The Top VCs With the Most Portfolio Companies in Start-Up Nation’s $100 Million Club
Carmel Ventures, Vintage Investment Partners, and Marker LLC are among the VCs with the highest concentration of highly valued Israeli startups, according to recent research by Zirra. In order to rank VCs according to their achievements, Zirra, a research firm, used its proprietary algorithm to value Israeli startups, extracting 163 companies that were found to be worth over $100 million. Zirra then ranked the VCs invested in these companies by the size of the portfolio, from highest to the lowest. VCs that were ranked higher have the largest number of startups that are valued above $100 million (without taking into account the exact valuation). Since 2016, Zirra has produced a ranking of Israel’s $100M+ startups in what they call the SUN100 (Start Up Nation $100M club).
VCs that are ranked lower on this list are still considered to have a relatively high concentration of highly valued startups. We mentioned only five or more portfolio companies and excluded all the rest, as most of the investors do have between one to four such companies in their portfolio.
Some major qualifications to the ranking list must be mentioned:
*Not everyone in this list are VCs: Some non-VC financial enterprises are involved in either investing or lending money to the SUN 100 club, including Silicon Valley Bank, which is a bank focused on tech companies, and Viola Credit (formerly Plenus), a lending fund. In addition, OurCrowd is a crowdfunding platform, and Mitsui is a corporate VC. Two VCs in the list have decided not to raise new funds and to focus on their existing portfolios: Gemini Israel Ventures and Genesis Partners.
*Incumbency advantage: Incumbent VCs have a natural advantage over younger VCs for the simple reason that they have been around longer. Most of the VCs listed here were established during the 90’s or the early 2000’s, such as Carmel Ventures which was founded in 2000, or Vintage Investment Partners, which was formed in 2002. Nevertheless, there are some nuances worth noticing: US-based VCs may exist longer than their Israeli counterparts, but their presence in the Israeli startups ecosystem is a newer phenomenon. Bessemer opened its Israeli office only in 2007, and since then has steadily increased its investment in the Israeli market.
*The list is by no means proportional to seniority. Older funds are not necessarily ranked higher, and vice versa.
*Having a lot of $100 million+ valued companies is not always as good as it sounds. A bird in the hand is worth two in the bush. Therefore VCs counts big exits more than large enterprises. After all, what’s the point in having ten companies of $100 million and above if none of them are about to be sold for a higher valuation or go public? Therefore, having four or ten large enterprises in a portfolio is only a part of the big picture, and exits should be taken into account too.
*On the other hand, having a lot of good companies says something about your investment capabilities. And VCs use their portfolio of high valuation companies to help them each time they are raising their next fund.
*More top rated VCs will not necessarily have higher returns. What counts is the share of each portfolio company the VC holds, and their portion of any exit. A significant proportion in a $300 million company that isn’t get bought for years but lacks the growth to go public can end up as a failure in the eyes of a VC.
How Do We Value Companies?
The output of the Zirra Valuation Process is by no means a company’s real valuation. What we do is estimate the real-time valuation, as if the company had a stock traded on the public market, taking into account market momentum and industry characteristics, while excluding effects such as a tech bubble or PR and marketing campaigns.
The valuation process involves both Intrinsic and Relative valuation algorithms. The Intrinsic data includes revenue and expense estimations, traffic trajectories, advertising campaigns measurements, investment history and velocity, based on aggregated sources.
In the Relative analysis, data is compared and benchmarked with a database of thousands of companies with correlation to stage, space, size and trajectory. This produces a preliminary set of company ratings and valuation metrics. For example, the algorithm concluded that teams of up to 3 co-founders, each specializing in his/her field of business, technology or marketing leads to growth, whereas teams of 4 or more co-founders carry a higher degree of risk. The machine learning algorithms track the growth of companies, arrive at conclusions independently and dynamically adapt for future analysis.
We then produce a map of competitors based on the data set, rated by the degree of direct competition, its size, threat, and proximity of the shared customer and partner base. Results are sent to relevant experts that comment on both quantitative analytics (scores and metrics) and qualitative analytics (risks, opportunities, competitors).
Where do we get the data from?
Data is extracted from 85 different data sources, regularly updated (daily to weekly). Sources include both open and licensed directories such as the company website, Bloomberg, Linkedin, SimilarWeb and Adwords; It can be “derived data” such as Glassdoor reviews, consumer reviews, sentiment analysis from open web articles; or other data points such as academic researches, stock indexes, and macro-economic parameters.
