Israeli VC on Sand Hill road

Today GM, and tomorrow???

Not a day goes by without another company announcing lay-offs.  Big companies, small companies, tech companies, non-tech, etc., etc.., etc.   Just a few hours ago, Deutsche Bank adjusted the price target for General Motors to $0. Never a dull moment, who knows what tomorrow brings.

There are plenty of people dishing out advice on how to survive this crisis… so I thought to give a pointer of my own to those entrepreneurs that still monitor my not-so-active blog…

Spend every dollar (or shekel) as if it were your own.

Many people have repeated the famous lines “Cash is King”, “make sure to have 24 months of cash in the bank”, and so forth.  Rarely does a start-up raise enough money for 24 months of operation, so I think that is a slightly unrealistic approach, but sounds good.  As for Cash is King, it’s always true, crisis or not.

I believe in keeping things simple.  Believe me, if you were spending your own money, you would probably do things differently.  Anyhow, just food for thought from an ex-VC, formerly on Sandhill road.

Tags: Deutsche+Bank, General+Motors

Israel Cleantech Delegation to California

The California Israel Chamber of Commerce (CICC) is organizing an Israeli Clenatech delegation to California, Nov. 10–13, 2008.  Participants in the delegation will have the opportunity to present their company to and meet privately and engage in roundtable discussions with leading investors, corporate partners, policymakers, as well as scientific and academic experts. Hosting corporations include: GE, Google, PG&E and the California Public Utilities Commission.

Paticipants will also enjoy exclusive tours of California cleantech companies and facilities.

Companys that are interested in applying, can access the application form at www.cicc-cleantech.com.

Tags: cicc, israel+cleantech+tour, ge, google, pg&e, california+public+utilities+commision

IVA Day 1...

This morning started with Israel’s Cleantech meetup, and continued with Day 1 of the IVA conference.  Definitely a busy day for an “ex-VC” like me. 

Opening keynote by US VC Tim Draper, of DFJ. Tim demonstrated his presentation skills by describing the new type of entrepreneurs that he is seeking, the “super hero’s”, followed by a rock star performance of “Risk Master”. Lyrics by Tim, Music by Mystery Rock Star.

For a video of one of his previous gigs (Stanford, Singapore, Mountain View, New York), click here.

During Tim’s performance, I was sitting next to a buddie of mine that also spent many years in Silicon Valley.  We both looked at each other and pondered how this same performance delivered here in Israel, would feel TOTALLY different when delivered in the US…  Yes, culture is culture; not always transferable from one place to another - even if it is only a song.

Next up, Mike Moritz of Sequoia Capital, who promised his feet would not leave the ground (or something to that extent…).  His presentation, entitled: “Size Matters, How to get it, How to keep it”, discussed what it takes to build enduring, sustaining companies that can grow to be multi billion dollar companies (not those sold for a mere $200,$300,$400M).  Using examples from successful companies such as P&G, Walmart, News Corp, Fedex, Nike, Amazon, Intel and Apple, Mike’s presentation was both insightful and inspiring.

Key points delivered:

• Pursue billion dollar possibilities


• When you run out of market, expand into another such opportunity


• Expand with care - there are no shortcuts


• No need to be a public company to grow and become a significant company


• Examine your company as an outsider


• Foreigners can win in the US


• Skeptics are often wrong


• Never bow to setback


• Capital intensity sometimes does work


• Lack of money breeds ingenuity


• Invest during downturns


• Make the founders spirit live !!!

The last part of Mike’s presentation really drove that last point home, when he discussed Apple.  We all know that Steve Jobs was fired, apparently because he required “Adult Supervision”.  Adults were brought in (3 different CEO’s actually)… the company almost died.  The return of Steve Jobs brought us products that have become such a basic part of our day-to-day.  The big question is how did Steve make this transition from what was a “rotten Apple” to where the company is today.  The presentation highlighted the following points:

• Be realistic (know what is really going on)


• Focus on a few things


• Start with small wins (remember, the first products that Apple released post Steve, were essentially just better versions of what was already out there)


• Focused on the product and develop things people want (there came iPOD).


• When lightening strikes - strike (iPOD’s success, brought quick new iPODs to market, riding on this unexpected success)


• Design what you want to use (Personally - this could be a bit problematic at times…. I recall quite the number of products developed by techies to their spec, without thinking about what a user really wants)


• Stay right in front of the customer (In Apple's case, this was achieved via the Apple retail store)

Mike certainly touches on a sensitive point for the Israel venture industry.  I have blogged about this subject before, and hopefully the mindset of the VC as well as entrepreneur is changing.  Presentations like these certainly help to drive the message home. Thanks Mike!

