Learning from other people's mistakes

Talia Aben from Gemini funds caught my attention reading her blog -"Israeli VC on Sand hill Road". In a recent post she listed five rules for entrepreneurs trying to reach VCs. I recommend reading the full post, but here's the gist of it:

Rule #1: Don’t send a “Dear Sir” email just out of the blue

Rule #2: Find somebody that can make a personal introduction to the venture firm. (...especially in Israel!).

Rule #3: Research the venture capitalists background.

Rule #4: Do not approach 20 funds at once.

Rule #5: Keep your opening pitch short.

Reading this post really reminded me of Guy Kawaski's post - "top 10 lies of entrepreneurs". One of my favorites mistakes was this common cliche:

“Hurry because several other venture capital firms are interested.” The good news: There are maybe one hundred entrepreneurs in the world who can make this claim. The bad news: The fact that you are reading a blog about venture capital means you're not one of them. As my mother used to say, “Never play Russian roulette with an Uzi.”

To see the flip side of the coin, I suggest reading the "Top Ten Lies that VCs Tell". It never hurts to learn from someone else's mistakes, right?

AfterDox - Former Amdocs Executives Form an Angel Investment Group

43 former and present executives from Amdocs have raised several million dollars and formed AfterDox, an angel group targeting early stage enterprise software and telecom companies. The group explicitly expressed that they will not invest in medical devices or hardware companies. The angel group has already met with 70 prospect companies and is getting ready to make its first investment.

The group of veterans plans to take active roles as mentors, board members and consultants, in order to help build the portfolio companies and raise additional rounds of investments, leveraging their experience and personal rolodex.

AfterDox's is led by Menachem Shalgi, former VP business development at Amdocs. Other members of the team include Amdocs co-founder Boaz Dotan, VP Eli Gelman, SVP Amir Goldstein (co-founder of Cellcom Israel Ltd. ), Arie Offner, Yossi Ben-Dov (CEO of Schema)and some other high caliber Israeli execs. According to IVC online, other managers of the group include Zvi Avron and Gary Sapir.

There are a few other Angel groups in Israel. The prominent ones are Israel Angels, the Angels Club (sponsored by "The Israel Export and International Cooperation Institute") and Silicom Ventures. In addition, there are hundreds of non-grouped angels who invest privately in high-tech companies. One of the most known is Mr. Yossi Vardi (founder of ICQ) who invests in early stage internet companies.

The reason for the recent buzz around angel investments in the Israeli market is the rising wave of investments in the tech industry in the last two years. As posted here a couple of days ago, high tech investments peaked in the second quarter of 2007, which caused high net worth individuals to consider venture investments as another asset in their portfolio.

More: Globes

ConteXtream Raises $9.6M in First Round

Israel based ConteXtream, developer of grid technologies for media server networks, has raised $9.6M from Gemini, Norwest Venture Partners, Sofinnova Ventures and Benhamou Global Ventures. The proceeds will be allocated to strengthen the company's development team in Israel and finance further R&D activity.

ConteXtream is working on a new type of communication server, aimed to simplify triple-play networks (voice, video, data - Services such as Comcast and Roadrunner). ConteXtream's product offers a new approach that simplifies the operational complexity of the triple-play networks by enabling transition from separate networks for each application to a single unified infrastructure. In simple words, ConteXtream will facilitate the rapid introduction of many new services and business models into a single IP network.

ConteXtream was founded in 2006 by CEO Sharon Barkai, former founder of Sheer Networks (acquired by Cisco) and Xeround Systems, provider of signaling solutions to carriers for VoIP (See my previous coverage here). Nachman Shelef, the Executive Chairman and a former partner at Benchmark Capital, was the founder Nicecom (acquired by 3Com) and later served as a VP at 3Com. Eric Benhamou, 3Com's former chairman is ConteXtream's sole seed investor.

According to Avi Hasson, a GP in Gemini:
"ConteXtream combines all the components that help build a successful company - an outstanding technological concept that addresses large and growing target market with a real problem; an understanding of customers' needs, an experienced founder and a strong technology team."

Source: Globes

Hi-tech investments in Israel climb 4% in Q2 of 2007

Resource Shelf posted PWC's latest report on High Tech Investment in Israel. According to the MoneyTree report, compiled by Kesselman & Kesselman (PricewaterhouseCoopers) , venture-backed hi-tech companies raised approximately $319 during Q2 of 2007, merely 6% higher than the comparable period last year.

Other interesting facts from the report:

• The average investment per company was $4 million this quarter compared to $3.8 million in the previous quarter.
• $626 million were invested in 161 high-tech companies in the first half of 2007
• The Communications & Networking sector maintained its lead, with 26 companies raising
  approximately $133 million, representing approximately 42% of total investments for the quarter, thelargest share of the total investment in the last three years.
  

Image source: IVC Research Center

Source File

Winners of the best venture-backed competition

Last Month, Red Herring and the Israel Venture Association co-sponsored a competition in Israel, limited to early stage companies with revenues of up to $10 million in 2006 supported by venture funds associated with the IVA.

Three Israeli startups received first prizes as the best young companies in their respective sectors.

And the winners are:






Software Category: Safend Inc.
Main Idea: Safend develops software to prevent data leaks in the organization, especially from authorized users.

• Founded: 2003
• CEO: Gil Sever
• Employees: 50
  
• Capital Raised: Safend has raised $9.65 Million in 2 rounds.
• Key Investors: Intel Capital, Walden Israel and Elron Electronics.
  

Communications Category: Unipier
Main Idea: A merger between Cash-U and Niragongo created Unipier, the developer of IPM - Intelligent Policy Management software that enables wireless providers to create, integrate and manage services fast.

• Founded: 2000
• CEO: Gabby Levy
• Employees: 60
• Capital Raised: Unipier has raised $43 Million in 4 rounds
• Key Investors: Greylock Partners, Intel Capital, Carmel Ventures, Fidelity Ventures, Pitango Venture Capital
  
  

Life Sciences Category: G.I. View
Main Idea: G.I. View has developed Aer-O-Scope, a new colonoscopy device that consists of a disposable camera embedded in a balloon that propels itself through the colon, providing a 360 degree view.

• Founded: 2003
• CEO: Dr. Benad Goldwasser
• Capital Raised: $29 Million in 4 rounds
• Key Investors: Israel Healthcare Ventures, Delta Ventures, Zielgler Meditech Medical Partners

See the rest of the finalists here.

How to raise money from VCs?

This funny video was posted on 5min (covered here before), Techcrunch and will probably be on every Israeli VC blog very soon.

It's a parody in Hebrew that provides entrepreneurs tips on raising VC money. I'm afraid that the subtitles don't do the humor much justice, but it's certainly worth your 5 minutes.

Some amusing tips:

1. In the presentation, have a logo of a different fund. VCs love to invest in companies that others are invested in.
2. Be Cool - VCs are serious, but you should be part of the vibe. You are the vibe - the vibe is you.
   
3. Say you are not a Web2.0 company - go against the current trend and use buzz words fast: UGC, P2P, CPC, and anything you can come up with. Try not to be comprehended.
   
4. Make Excel your best friend. Refer to revenue as the fulfillment of a vision, not profits.
5. Have clear goals - for example, repeat the mantra "8 million, on 68 million before the money".
   

View the rest here: