News & Blog
The Israeli ‘Second Act’
There are over 90 Israeli originated unicorns, majority of which are centered in B2B enterprises and cybersecurity. However, following 2022, the number of Israeli unicorns is on the decline. Israeli unicorns must begin to develop a strategy, or ‘Second Act’ that prolongs their high growth period which is critical for their success and valuation.
FUELING FAKE GROWTH
The investment landscape has become more complex with mid-stage companies showing inefficient growth despite achieving high sales volumes. This phenomenon was exemplified by the increased access to liquidity and the need for VCs to deploy capital quickly. Understanding which metrics are most reliable for validating sustainable growth are crucial for investors when evaluation growth investment opportunities.
Not an Art: Pricing of Securities on the Secondary Market
Buyers of private company stock take a market value approach when it comes to valuing a security that is for sale. Recent financing rounds may provide a decent way to gauge security pricing yet they don't provide an accurate price for selling on the secondary market. Additional variables that affect the pricing of securities on the secondary market come into play when calculating stock pricing.
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Dancing on Air
The decrease in valuations of public tech companies affects private transactions pricing, although the effects are not immediate. The immediate consequences include difficulty retaining employees, emergency cost cutting initiatives and an increased focus on profitability. VCs are adapting their strategies to reach the light at the end of the tunnel amidst market downturns.
Conflicts of Interest in Secondaries
GP-led secondary transactions have become increasingly popular and are gaining recognition as an active portfolio management tool. Often, a GP disposes fund assets in the secondary market by way of a stapled deal however, there arises a potential conflict of interest where the GP sells the assets at a discount. How can this conflict be avoided?
The VC Risk/Return Continuum
The risk return continuum can be visualized for different stages of maturity strategies in VC: seed investing, early venture, late venture and growth and secondary investing. There are typically four inherent company specific risks that affect each stage of a company's development differently.
Secondaries: how to protect yourself from falling knife?
The only way to generate attractive returns in secondaries is to buy into quality companies that are managed by skilled investors. Secondary investors have the ability to increase their protection by adding a few clauses that are more commonly seen in M&A, PE or LBO’s. When an investment turns sour, secondary investors can embed downside protection mechanisms through agreements with the sellers themselves as opposed to the company during transactions.
Will you be missing the golden years of the secondary market?
It is common knowledge that in any crisis situation lies an attractive opportunity. On average, every 9 years, the US economy has experienced a recession. However, not all investment strategies suffer, on the contrary — some of them have excell and provide their investors with unparalleled market opportunities. One such strategy is called secondary investing.
7 tips how to not kill the deal
Israeli entrepreneurs have made a name for themselves in the high-tech world thanks to their courage and initiative, however, precisely because of these qualities, they may lose quite a bit of leverage in their negotiations with investors. How can successful fundraising be achieved? We’ve outlined 9 tips for how to fundraise correctly and effectively.