The rest of the afternoon was busy with panels, presentations, awards, start-up presentations, and a schmoozfest (which I missed, as I had an important parent meeting back home).  But no worries, tomorrow is another day with IVA Day 2, as well as Ness Technologies “We Make it Happen” Summit, featuring (or shall I say staring?) Al Gore. It’s going to be a long week…

 

 

Tags: iva, mike+moritz, sequoia+capital, tim+draper, DFJ, ness+technologies, steve+jobs, apple+computer, riskmaster, cleantech+meetup

Cleantech group meets in Ramat HaSharon

Today’s morning started with the 3^rd Cleantech Israel “meetup” . The group found a new venue, since it is quickly outgrew Herzelia’s Max Brenner cafe… Each meetup brings new faces, eager to get involved in Israel’s renewable energy, water and environmental technology sectors.

Event speaker this time was Mike Granoff, President of Maniv Energy Capital and an investor in Shai Agassi’s Project Better Place, who gave his perspective on the venture and it’s potential.  Personally, I’m a fan!

There is no doubt that the Cleantech buzz (and real activity, not just buzz) here in Israel is growing. We are seeing hi-tech executives venture away from traditional IT industries, into this new field.  In my opinion, this is great news.  We have technology from the Universities and research institutes, and are now bringing management skills acquired from traditional fields into Cleantech.  Growing as well are funding alternatives, although this still lags IMHO.

Thanks again to Israel Cleantech’s Jonathan Shapira and Gene Dolgin for organizing.

 

Tags: cleantech+israel, michael+granoff, project+better+place, maniv+energy+capital, cleantech, israel+cleantech+ventures, jonathan+shapiro, gene+dolgin

No surprises please!

That is what I have always asked from my entrepreneurs.  If there is bad news, I want to know about it.  Same for good news.  But PLEASE, no surprises!

Entrepreneurs and their VC’s (and board members) have a very delicate relationship.  We all like to think that it’s always open, friendly, etc., etc., etc.  But looming overhead is that cloud, which never quite goes away… you can think of it as the “power” cloud. 

The most effective boards are those that discuss real issues, not just get together periodically for an update by the CEO.  Our job on the board (other than governance, etc.) is to keep the company on track, raise new issues that perhaps are not part of the day-to-day, and make sure that management has the full picture.   For these discussions to have any impact, the board needs facts – be them good or bad.

Today in a casual entrepreneur, “ex-VC” meeting, I was asked my opinion on how to manage boards, and when best to deliver troubling information.  My answer: right away.

After all, when you really think about it, who really has power over whom?

Tags: venture+capital+boards, hate+surprises

Israeli VC's are raising lots of money...

IVC Research Center published their numbers for 2007, and it looks like $1.1 billion was raised, 21% more than in 2006. You can read the Globes (English) or TheMarker (Hebrew) articles on the subject.

Seems like a lot of money is available for early stage Israeli start-ups - NOT! 

When you double click and realize where funds are designated, you will find that not much of that capital will be directed at early stage IT companies.  Of the 10 groups mentioned, only Pitango and Tamir Fishman will invest in early stage IT. Other funds raising money in 2007 include 4 healthcare-related groups (Pontifax, 7Health, Agate, and SCP Vitalife) , 2 on Cleantech (Israel Cleantech and AquAgro, and one each for mid-tech (Wanaka) and mid-stage (Aviv).

Although the headline definitely sounds good for the entrepreneurs...  Combine that with global economic concerns, etc., and the story gets more complicated.

My advice to entrepreneurs out there – now is the time to sharpen your pencil, review your budgets and make every $1 (weak as it may be) count.  Reduce spending to what you REALLY need to move your business forward.  Make sure your goals are properly defined and focus on meeting them.  When things get tough out there, the world is much less forgiving.  

Tags: ivc+research+center, pitango, tamir+fishman, pontifax, 7health, agate, scp+vitalife, israel+cleantech, aquagro, wanaka, aviv

You deserve the real answer!

As I meet with entrepreneurs in my newly defined “ex-VC” role, I find myself very often translating VC talk.  It reminds me of a post Guy Kawasaki published over 2 years ago (“The top ten lies of Venture Capitalists”).  Definitely still worth a read.