Companies With Significant Milestones in This Quarter’s list
Taxi ride-hailing app Gett is still Israel’s highest valued private tech company. The company’s status got even better this quarter, as the Israeli automotive ecosystem was upgraded with the acquisition of Mobileye by Intel for $15 billion and the decision by Intel to make Israel its automotive powerhouse. A little less than a year since the $300 million that car maker Volkswagen had put into Gett, there is still no sign of a significant cooperation between the two on a service or a product.
Still, Gett continues to grow in European markets such as Russia and the UK. Gett’s acquisition of Mountainview House Group in the UK gives them control over black cab brands Radio Taxis and Xeta as well as corporate transport platform One Transport. As a result of this acquisition Gett is the biggest taxi app in the UK, with over 11,500, taxis in London alone.
Gett claims to be the market leader in Europe in terms of volume of rides, revenues, and profits. Within Europe the service is currently live only in Russia and the UK, indicating much more room for growth and building on their market lead. Despite talk over five years ago of launching in France and Germany, Gett has not yet entered those markets.
In France, Uber has taken a leading role but met with serious resistance from Taxi drivers and from the French government. German companies MyTaxi and Taxi.eu lead in Germany, where Uber has run into issues and been forced to leave all but Berlin and Munich.
According to Zirra research, Russia is Gett’s fastest growing market, in terms of growth in Android and Apple’s app stores, and in terms of web traffic. Still, Gett is not the biggest taxi app in the country. It is overshadowed by Yandex, which accounts for 55% of all taxi rides in Moscow, with Uber and Gett handling about half of the remaining 45% of rides in the city.
In the US, Gett’s initial attempt at penetrating the market has not been as successful as they hoped. Despite strong marketing efforts, attractive fixed fares, and CEO Shahar Waiser moving to New York, the company’s business in the city is not yet profitable and trails behind
In recent months, Gett has been expanding its offerings into delivery, allowing businesses to call for couriers. According to a Zirra survey, a significant number of respondents were open to trying Gett’s delivery service if prices are low enough.
Raising $19 million about 2 months ago, Trax imaging joins Amazon in the race to commercialize in-store computer vision tech. Trax allows grocery store employees to capture images of the current retail situation in stores and through deep analytics in Trax’s cloud, insights and reports are delivered to management teams for the purposes of optimizing stocking cycles and tracking products and promotions. Now Trax is arriving to consumers as well, allowing them to find desired products in real time or suggest alternatives. Soon, Trax will be able to compete with Amazon Go’s cashier-less stores. But Trax is not alone in the market, as many established companies are already developing computer vision-based solutions to retail such as IBM, Oracle, SAP, Microsoft, and smaller companies such as Planorama, RetailNext and Symphony Gold. [Read here for Zirra’s full spotlight report on Trax Imaging]
Kaminario, a developer of a high performance all-flash array storage system, passed the $1 billion valuation this quarter, thanks to a $75 million financial round earlier this year. After a couple of years trying to convince enterprises to deploy more SSD-based storage, EMC started to sell a competing system, ExtremeIO, thus educating the market, and making it large enough for Kaminario’s flash-based product. In 2014 the company achieved a world record in speed of storage and a very high reliability, making it a valid competitor to EMC. 2015 and 2016 were excellent in sales, bringing the company toward $100 million in annual revenue run rate. The company also grew in terms of size, 111% in two years, not bad for a company that was founded in 2008. [Read here for Zirra’s full spotlight report on Kaminario]
Taking advantage of the momentum he has created with selling Mobileye to Intel for $15 billion last month, computer vision scientist Amnon Shashua announced a new $41 million round from unknown investors for another tech company he had founded: OrCam. According to Reuters, the new round that was announced only this weekend values OrCam an $600 million, while Zirra’s valuation algorithm estimates OrCam’s valuation at $569 million. This puts Orcam straight as the 18th highly valued private tech company in Israel, according to Zirra.
OrCam takes the computer vision abilities of a company such as Mobileye’s obstacles detection on the roads to help blind or visually impaired people to “see” better by reading them in headphones what is in front of their eyes. A tiny computer that is attached to the side of a pair of glasses read today’s news or a sign, recognize faces and facial expressions, and helps them to function almost as anyone. All they need to do is activate the visual engine by pointing to the object.
The device has just launched to market in 2016, and according to Shashua will become profitable in 2018 and then will consider a listing in New York.