod Moyal also chose to embark on an independent career. Working in a large corporation with huge brands and mainly dealing in investment and analysis, she saw the opportunity to attract investors and build a company of her own from scratch. Together with her business partner, Mor Assia, they launched iAngels – a platform that connects investors from around the world to start-ups in Israel. iAngels’ business model operates by doing the due diligence on the start-ups and negotiates investment conditions. After a period of rigorous analysis they then decide whether or not to open up an investment opportunity to their international investor community, who are able to invest from a minimum investment of $10,000. iAngels currently manages $100 million, and has invested in nearly 100 start-ups in its four years of activity.
What qualifications are you required to use in your current position?
“In terms of managing a business, interpersonal skills are obviously a huge requirement – recruiting and nurturing employees, creating a supportive and constructive organizational culture, marketing, sales and basically everything that a business needs to exist. “
What tools did you get from the studies you are using today?
“I studied organizational psychology, management, strategy, marketing, branding – all of which have given me additional tools that have helped me on my new entrepreneurial journey. Getting to know interesting and successful people from all over the world, many of them coming from backgrounds different to mine has been a fascinating and life building experience.”
In a career there are often decisions which are game changers; decisions which advance you forward. What were the decisions you encountered of that nature?
“The decision which was big game changer for me was the decision to establish iAngels.
To leave a stable job with great prospects to moving to work from a basement with my business partner Mor, was a total 180-degree change. This decision came from both of us wanting to produce something of our own. I have always felt that I would return to Israel and as a person who grew up and lived here, I also feel responsible for the future of our country and much of this future lies in the technological initiatives of Israel, which is one of the most significant growth engines that we have. In the United States, we identified the potential of connecting entrepreneurs in Israel to investors all over the world who wish to participate and invest in Startup Nation and hence, the idea to launch iAngels began, combining the right combination of an important social goal with personal self-fulfillment. “
What is the main challenge in your current job?
“To build a company from scratch is a big challenge, and in most large and stable companies, as long as you are a good and diligent employee, there are always opportunities for advancement, and in your company you can be the best and most successful worker and still nothing in the future. I’m not sure that four years ago I had the mental ability to cope with some of the situations that have come to my doorstep today. In this sense, I feel that parenting my three children has also contributed a great deal in requiring me to be more responsible and mature. You can not suddenly fall apart when something does not add up because there are people who rely on you, so I’m forcing myself to meet expectations, to rise, to look forward and be positive. “
What would you like to change in the field?
“I would like to change the image that Israelis sometimes have in the world, because there is a lot of magic and uniqueness in Israeli entrepreneurship, but sometimes something in the business potential is missed because of a cultural gap. Because we work with people all over the world, we have the opportunity to set a high standard for respectful professional conduct.”
What kind of management do you dream of leading?
“I feel that I am leading this move today with iAngels, and this is exactly where I want to be, with the people I want to work with and I really enjoy coming into work and being a partner to so many talented investors and entrepreneurs who are changing the world, who have huge dreams that we’re able to partner with. And as two female founders, it is important for us to promote the female voice in society. Out of our 20 employees, 15 are women and it’s an opportunity to lead by example and show fellow females as well as our daughters that everything is possible. ”
A manager who inspires you? And why?
“I was fortunate in my career, wherever I went I won the attention of principals who took me under their wing, developed me and taught me a lot. And my co-founder Mor Asia and partner Kfir Hod Moyal, have given me a huge amount of inspiration.”
It’s no surprise that Israeli companies are rocking the startup scene. The nation is now rated #1 outside the Silicon Valley for startups and is known for their innovative and trendy ideas. In recent years, there has been an increase in the diversity of entrepreneurs with more and more women taking on entrepreneurial challenges. These women are true pioneers in their industries and are sure to leave a substantial mark for future entrepreneurs.
Here are eight women that are rocking the Israeli startup scene.
Orly Izhaki: Co-founder & CEO, Wisestamp
As co-founder and CEO of Wisestamp, a marketing solution platform for small business and self-employed individuals, Orly Izhaki focuses on “simplifying complexity.” She is responsible for solving problems and overcoming obstacles that her customers face. Her goal is to help her customers experience rapid business growth by using Wisestamp tools and to continue finding solutions to their ongoing business struggles.
