May 19, 2022

IAG gets in the game: bridging the Europe and Israeli VC ecosystems

In Israel's record year of investments, IAG initiated a week-long professional visit to promote its business interests and activities.

The goal of the trip was to allow IAG and its investors to meet the main players of the Silicon Wadi, connecting to the ecosystem that last year raised over $25 billion, and to deepen the cooperation of this unique ecosystem with Europe, through the bridge created by IAG members.

Despite the impressive capital raised, Israeli startups wish to enhance their collaboration with Europe, while currently the United States is the dominant partner of the ecosystem. It is currently estimated that close to 80% of the foreign capital invested in Israel originates in the United States. These startups are hungry for smart capital and value-added investors enabling them access to markets. Ensuring continuous growth is not only a matter of funding.

IAG is a perfect candidate to build this bridge between the two countries, as it already has multiple connections in place with the local institutions, including the Italian Embassy in Israel and Ambassador H.E. Sergio Barbanti. IAG partners also met with incumbent large companies like Enel, which opened its Innovation Hub in Tel Aviv to the business angels to extend the dialogue between startups and investors to corporations. The actual dedication to this goal is represented also by several investments already done in Israel by IAG investors, for instance the two Med-tech companies Bendit and Votis whom the group met with during the trip, both aiming at saving lives in their specific therapeutic areas.

The dialogue with the main VCs, research centers and startups has been facilitated by Herzog Strategic Ltd., a leading Tech consulting company. Herzog Strategic is a daughter company of Herzog Law, the biggest Israeli Law Firm. Herzog Strategic technology and business expertise, as well as their ability to tap the vast stores of knowledge and resources, have made it possible to introduce the IAG delegation into an ecosystem that produced 247 Exits of which 42 unicorns in 2021 only.

"The role of angel investments in the life cycle of innovative companies is crucial for the creation of a vivid and energetic ecosystem. It was our pleasure to lead the professional aspects of the visit of IAG to Israel, exploring opportunities for strategic partnerships and investments. It was another step towards building strong relationships with Italian entities and with the Italian market" commented Ofer Sachs, CEO of Herzog Strategic and former Ambassador of Israel in Italy.

This journey began in October 2021, when Edouard Cukierman, Managing Partner of Catalyst visited Rome to meet some of IAG’s representatives and started working with the most relevant network of Italian investors to build a bridge with the European investors ecosystem. Catalyst is one of the pioneers of VCs in Israel as it launched its first fund in 1999. Over these 23 years, it has invested via 5 funds, achieving more than 50 Exits from associated partners.

During this visit, IAG had the opportunity to get to know and forge relationships also with Pitango, one of the most prominent VCs in Israel, with over $2 billion under management. Pitango is focused on seed, expansion and late-stage companies in core technologies, consumer, and Life Sciences. With over 275 investments resulting in a stellar return: 87 Exits including 6 Unicorns.

With the same aim, the Italian body has been invited to Ra’anana for a meeting with Sanara Ventures, a healthcare investment platform for innovative pre-seed, seed, and A round healthcare startups, that combines expertise that come with the leadership of global giants Philips Healthcare & Teva Pharmaceuticals through its fund managing $100 million.

The strength of the Israeli ecosystem is the strong connection between all the players in the innovation journey. Disruptive technologies often start their lives in the laboratories of research centers: Israel's Sheba Medical Center at Tel Hashomer has been ranked by Newsweek as one of the top 10 hospitals in the world for a third straight year. It is one of these cradles of talents. The directors of ARC, the innovation arm of Sheba, explained to IAG about their open approach with the startups in terms of cooperation, allowing trials, product testing and finding opinion leaders. Their dialogue is open to international players, both investors and scale ups. Here is the touch point for the partnership with IAG, its industry experts and over 20 portfolio’s scale ups operating in the life sciences industry.

SIBF VC is another unique fund IAG was introduces to and has a model of investing in high-tech startups that are just ahead of the so-called Death Valley, the moment where results don’t match the expectations and it’s hard to go back on track. SIBF uses a turnaround approach investing in distressed companies with strong and fundamental IP that need management and business model restructuring. Despite the risk it implies, this approach allows them to maximize their returns. With a $150 million fund and a success rate of more than 95% on its investments, SIBF is strongly interested in entering Italy and could leverage IAG’s network to do it.

The crowdfunding players also represent a large contribution to the total funding. The main player is OurCrowd, boasting a portfolio of 336 companies, 200,000 investors, 1.8 billion invested and 57 Exits achieved. Notable among OurCrowd's investments are Jump, acquired by Uber, NASDAQ-listed Beyond Meat, and NYSE-listed Lemonade. Their innovative model includes the indirect investment opportunity in holdings focused on specific industries or development stages.

As the various VC players often point out, this Israeli wave of innovation is also driven by the development of new technologies by the numerous research centers. For this reason, IAG and Impact NRS decided to come together to discuss a partnership to support the best Israeli technologies aiming to transform the health, wellness, and food behaviors of today into sustainable business of tomorrow.

Leonardo Giagnoni, MD at IAG, commented the great results of the Innovation Trip: “Connecting dots and bridging the gap between countries will speed up the spread of innovative solutions. Sharing values and creating trust between leading players is fundamental for setting up these long-term cross-country relationships”.