NFX, an Israeli VC firm led by Gigi Levy-Weiss, has announced raising $450 million for its third fund, which will focus capital investments in Seed and Pre-Seed startups. The third NFX fund marks its largest ever.
Making the biggest impact at Seed level
The fresh NFX fund plans on investing in 70 startups from Israel and Silicon Valley, focusing on entrepreneurs innovating in FinTech, Marketplaces, gaming, PropTech, crypto, synthetic biology, and more. As we mentioned, this is NFX’s richest fund to date -- the VC’s last fund in 2019 totaled $275 million, while the first fund brought in $150 million in 2017.
While chatting with Geektime, Levy-Weiss says that the fund has not determined a specific amount capital for Israeli startups but he notes that to date, 40% of the previous funds’ capital was invested in Israel -- and NFX expects similar results this time around as well.
We asked Levy-Weiss why the fund chose to invest in the Seed and Pre-Seed stages, rather than investing in scaling companies -- given that the ecosystem has been producing more and more scaling startups lately. "We believe that the greatest impact as investors we can make is at the Seed stage. In addition, as former entrepreneurs, we see this as the stage where we are most beneficial to the startup - and this is the stage we enjoy the most! ”, Says Levi-Weiss.
“It is possible that some of the valuations are high and will drop a bit in the future, but there is no problem here"
A record year for the Israeli ecosystem, with 6 out of the 9 months totaling over $2 billion in funding. What are your thoughts on the subject? Are some of these startup valuations inflated?
Levy-Weiss: “Although some of the valuations in the industry are indeed high, these valuations are similar to their counterparts from around the globe. One of the reasons is of course the large amount of money that has flowed into the industry, but in essence, real companies are growing here, with innovative technology, great teams, customers and revenue, and really manage to 'disrupt' huge industries. It is possible that some of the valuations are high and will drop a bit in the future, but there is no problem here. "
We also asked Levy-Weiss his opinion on the insane salaries enriching the high-tech industry, and he calls to "stop the madness". He adds that this is a natural process as part of increasing and expanding the companies' recruitment efforts. “"In order for us to allow Israeli high-tech to continue to flourish, we will have to solve this problem by various means - from better technological education in schools, through increasing the representation of populations that are not sufficiently represented in the industry (ultra-Orthodox, Israeli Arabs, women of all ages), vocational retraining, investment in infrastructure, etc. Only such systemic measures will allow the industry's accelerated growth to continue - and ultimately also offset wage increases.
The new fund, as mentioned, will also invest in the crypto fields, among others, and the woman leading the NFX’s crypto charge is Morgan Blair, who was part of the founding of Diem - the crypto currency from the house of Facebook (formerly Libra). Prior to working at Facebook and joining NFX, Blair was also a partner at Andreessen-Horowitz - one of the largest venture capital funds in the world.
NFX was founded in 2015 by serial entrepreneurs who founded ten companies and sold them for upwards of $10 billion. Over the years, the NFX founders have invested in Doordash, Lyft, MyHeritage, SimilarWeb, Global-e, Mammoth Biosciences, Poshmark, Patreon, lastminute.com, Trulia, Twist, Moon Active, Plarium, Playtika, and others. NFX manages a portfolio of $875 million in assets, and claims to have launched the biggest early-stage fund in the world, however, U.S. based Greylock takes the number one spot by raising $50 million more for their new fund, raised a couple of weeks ago.