Wisestamp currently has more than 650,000,000 users and continues to grow at rapid rates. Their customers gain access to tools they need to run a successful business without having to pay enterprise business rates.
Angie Geffen: VP of Marketing, CodeFuel
With nearly twenty years of marketing experience behind her, Angie Geffen is a leading marketing expert. As VP of Marketing at CodeFuel, she is responsible for leading and managing marketing initiatives that drive CodeFuel to successfully meet its brand marketing, revenue, and product placement goals. Her executive responsibilities include strategic decision-making, marketing/communication management, brand marketing, partner/channel marketing, and product planning and development.
Code Fuel is an engagement and monetization suite that helps publishers create, distribute, and monetize content. It delivers content to the users at the right times to increase online conversions.
Shelly Hod Moyal & Mor Assia: Founding Partners of iAngels
Shelly and Mor co-founded the Israeli crowdfunding network, iAngels. The powerful duo took iAngels from startup to a top-tier startup investment firm in less than two years. They are responsible for raising capital to fund iAngels, recruiting new investors, and managing a growing team.
iAngels offers entrepreneurs ease in researching and finding funding for their startup. Entrepreneurs can engage and build strong relationships with investors around the globe – and they never have to leave their office…
Two side-by-side acquisitions in the US in recent months — Xaxis’ purchase of Triad Retail Media, for a rumored $300m, and Criteo’s $250m buyout of close competitor HookLogic — point towards a clear trend in global e-commerce, with considerable lessons for entrepreneurs in Israel.
Both Triad and HookLogic help retailers sell ad space on their websites, opening up a valuable additional revenue stream for sellers, especially those transitioning from physical stores towards e-commerce.
Triad’s flagship client — Walmart — made a similar move in 2016, buying upstart online retailer Jet.com for $3.3 billion, ostensibly to get its hands on Jet co-founder Marc Lore. In essence, after years of stagnant e-commerce performance, Lore became Walmart’s now-or-never effort to challenge Amazon’s total dominance of online retail.
Analyzed together, the Triad, HookLogic and Jet deals offer a telling case study for investors also, highlighting the huge investment today in “catch-up” e-commerce. Macy’s displayed similar thinking in August, in announcing the closure of 100 stores in favor of investment in online and mobile. Sears has made parallel moves for several years, as have major retail brands far beyond the US.
New technology needed to capture changing buying patterns
The trend is clear. As iconic legacy retailers seek to adapt their operations for the changing retail preferences of consumers — and younger, urban consumers in particular — deep investment in both R&D and human capital is needed.
Ahead of the game as ever, the giants of e-commerce have already spotted the value brought by Israeli startups in this space. Through investments or acquisitions respectively in Annapurna Labs (Amazon), Corrigon, SalesPredict, Shopping.com, and The Gifts Project (eBay) and Twiggle and Visualead (Alibaba), each of those majors established a base in Israel, and continues to look closely at Israeli innovation. For that reason, exit strategies built on an acquisition by one of these giants remain a valid hope for early-stage investors.
However, the savvy investor today should be looking elsewhere also. Much like Walmart, across the globe there are huge legacy retailers fighting to adapt to modern, digitized consumer habits. Many of these brands have an aging consumer base, and minimal in-house tech capabilities. The choice facing these companies is both simple and urgent. Either they continue to swim against the tide of e-commerce, and unsuccessfully battle the Amazon juggernaut from a bricks-and-mortar setup, or they rapidly invest in easy-to-implement technology, in the hope of fighting strong in a digital age.
The same need for innovation spotted by Walmart exists higher up the value chain also, opening up a whole new category of exit strategy for forward thinking e-commerce solutions. Unilever’s billion-dollar acquisition of Dollar Shave Club in July, cutting retail suppliers out of the value chain entirely, gives an unmissable hint as to where the powerful conglomerate believes the future of retail lies.
