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Horn of Plenty
February 16, 2000 GlobesBy Ella Jacoby
Not many venture capital people can chalk up to their credit exits the way Eddy Shalev of Genesis can: VCON (issued in Europe), AudioCodes (issued twice on Nasdaq), Butterfly (sold to Texas Instruments for $50 million), Fundtech which also posted a successful offering, and Netect, sold to BindView for more than $30 million. There were other less prestigious exits, such as Security-7, sold to international company Computer Associates for a modest sum.
Genesis can already take the credit for all these investments. Shalev started off as a representative of brokerage firm Oscar Gruss, and later moved over to the Oppenheimer international investment bank, currently a Genesis partner. Back in the merry pre-fund days, Shalev posted several exits under the framework of his investment company A. Shalev Ltd, with the assistance of Vered Asulin, now a partner in Genesis.
The investment company held shares in the Mofet fund, which it later sold. It also was invested in several promising start-ups, such as Orckit, Orbot, sold to Applied Materials in 1996 for $110 million and Nicecom, sold to 3Com. Shalev and Asulin also helped found Paradigm Geophysical, which went on to issue (although the share is currently marking time).
With a record like this, Shalev had no difficulty in raising $90 million for his first fund from investors such as Banc of Boston. CIBC, which invested $10 million in the first fund, doubled the amount in the second. It was even easier to bring veteran investors to the Genesis II table. Genesis II has just closed at $100 million and is expected to grow to $150 million. Genesis I invested in 27 companies. Genesis II has invested in five, with another three to five companies lined up to receive financing in the next few months.
One of the really prestigious investors in the current fund is IBM, which put $5 million on the table. "IBM decided to invest in Europe," says Shalev, "and they came to the conclusion that the best place in Europe to invest in is Israel. They decided on us after examining five or six funds."
"Globes": Will the IBM investment change your charter?
Shalev: "Definitely not. They're very open-minded. They wanted exposure to the venture capital industry in general and to our companies in particular. They take us most seriously, opening their laboratories to us. It's important for them to identify what is currently called 'destructive technologies' that could kill their main line of business. They want to see how they can at least be part of these technologies."
Genesis also managed to bring in Israeli institutional investors, traditionally afraid of investing money in venture capital. After seeing the yields their counterparts in the US reaped, and after the long publicity campaign waged by local funds, Genesis is reaping the rewards: three Israeli provident funds have invested, although Shalev is meanwhile precluded from revealing their names.
"The amounts are relatively small, but they signify a change. I believe that the banks will be next to enter the picture, and they will have a very aggressive strategy of investing in venture capital. The successes in this sector speak for themselves: CIBC invested $30 million in Global Crossing. Today, after three years, their holdings are worth more than $5 billion. Israeli banks won't be able to remain aloof for long."
Business Card
Name: Genesis I, Genesis II
Investment Stage: Seed to mezzanine stage
Investment areas: Communications and software
Capital managed: $190-240 million
Average investment offered: $8-10 million
Exits: VCON, AudiCodes, Butterfly, Fundtech
Portfolio companies: Comsys, Foxcom, Foxcom Wireless,
HeliOss, Allot, EDSL, IET, G-Connect, Tescom, Vicusoft
(formerly Applicad), Compugen
Partners in management company: Eddy Shalev, Vered Asulin, Eyal Kishon and Yair Shoham.
Not many venture capital people can chalk up to their credit exits the way Eddy Shalev of Genesis can: VCON (issued in Europe), AudioCodes (issued twice on Nasdaq), Butterfly (sold to Texas Instruments for $50 million), Fundtech which also posted a successful offering, and Netect, sold to BindView for more than $30 million. There were other less prestigious exits, such as Security-7, sold to international company Computer Associates for a modest sum.
Genesis can already take the credit for all these investments. Shalev started off as a representative of brokerage firm Oscar Gruss, and later moved over to the Oppenheimer international investment bank, currently a Genesis partner. Back in the merry pre-fund days, Shalev posted several exits under the framework of his investment company A. Shalev Ltd, with the assistance of Vered Asulin, now a partner in Genesis.
The investment company held shares in the Mofet fund, which it later sold. It also was invested in several promising start-ups, such as Orckit, Orbot, sold to Applied Materials in 1996 for $110 million and Nicecom, sold to 3Com. Shalev and Asulin also helped found Paradigm Geophysical, which went on to issue (although the share is currently marking time).
With a record like this, Shalev had no difficulty in raising $90 million for his first fund from investors such as Banc of Boston. CIBC, which invested $10 million in the first fund, doubled the amount in the second. It was even easier to bring veteran investors to the Genesis II table. Genesis II has just closed at $100 million and is expected to grow to $150 million. Genesis I invested in 27 companies. Genesis II has invested in five, with another three to five companies lined up to receive financing in the next few months.
One of the really prestigious investors in the current fund is IBM, which put $5 million on the table. "IBM decided to invest in Europe," says Shalev, "and they came to the conclusion that the best place in Europe to invest in is Israel. They decided on us after examining five or six funds."
"Globes": Will the IBM investment change your charter?
Shalev: "Definitely not. They're very open-minded. They wanted exposure to the venture capital industry in general and to our companies in particular. They take us most seriously, opening their laboratories to us. It's important for them to identify what is currently called 'destructive technologies' that could kill their main line of business. They want to see how they can at least be part of these technologies."
Genesis also managed to bring in Israeli institutional investors, traditionally afraid of investing money in venture capital. After seeing the yields their counterparts in the US reaped, and after the long publicity campaign waged by local funds, Genesis is reaping the rewards: three Israeli provident funds have invested, although Shalev is meanwhile precluded from revealing their names.
"The amounts are relatively small, but they signify a change. I believe that the banks will be next to enter the picture, and they will have a very aggressive strategy of investing in venture capital. The successes in this sector speak for themselves: CIBC invested $30 million in Global Crossing. Today, after three years, their holdings are worth more than $5 billion. Israeli banks won't be able to remain aloof for long."
Business Card
Name: Genesis I, Genesis II
Investment Stage: Seed to mezzanine stage
Investment areas: Communications and software
Capital managed: $190-240 million
Average investment offered: $8-10 million
Exits: VCON, AudiCodes, Butterfly, Fundtech
Portfolio companies: Comsys, Foxcom, Foxcom Wireless,
HeliOss, Allot, EDSL, IET, G-Connect, Tescom, Vicusoft
(formerly Applicad), Compugen
Partners in management company: Eddy Shalev, Vered Asulin, Eyal Kishon and Yair Shoham.
