Flush with cash, the VC fund is ready to invest in later stage Israeli startups
Viola Private Equity, a member of the Viola Group, today announced the closing of its latest investment fund, Viola Private Equity II, reaching its target amount of $250 million. The fund raised money from institutional investors and family offices in the United States, Europe and Israel.
For the first time, the Viola Private Equity also received investments from Asia, including China. This is part of a larger Viola Group strategy to pivot towards Asia. Carmel Ventures — which is also part of the Viola Group — announced the launch of $194 million Fund IV in October, which received backing from prominent Asian investors including Baidu (which has invested in two Israeli startups recently), Qihoo360, and Ping-An.
“We are a growth equity fund focused on tech companies domiciled in Israel,” founder and general partner Harel Beit-On told Geektime. “We invest in companies that have a minimum of $15 million annual revenue. This is our second fund. We have firm commitments to the tune of $250 million, which is what we set out to do, but we remain open to additional investments up to $300 million,” Beit-On told Geektime.
Who do they fund?
Viola Private Equity invests in growth-stage technology companies across high-growth sectors that include enterprise software, e-commerce, cyber security, fintech, and medical devices.
Fund II will invest in 10-12 growth-stage companies and investment sizes will range from $20 million to $40 million per company. Viola Private Equity’s previous fund invested in 12 companies, four of which have already exited or filed an IPO, including MobileAccess, Amiad Water Systems, and Matomy Media Group, which filed an IPO last year valuing the company at $350 million.
“This week, we are announcing the exit of our fourth company,” Beit-On told Geektime, “Orad Hi Tech Systems. They provide software solutions for broadcasters — virtual studios, graphics for sports events. They’re recognized globally.”
Viola Private Equity’s new fund recently completed its first investment in GlassesUSA.com, to the tune of $12.5 million.
“The prescription glasses market is very large,” Beit-On explained, “$27 billion in the U.S alone every year, mostly sold through optometry stores with very high prices and margins. It’s the classic market where e-commerce can create a disruption, and lower prices dramatically to consumers,” Beit-On told Geektime.
Viola Private Equity is led by four general partners: Harel Beit-On, Jonathan Kolber, Sami Totah and Ayal Shiran. All four invest money from their own pockets in the fund.
“The Israeli tech entrepreneurs and investors have become more focused on building large significant companies. Demand for technology growth capital in Israel is growing and Viola Private Equity is well positioned to fulfill this need and partner with the most promising companies coming out of Israel,” said John Morrison, Managing Director of Munich Private Equity Partners (MPEP), in a statement. MPEP is one of the fund’s investors and is based in Germany.
What Viola is looking for
“We’re looking for companies with more than $15 million per year annual revenue and great management teams that are going after large opportunities. We’re a later-stage investor. In order to make money, we need the companies to scale considerably. We need to be addressing large markets with innovative products,” Beit-on explained.
Beit-On said there is a large number of companies in Israel that fit this bill and Viola maintains a database of them.
“We reach out to them proactively, but we also have a strong presence in the Israeli ecosystem, and we’ll be happy for companies to reach out to us.”
“We’re interested in e-commerce — it’s exciting and growing. But we look for differentiated models. We also look for enterprise software with SaaS models. They normally demand a large capital pool as they scale and that’s another good opportunity for us.”
Beit-On expressed that Viola is also interested in medical device companies despite the fact that they often take longer to exit.
“When we invest, our time to exit is more manageable. We have a holding period of 4-5 years.”