E-Commerce in Israel — an overview
In Israel, while e-commerce continually struggles to take off on the ground, a string of local startups are aiming to add their names to the success stories listed above. Across multiple sub-segments of e-commerce — marketing, payments, supply chain management, data collection, analytics, advertising and more — investors have been backing Israeli companies in this space. In 2015 alone, Israel’s e-commerce sector saw $230m in investments, yielding $484m in exits (following $493m in exits in 2014).
Zeekit, which recently announced its $9m Series A, offers a virtual fitting room app, where users can see themselves in the clothing purchases they’re considering. MySizeID tackles a similar problem from a different route, by calculating a users’ precise measurements, to eliminate the perennial sizing issues that plague the online clothing industry. Brayola, which raised a $2.5 million Series A earlier this year, tackles a similar problem, allowing women to evaluate and validate their bra choices.
Additional promising names include Hexa, which lets retailers recreate dull 2D sales images as flexible 3D objects, and E-Global, which raised $20 million this year for its solution to enable retailers to sell more effectively to overseas markets.
Other names to look out for include Wiser (a dynamic price-matching engine), Shoppimon (a platform automation tool), Commerce Sciences (customization and micro-targeting solutions), Feedvisor (algorithmic repricing and revenue intelligence) and Aspectiva (a tool to curate and productize consumer reviews).
Finally, as is often the case, Israel’s e-commerce sector draws heavily on the deep tech capabilities honed within the military. To use a standout example, it’s far from coincidence that Israel, for thirty years the world’s largest exporter of military drones, is also home to more than thirty civilian drone companies, several of which are explicitly targeting the smart delivery of urban e-commerce goods.
The opportunity today (and what we look for)
Against this backdrop, e-commerce entrepreneurs should have a clear sense of the opportunity that awaits. Whether for acquisition-hungry e-retailers like Amazon or eBay, or investing-to-adapt legacy brands like Walmart, or even a giant like Unilever that’s playing with the transition from B2B to B2C, innovation will ultimately determine how each of them fares.
As the retail industry in general adapts to the changing way in which goods are purchased globally, exit strategies for companies active in this space are widening. While high-street retailers and corporate conglomerates were once off-piste options for e-commerce entrepreneurs, the lesson of 2016 so far is that they no longer should be. If an entrepreneur spots this, and starts targeting these strategic relationships and links early-on, that’s a tell-all sign of a company that’s headed in the right direction.
From the hundreds of companies we’ve assessed, we’ve spotted this on several occasions, backing four companies to date:
· Kwik, which offers branded smart buttons that connect retailers, brands and service providers to their customers
· Caja Systems, a robotic warehousing solution for the smart storage and distribution of goods
· WebyClip, which automatically matches and embeds video clips to strengthen e-commerce sales pages
· Zooz, a data-driven payments platform designed to help sellers customize and optimize their global payment costs
The shared thesis across the four investments, and our clear investment preference within e-commerce, is for ancillary technologies — specifically those driven by proprietary software — that retailers can quickly integrate in order to demonstrably improve some of aspect of their performance. In our assessment, investments that meet this criteria not only correspond with Israeli strengths, but typically command solid valuations — upwards of 3x in EV/Revenue.
According to August 2016 figures from research group eMarketer, the share of e-commerce as a percentage of total retail globally is set to almost double in the years ahead, from 7.4% in 2015 to a projected 14.6% by 2020. Looking to that target point and beyond, investors can expect to see further prominence for Israeli companies, provided they continue to develop the technical solutions needed to power this huge global change in consumer behavior.
This article was originally published on iangels.vc
iAngels raises $15 million for startup investments
iAngels, an angel investment platform that enables accredited investors globally to co-invest with prominent angel investors in Israeli startups, has raised $15 million from European, Asian and U.S. financial institutions, for a fund targeting investments in early-stage Israeli startups. The fund will focus on companies in the areas of fintech, enterprise software, artificial intelligence, smart cities, cyber security and IoT. The announcement takes the total capital raised by the investment company to $50 million, in the three years since it was founded by Shelly Hod Moyal and Mor Assia. In that time, the company has invested $20 million in 63 portfolio companies.
