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Elron Ventures to Launch CyberFuture to engage CISOs in VC decision-making

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Elron Ventures, investors in early-stage tech startups in the cybersecurity and B2B software space, announced the CyberFuture alliance that brings investors and prominent CISOs from leading brands to entrepreneurs in a unique way. 

Backed by Elron Ventures, the alliance empowers security practitioners to vet and influence investment decisions, as well as support the selected early-stage companies. CyberFuture Alliance members represent a wide range of industries across the globe, such as banking, tech, retail, travel, healthcare, pharma, and more. Alliance members include Vijaya Kaza, Chief Security Officer, Head of Engineering for Trust & Safety at Airbnb, Gerhard Eschelbeck, former CISO at Google, Jairo Orea, Global CISO for Royal Caribbean Group, Al Ghous, CISO for Snapdocs, Yaron Levi, CISO for Dolby Laboratories and Ilan Abadi, Global CISO at Teva Pharmaceuticals.

For entrepreneurs, direct access to CISOs immediately translates into real-world market insights, accelerating the time to product-market fit and sharpening product focus. CyberFuture facilitates the matching of the relevant cybersecurity leaders with the selected startups, to benefit from such insights.

With CyberFuture, companies can continue forward without having to compete with other companies who are vying for CISO attention. Elik Etzion, Managing Partner at Elron and former Global CISO for Israel’s largest financial institution, Hapoalim Bank, is familiar with the CISO-to-investor gap. “We intentionally kept this alliance to a smaller, high-quality group, allowing each involved CISO to be active in decisions and work as a team,” said Etzion. “At Elron Ventures, we are not only financial backers but fellow practitioners who want to see today’s most viable early-stage solutions succeed.” Elik believes that the alliance will generate a unique value for the supported startups by crystallizing the product offering, networking, and design partnership opportunities, and navigating the go-to-market motion in global markets.

“The CyberFuture initiative is a win-win for both security leaders and entrepreneurs,” said Vijaya Kaza, Chief Security Officer, Head of Engineering for Trust & Safety at Airbnb. “It gives security leaders the opportunity to influence investment decisions and shape the future of cybersecurity, helping to stay ahead of emerging threats. At the same time, entrepreneurs leading the charge in cutting-edge innovation can benefit from the real-world expertise and guidance of security leaders who are on the front lines every day.”

Elron acts as the back office, bringing the expertise of professional investments in early-stage startups. “Sitting in the seat of ‘CISO as an Investor’ gives a new perspective on what is possible,” said Gerhard Eschelbeck, former CISO at Google. “Traditionally, we as CISOs wait to see if new tools are developed for our specific needs. Here, we get to find those special ideas while they are incubating and help create a stable foundation to address critical wide-scale challenges.”

 

Record Number of Investments in Israeli Start-ups

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During January 2021, the month that COVID-19 reached its peak in Israel, local Start-ups raised $1.44B – a record amount of investments in Israel during a single month. Six start-ups raised more than $100M each (mega rounds) during the month. According to Start-Up Nation Central (SNC) the mega-rounds in January 2021 alone, equal close to 30% of the total number of mega-rounds in the entire year of 2020.

It is the highest number of both mega-round and general investments made during a single month in Israeli start-ups. The year 2020 witnessed 21 ‘mega-round’ investments during the whole of 2020, equivalent to 33% of capital raised. As a monthly comparison, there were three ‘mega-rounds’ in January 2020, none in January 2019 or January 2018. The mega-rounds in January were led by US investors.

Fintech was the dominant sector with two ‘mega-rounds’ and $413M raised. It is a continuation of Fintech’s strong performance since September 2020 with $1.4B in investments compared to only $340M raised in the first eight months of 2020. Director of Research at(SNC), Meir Valman, said that the record level of fundraising is driven by the increasing maturity of the Israeli tech ecosystem, when rapidly growing startups are able to raise much larger rounds.

The six ‘mega-rounds’ which were announced during January 2021 were: Rapyd Financial Network (Fintech, $300M), Drivenets (Network Infrastructure, $208M), OwnBackup (Enterprise solutions, $167.5M), K Health (Digital health, $132M), Resident Home (Ecommerce, $130M) and Melio (Fintech, $110M).

