After operating under the temporary name Ofek Ventures, venture capitalist fund 10D reveals it has raised $110 million for its first fund that will focus on early-stage investments. The VC fund is led by Yahal Zilka, who previously co-founded Magma VC and one of the first investors to recognize Waze’s massive potential, Rotem Eldar and Itay Rand.
After a huge exit, Deep Tech takes investment focus
The VC fund officially announced itself to the world on Wednesday, but in reality, has been fairly active for the past year, with 6 investments in Israeli startups - including StuffThatWorks, Seebo, and DayTwo, which received funding back in 2019.
The fund has two veteran investors in Zilka and Eldar behind the wheel. During his time at Magma VC, Zilka invested in some of the most popular Israeli startups, as well as riding a few successful Israeli exits along the way, including Waze, Argus, Magisto, Onavo, and more. On the other side, Eldar during his time at Gemini Ventures laid down investments in companies such as Moovit (acquired by Intel), Implisit (acquired by Salesforce), and MinuteMedia. The third partner Itay Rand was previously part of established VC funds like 83North and Founders Group, alongside working for Boston Consulting Group.
In a conversation with Geektime, Itay Rand tells that the fund’s investors are some of the biggest family offices in the world, in particular, those who manage focused investment strategies, private equity, and major strategic players and institutions from around the world. Rand continues to share that there is an equal share for each investing entity across the globe, from Australia, Japan, Asia, through Europe, and to the U.S.
We've noticed less early-stage investments due to COVID-19
What is the new fund’s focus?
Rotem Eldar: “The fund is searching for outstanding entrepreneurs, who aim to solve major widespread problems. The fund doesn’t really have an exact focus, this comes from the belief that Israeli tech can be expressed in different variations and industries. We are looking for sectors that are ripe for technological change. A big part of our profession is to recognize market trends, and identify startups with fitting solutions.”
“We founded the fund after realizing that we share the belief that entrepreneurs, not investors, are the most important and central factor in the success of both companies and the technology industry. Our role as investors is to support them and help them be the best version of themselves throughout the lifecycle of the company,” says Eldar. “In addition, we come from different backgrounds and have different professional experience which is complementary in many areas,” he adds.
You've been active for more than a year, hasn't it difficult to raise capital during this time?
Rand: “Most of the fund’s capital was raised prior to the COVID-19 crisis, so the pandemic didn’t really affect us. Over the last few months, mostly due to the crisis, we’ve noticed less early-stage investments than before. Most VCs are looking to strengthen their portfolio companies, which comes instead of investing in new startups.”
Because of COVID uncertainty, entrepreneurs are avoiding fundraising
When asked if the fund isn’t afraid to enter the early-stage investment game now, during a global pandemic, Eldar explains Seed and Series A investments are a bit tricky because of the high risk: “The pandemic and focusing on funding our existing portfolio, hasn’t changed the risk at all. We are continuously investing, even during COVID reality.”
“We believe that the biggest change brought on by COVID-19 is not focusing on existing investments, but rather in low to no motivation coming from entrepreneurs embarking on the funding process, mainly due to cash flow concerns, or a general fear from our target markets and the changes that the pandemic has brought on them.”
Zilka explains that the fund identifies two key changes: the first one is the amplified motivation for finding digital solutions, where traditional organizations are looking for technological solutions. According to Zilka, this motivation generates many opportunities that lead to new technologies.
The second change that we’ve identified is in business meetings, which according to Zilka, hasn’t really changed, except that more first-time meetings and first impressions are all getting done by Zoom: “Anyway, there are no substitutions in early-stage investing to the first face-to-face meeting.”
Zilka, who shared Magma VC’s success with Waze, explains that he’s seen more than one company with similar potential. “Waze’s story is highly important, highlighting the value that can be created when building a major market player. And there are numerous Israeli companies that continued on the same path, and now valued at fairly high.”
He referred to one of the fund’s portfolio companies, StuffThatWorks (STW), which was founded by former Waze employee Yael Elish. The startup aims to use crowdsourcing to do kind of what Waze did but in the telehealth market.