The iAngels model allows clients to choose from companies vetted by its partners, for investments of $10,000 or more. The new fund will act as a co-investor, putting between $250,000 and $1 million into early-stage portfolio startups. “The fund was formed to provide a supportive home for promising startups at the outset of their growth, to answer not just their funding needs, but to accompany them through their various stages of development, regarding strategy, growth, and future funding rounds,” Assia said. (Eliran Rubin)
If you’re a smart investor or just tech savvy, you are probably curious about the Israeli startup scene. There is no doubt that the startup ecosystem in Israel is amongst the most successful in the world, so if you are interested in either investing, or just learning more about what’s going on here, keep reading!
It’s not every day that I get an opportunity to connect with a high powered and influential woman such as Shelly Hod Moyal. In between running an incredibly innovative and successful investment company and taking care of her kids at home, she made the time to answer some questions for Puzzle Israel about herself,iAngels and the Israeli startup scene, and the budding partnership forming between Puzzle Israel and iAngels.
A bit about Shelly, her partner, and how they got started
Shelly’s background is financial, spending years on Wall Street, working as a wealth management associate at UBS, then at a hedge fund as a research analyst, and finally as an investment banker at Goldman Sachs. Since graduating college, Shelly has been involved in analyzing investment opportunities for individuals, institutions and companies. Her main interest, though, remains creating a vehicle that helps angel investors evaluate opportunities and build a responsible and manageable portfolio through co-investing with top performing investors and maintaining hands on involvement to improve performance of investments.
Shelly met Mor Assia, the co-founder of iAngels, about seven years ago while Mor was getting her MBA at Columbia, and they instantly became great friends. Mor and Shelly both married “serial entrepreneurs”, as Shelly put it. Mor’s Husband is Yoni Assia, the Founder and CEO of eToro, the world’s leading social trading network Yoni’s father, also the chairman of iAngels, is David Assia, is a serial entrepreneur as well and one of the leading and most prominent angel investors in Israel. Shelly’s husband, Kfir Moyal is one of the founders of Matomy and is the general partner of a micro VC, Cyhawk Ventures, which invests in early stages of new media and advertising technology.
How iAngels all began
One of Israel’s nicknames is “The Startup Nation”, because more and more entrepreneurs and innovations with fantastic investment opportunities are popping up every day. In light of Shelly and Mor’s connections with investors and companies abroad, they realized that there is a major disconnect between the startup ecosystem in Israel and investors abroad who want to actively invest in early stage companies in Israel but don’t have an efficient way of doing so. They got to thinking, and knew that there had to be a way to spearhead this process. As industry insiders – they have the global perspective, analytics, and connections. They had done the research, they had a comprehensive list of successful investors and investments, and they realized that starting iAngels was well within reach. At that point, the main goal was bringing investors into the Israeli startup landscape, which is constantly growing and succeeding.
Israel: the “Startup Nation”
In Israel, for every one million people there are 375 tech startups. The country in second place is the US, with about 180 startups per one million people. That means that Israel has more than twice the amount of startups per one million people than the USA. From instant messaging toWaze, the world’s largest community-based traffic and navigation app, thousands of startup ideas have come out of Israel. There’s a reason the term “startup nation” was coined about Israel. About 8% of the total population works in high tech, a percentage that is virtually unprecedented in any other country. So why is it that so many successful ideas come out of this small country? According to Shelly, the first factor that brings about the entrepreneurs is the Israeli “hutzpa”, or direct, risk driven “go-getter” personalities. The risk disposition has other drivers. For example, in Israel the standard talented engineers are recruited straight out of the most elite IDF intelligence unit, arriving to the high tech field young and motivated with five years of top class training and experience behind them.
A nation willing to take a risk is a nation bound for success, making Israel the perfect platform for high risk high profit endeavours.
iAngels and Puzzle Israel
Puzzle Israel is dedicated to showing tourists the real Israel, the textural and colorful cultures and subcultures of society, and the real people behind the faces seen in the media. One of the most prominent cultures in Israel, as we can understand from Shelly, Mor, and iAngels, is the startup culture, and Puzzle Israel is ready and proud to show travelers this part of the real Israel. In keeping with the goal of experiencing all the culture that Israel has to offer, meeting two strong and significant Israeli figures such as Shelly and Mor provides a sneak peak into the people behind the culture that is the startup nation.
Let’s Get Social!
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