The ongoing COVID-19 crisis has led VCs to pass on early-stage startup investments, at least in recent months, in favor of more established companies, which have seen an increase in venture capitalist action. Today (Tuesday), a new Israeli-Japanese VC, Aristagora VC, announced that it has raised its first fund totaling $60 million, with the aim of supporting startups at Seed and Series A stages.
Plans to invest between $500k to $1.5M in each startup
“Professional investment in early-stage companies is falling — in Israel and abroad. Many market research studies show that this trend has been on the rise in recent years, with a steady change in the number of VCs and in their assets under management. As an early-stage investor, I have repeatedly experienced the frustration that stems from investing in new technology companies, only to see them halted in their tracks due to insufficient funding. Today’s early-stage investors must provide greater financial security than in the past and support new companies with larger sums of money until they are ready for next-stage funds...," explains Managing Partner Moshe Sarfaty.
The new fund will focus on deep technologies, investing between $500k to $1.5 million in each chosen startup. The new fund says that it will specialize in helping early-stage startups survive the “Startup Death Valley”, where entrepreneurs have mostly blown through their own invested capital, their family and friends investments or Angel investments.
While these investments allow startups to stay in the black, product development, and market growth demand some pretty serious coin. The VC fund notes that once those “initial investments are wiped away. The start-up’s bank account is drained, and the new company finds itself in Start-Up Death Valley until venture capital funds bail them out with external funding.”
Funneling tech from Israel to Japan, but not only
The fund’s managers believe that placing a limit on verticals during these early stages can sometimes prevent young entrepreneurs from achieving market adeptness and flexibility. As such, the Aristagora VC partners decided not to focus on a particular vertical, focusing instead on quality human capital and leading technologies.
The new fund brings together an experienced team of Managing Partners, including 3 Israelis: Anat Tila Cherni, who brings over a decade of investment experience and previously led the Asia Desk at Discount Capital Underwriting; Moshe Sarfaty, a graduate of Yale University and former managing partner at Krypton VC, with years of early-stage financing experience under his belt; The Chairman of the fund’s Investment Committee is Gideon Ben-Zvi, who currently serves as CEO at Valens, and provides decades of entrepreneurial experience alongside being an expert of turning an academic idea into an actual initiative; and finally, the only non-Israeli of the group, Managing Partner Takeshi Shinoda, who operates out of Japan and Singapore and is the owner and CEO of an asset management, private equity, and wealth management firm for Asian clients.
According to Anat Tila Cherni, “Demand among Asian investors in general, and Japanese investors in particular, for exposure to Israeli technologies and innovation is on the rise. That being said, foreign companies, particularly Israeli ones seeking to penetrate the Japanese market, are often faced with a slow and challenging process. In the absence of local partnerships and cultural understanding, operating successfully in the Japanese market would be very challenging.
Shinoda adds another key value to the fund other than his vast expertise, by opening up Asian markets and allowing Israeli startups to get their foot in the door, with the Japanese market introduction being key, as it is commonly one of the hardest major markets to penetrate. However, the fund states that it has no focus in steering startups to Asia, but rather offers a built in benefit.
According to Takeshi Shinoda, “From my vantage point in Japan, I know exactly what needs to be done to penetrate the Japanese and Asian markets. My local team and I will ensure that the fund’s portfolio companies are brought to the local market at the right time and in the best possible way. We will help Israeli entrepreneurs with their diverse Israeli mentalities to adapt themselves to the local market while also holding on to the many benefits that led us to focus on the Israeli market in the first place.”