Many entrepreneurs meet with VC’s that are “very interested” in the company and report that a “meeting went very well”.  I have a very specific question that I ask in response: “What is the next step?”.  (Actually this is the same question that one would ask in the context of a customer meeting as well.)  Not always is there a concrete answer.

It is absolutely OK to ask a venture capitalist at the end of a meeting what is the next step.  In fact, it is necessary.  You will be able to understand very much from this response, most importantly what was the real level of interest. 

As often said, a quick “no” is the second best answer to “yes”. And… if the answer is “no”, take the time to discuss and question why.  Not for the purpose of changing a mind, but for understanding the real reason.  This feedback will be extremely helpful in addressing these concerns for the next meeting, as well as dealing with real issues.  Good Luck!

Tags: guy+kawasaki, the+top+ten+lies+of+venture+capitalists, feedback+from+venture+capitalists

Academic research and start-ups?

Today, I was invited to participate in a panel discussion at Ben Gurion University, moderated by Nimrod Goor of Precede, that addressed turning scientific research into start-ups.  Participants included Orni Petrushka (Precede), Neta Cohen (BGN technology transfer office),  Prof. Dan Sadot (BGU), Dr. Itai Baruchi (Pythagorus Solar) and myself (“ex-VC”).

Turning research into commerce is not obvious.  A University’s technology transfer office is typically responsible for commercialization of IP, with an objective of returning income to the inventor and to the University to support further research.  Every venture capitalist that dealt with technology transfer offices has something to say about the matter (not always very nice BTW).  However, getting a licensing agreement from the University is only the first baby step in the direction of building a company.

Much of today’s discussion surrounded the fact that an invention (with or without patents), is just not enough to create a start-up.  Ideas have to become products, which will be purchased by customers.  The development of the business plan is not typically included in the curriculum of an engineering student.  During my under graduate Math/CS studies at Tel Aviv University, we had no exposure whatsoever to the concept of commercialization. In fact, I don’t recall a single opportunity to speak with anybody from industry.  Glad to see that things change.

 

Tags: precede, nimrod+goor, orni+petrushka, bg+never, prof.+dan+sadot, itai+baruchi, pythagorus+solar, technology+transfer, academic+research+and+startups

Green technologies have side effects...

I was recently talking with an ex-VC colleague of mine that has started to explore investment opportunities in Cleantech/Greentech (would somebody please explain the difference to me???).  Turns out, since Cleantech has invaded his life, he has developed an acute sense of “environmentalitis”. I can certainly relate.

Since I have moved back to Israel from Silicon Valley, I feel like a criminal every time I throw out the garbage… around here, hardly anything seems to be recycled.  In our family, we do what we can.  As such we take egg cartons, toilet paper rolls, etc., to Ben’s pre-school.  At least it will become “art”, rather than landfill.  Ben understands about recycling (or so we think).

In Yoav’s class (5^th grade), his teacher is actually dedicating time to discuss the environment.  He came home today telling me about a plant in Emek Hefer (where we live) which turns cow dung into electricity (600 tons of cow dung per day, resulting in 2–3MW of electricity).  He thought maybe I would want to work there, as long as I don’t smell when I come home.

Teaching kids is a great way to create awareness, as they share the news with their parents, as well as become environmentally-conscious adults.  But until they grow up, we have to find some more effective ways to deal with this issue.  On Kibbutz Evron in Israel, they are using a very practical approach to plastics bags – charging for them… you can read about that here. I’m in favor… after all, I have my “Whole Foods” foldable, reusable bag with me at all times . 

Tags: cow+dung+electricity, cleantech, environmentalitis, greentech, recycle, kibbutz+evron, whole+foods

Guys, guys, guys pay attention...

This is NOT the message that we should be delivering to tomorrow’s entrepreneurs.

This is a photo from yesterday’s Themarker, after the acquisition of Yadata was announced.  The articles’ headlines: The new millionaires. It is true that only $4.4M was invested in the company, and that investors made a nice return, but this is not what will create a sustainable business in Israel folks.  Isn’t anybody listening??? 

We need to be able to build companies that will be sold for hundreds of millions, not tens of millions.  Yes, a few new millionaires, local heros, etc., etc., etc.  We have only ourselves to blame, as such exits are not something we should be proud of - at least not when there was venture capital money working.  Bootstrap – that’s a different story.

Probably an unpopular thing to say at a time when these 3 very smart and talented guys have stepped up a notch in terms of their net worth; I am expecting better.  Much, much, much better.

Sigh.

Tags: Yadata, yadata+acquisition+by+microsoft, themarker