Fusion LA, a Los Angeles based accelerator for Israeli entrepreneurs, announced Monday, because of the COVID-19 crisis and transition to remote work, that it has launched a program to speed up its investment process. The accelerator’s target is to agree on terms and transfer investment funds within 3 weeks of initial contact. This initiative joins a list of other VC funds, like Gigi Levy-Weiss’ NFX which has also recently integrated a new fast-track investment process.
It’s not a just a gimmick during the COVID-19 crisis
In all, Fusion LA has invested in more than 40 early-stage startups, with 9 of the companies opening headquarters in the U.S. The new program will focus on early-stage startups belonging to various industries: gaming, media, Software Enterprise (i.e. Construction-Tech, HR-Tech, and Marketing Tech), digital health, digital agriculture, AR/VR, smart cities, IoT, FinTech, and AI.
With a new batch set to begin, the program had to create the necessary adjustments according to our new reality. “Before the crisis, it would have taken us between a month to two months to selectively accept new applicants - From the initial email, through face-to-face meetings and followup calls with Fusion LA executives, and until an investment offer was sent and due diligence completed,” explains co-founder, Guy Katsovich in a talk with Geektime. However, the upcoming batch, which includes between 5-8 startups, will be selected to participate and transferred investments all within just 3 weeks. Katsovich also highlighted that this sped-up investment process is in no way, shape, or form some kind of gimmick for the COVID crisis, but rather the model is here to stay.
Aren’t there a lot of challenges that come with a remote selection process?
Katsovich: “From my perspective, the transition into the remote selection process felt organic, and as far as needing to ‘feel’ the people in face-to-face meetings, then we are more than happy when required to go meet the teams. However, in the end, we think that the new process is not only great for investors but even more beneficial for the entrepreneurs - The fact that startups can stop making the pilgrimage to investors in order to raise funds creates a more utilitarian and transparent process for both sides to enjoy.”
Katsovich works in partnership with fellow co-founder, Yair Vardi. Without additional employees, the two partners report that they receive between 200-300 inquires from startups wanting to take part in their program, meaning there is a lot of work to do in very little time. Katsovich further explains that the COVID-19 crisis has accelerated their transition to digital processing and challenged the two with remote investing. “We went into the garage and developed internal automation processes, using both technological and methodical tools to create a quick Deal-Flow selection process, that assists us in scheduling meetings and collecting relevant materials regarding the entrepreneurs we are working with.”
Is the U.S. even enticing for the Israeli entrepreneur?
The accelerator’s next batch is set to begin in September 2020, and the question comes to be, with everything happening right now in America - the #BlackLivesMatter protest alongside the ravaging COVID-19 virus - would Israelis even want to move there? Katsovich notes that they have never forced any company to immediately move operations to the U.S, though over the long-term they believe that access to the target market’s capital, customers, and talent offers better chances of growth for startups. “We are constantly monitoring all that’s happening in the states, however, despite the protests and coronavirus, the U.S. is still the biggest market for Israeli startups, as well as the Westcoast being a base for a majority of Venture-Backed-Companies.”
How did your portfolio companies fare over the last period?
Katsovich: “There were companies that halted fundraising processes as well as sales operations, and there were companies that experienced sudden and significant growth and momentum lately. It’s no secret that the VC industry is currently functioning in a wide range of uncertainty, and on a personal level, it was exciting as a VC fund Associate-Partner to navigate the crisis landscape and see its effects on the portfolio. Eventually, we were glad to see most of our startups taking the initiative and acting in a pro-active manner to survive the crisis; whether it be trivial efforts like reducing costs, or bigger initiatives like turning to new markets, opening new distributing channels, transitioning sales networks to Inside Sales, and more.”
Just a few weeks ago, Gigi Levy-Weiss’ NFX fund announced that they had developed an automated system shortening the investment process, without in-person meetings, pledging a simple 9-day selection process and investment within 3 weeks.