Start-Up Nation Central is a non-profit organization that helps tackle global challenges by connecting Israeli technologies with multinational corporations, governments, investors, as well as NGO’s from around the world.

Startups raisings in Israel: $1.2 billion in September 2020

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Israeli startups raised a record $1.2 billion in September 2020, the largest amount raised in a single month, according to data from the Start-Up Nation Finder. It was also the first time that more than $1 billion was raised in one month. Year to date, the total for three quarters has reached $7.2 billion, nearing last year’s record full-year total of $7.6 billion.

The record equity raised in September 2020 was led by two mega-rounds: InsurTech company Next Insurance raised $250 million in a series D round, following the company’s C Round in October 2019, which also totaled $250 million; the second-largest sum, $200 million, was raised by open-source security platform Snyk, also in a series D. This follows the company’s $150 million round earlier this year.

The month of September 2020 represents a huge turnaround from the lows of May 2020, when just $421 million was raised at the height of concerns that the COVID-19 pandemic would halt future growth in the technology sector. While equity rounds exceeded $600 million in every month from June through August, it was only in September that they once again reached – and, in fact, exceeded – the previous high recorded in April, when $970 million was raised.

However, while the total amount raised in September hit an all-time record for a single month, the actual number of rounds is still below previous peaks. Only 50 rounds were raised in September, compared to the peak of 121 rounds recorded in January 2018. It should be noted that there is a time lag in the reporting of many rounds, especially those raised by early-stage startups, so this number is likely to be revised upward in the future.

Japan’s ORIX to invest $60 Million in Israeli VC OurCrowd

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OurCrowd announced last week that ORIX Corporation (“ORIX”) invests a strategic $60 million in OurCrowd, Israel’s most active venture investing platform. This is ORIX’s first collaboration with Israel’s startup sector, with OurCrowd planning to provide the diversified financial services giant access to a wide variety of innovative technologies and companies.

Under the terms of the agreement, ORIX and OurCrowd will collaborate in agreed focus areas and will establish financial products and investment opportunities suited for the Japanese and global markets. This will include curated access to both venture capital funds and individual portfolio companies on a deal-by-deal basis. 

CEO of ORIX UK, Kiyoshi Habiro said, “We are excited about investing in OurCrowd, Israel’s most active venture investor and one of the world’s most innovative venture capital platforms. We intend to be active partners with OurCrowd and help them accelerate their already impressive growth, while bringing the best of Israeli tech to Japan’s large industrial and financial sectors.”

Over the past several years, Japan-Israel trade has increased significantly with Japan becoming one of the largest investors in Israeli tech and with over 90 Japanese companies now active in Israel. ORIX and OurCrowd will work to further increase cooperation between the two countries and enhance opportunities for Israeli startups throughout Asia.

OurCrowd CEO Jon Medved said, “ORIX is a global leader in diversified business and financial services who will strengthen OurCrowd in many ways. We are enthusiastic about the potential to further transform the venture capital asset class together and provide a strong bridge for our innovative companies to the important Asian markets.”

Established in 1964 from its start in the leasing business, ORIX has advanced into neighboring fields and is presently undertaking a wide range of businesses such as corporate finance, industrial/ICT equipment, environment and energy, automobile-related, real estate-related, private equity investment and concession, banking and life insurance businesses. Since entering Hong Kong in 1971, ORIX has been operating its businesses globally by establishing locations in 37 countries and regions across the world.

The OurCrowd community consists of almost 60,000 registered investors from over 183 countries.  Rated “the most active venture investor in Israel” by Pitchbook, OurCrowd has more than $1.5 billion in commitments and has made investments in more than 220 companies and 22 funds. OurCrowd already has had many exits, including the IPOs of Beyond Meat and Lemonade, the acquisition of JUMP Bike by Uber, the acquisition of Briefcam by Canon, the acquisition of Argus by Continental, the acquisition of Crosswise by Oracle, the acquisition of Replay by Intel, and many more.

Nomura International plc acted as Adviser to OurCrowd in connection with the transaction.

