The stocks of technology companies are in a decline, and the market is heading toward an uncertain period. And at a time like this, some funds are willing to allow all parties involved –investors, entrepreneurs or even employees– to liquidate their shares in their company in exchange for their holdings. One of these funds has now raised $300 million to do just that.
"It is important for us to see that the company has patient investors"
The Israel Secondary Fund announced today (Monday) that they raised a third fund of $312 million for the liquidation of shares in high-tech companies that for various reasons are on the rise. Among the investors who took part in the current round are several large institutions such as Migdal, Altshuler Shaham, and Bank Hapoalim, as well as foreign investors, including pension funds from Europe and the U.S. and family capital management companies (family offices). ISF currently manages about half a billion dollars in its three different funds.
In a conversation with Geektime, Dror Glass, Managing Partner, and founder of ISF, said that in light of the market being on the decline and the possible ramifications that follow, such as postponed acquisitions and stock issues, all for an unknown period, "the secondary market is likely to be an important alternative to liquidity in technology market". As you may recall, less than a week ago, Titan raised a $100 million fund for the same purpose. Glass welcomes such second-hand funds: "We welcome other players that allow for more liquidity and market collaborations."
According to Glass, the uniqueness of the fund compared to other competitors is the fact that it was one of the first in the field. "ISF has built a strong reputation over the years as a selected partner for secondary deals among the major players in the market, including investors, funds, corporate executives and employees. An important principle for us is to execute a win-win-win scenario for the seller, company and ISF," said Glass.
To date, ISF has executed more than 80 secondary transactions and invested directly and indirectly in more than 220 companies. "We need to see that in a company where we buy shares, investors have the patience to continue building the company beyond the next two years– because it may take longer," Glass added. Among the fund's portfolio companies: Myheritage, Aidoc, WSC, Innovid, Valens, Pixellot, Earnix, Verbit, Arbe, Yotpo, Waze, Solaredge, Coralogix, and Venture firms Vertex and Glilot.