Augury Raised $55 Million for Machine Sensors Platform

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The AI-based Machine Health solution provider from Haifa, Israel, has secured $55 million growth funding round led by Qumra Capital and with participation of existing key investors, including Insight Venture Partners, Eclipse Ventures, Munich Re Venture Capital and Qualcomm Ventures. With this round Augury has raised $106 million since its initial funding six years ago.

Augury provides AI-based Machine Health solution for the Industry 4.0 production floor using vibration, ultrasound and other types of sensing technologies to detect equipment malfunctions and provide detailed recommendations for maintainanace. Its algorithms use vast amounts of collected data from over 40,000 machines to build a model of how malfunctioning equipment behaves.

Augury’s customers include manufacturers such as Hershey’s, Colgate-Palmolive, Essity, Heineken and ICL. The comapny said it ihas more than tripled its revenue n the past year. The new funding will finance the expansion of its engineering and development teams in Israel as well as its services and sales teams around the globe.

Earlier this month, ICL announced the expansion of its AI-based Machine Health program with Augury. ICL is a global manufacturer of products based on unique minerals. It said that Augury’s first installation of Machine Health solution saved ICL more than $1,000,000 in production losses and downtime costs in only 10 months. As a result ICL will implement this technology across all of its factories located in Israel, Europe, North and South America.

Economy of Knowledge: 362 R&D Centers of Multinational Companies

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Photo above: Selected Active MNCs in Israel by Location

A new report published by IVC, GKH and IATI reveals that the depths and scope of Multinational Technology Companies involvement in Israel has reach ed such a level that it influences the National Budget calculations. The term Multinational Technology Companies (MNC) refers to a foreign corporation that controls the R&D or owns a high-tech company in Israel (some entities such as Intel and HP have in addition to R&D large manufacturing facilities in Israel).

With the growth of M&A activity in the last two decades, the presence of MNCs has become an integral part and a major contributor to the Israeli tech ecosystem. According to the report, there are 362 active multinationals in Israel (in 2019), employing approximately 62,000 employees. Israeli based MNCs are about to pay nearly $8.85 billion taxes in 2019 (based on tax payment of $142,500 per employee). This amount is equivalent to approximately 2.6% of Israel’s estimated GDP for 2019, and 18% of the total income from direct tax, which is expected to be $48 billion this year.

Intel is the Biggest MNC in Israel

The majority of MNCs in Israel are U.S. based corporations, accounting for 63% of the 362 companies. While there was a noticeable German presence in 2016 and Chinese presence during 2017, currently there is no other country with any significant presence other than US. The three top technology clusters in MNCs in Israel are: Machine Vision, IoT and Cyber Security. Approximately 32% (115 companies) of all MNCs develop technologies in at least one of these clusters.

Many MNCs started as a result of M&A deals (70% of all M&As between 2014 and 2019 were by foreign companies). Most global companies acquiring Israeli startups are from the US, with a steady number of more than 50 exit deals each year. Most active corporate buyers of Israeli companies in the last 5 years are Google (10) and Microsoft (8).  Intel, on the other hand,  is the most active corporation in Israel. During 2014–2019, Intel Capital participated in 52 investment deals and Intel corp. acquired 5 companies totaling $17.5B. The largest number of employees is in a manufacturing facility (Intel Fab in Kiryat-Gat) and not an R&D center.

The full report: Multinational Technology Companies in Israel

Peregrine Ventures Raised $115 Million for Medtech

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Peregrine Ventures from Israel announced the closing of $115 million raising for its fourth fund, Peregrine 4. The partners include institutional and private equity investors from Israel, US, Europe and Australia. Peregrine 4 plans to invest in early stage and late stage rounds of medical technology startups in Israel. Since 2001, the VC firm has completed 10 exits totaling approximately $2 billion (cumulative value). . Prominent exits include Valtech, Neovasc, B-Balloon, Eximo and Rocketick.

Peregrine Ventures also owns and operates the Incentive Incubator in partnership with the Israeli Innovation Authority. Eyal Lifschitz, managing partner at Peregrine (photo above), noted: “There is a huge demand and opportunities in the Israeli medical technologies, and foreign investors recognize this. We decided to limit Peregrine 4 fund to $115 million, since we believe this size is best suit our management team and abilities to find the best opportunities – and to take an active role in helping them achieve their goals.”