July 14, 2025 • 49 mins
What’s the playbook for building a resilient, multi-billion‑dollar venture firm that weathers every market cycle? In this episode, Abe Finkelstein, Co‑Managing Partner at Vintage Investment Partners, shares how they underwrite managers, navigate funds‑of‑funds and secondaries, and spot next‑gen innovation—all while maintaining LP confidence across turbulent times.
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Episode Transcript
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(00:00):
So is European Venture dead?
(00:05):
You're the first person that ever, asked methat.
Look.
I don't think so.
As a firm, we don't think so.
You know, I think I think you saw it recently.
We actually added a, a partner in London, ourfirst partner outside of Israel.
So we're actually long European venture.
(00:25):
We've been investing in Europe for aboutfifteen years now, have done extremely well.
I don't want just look backwards.
I am looking forwards, but I definitely thinkthe best years for Europe are ahead of itself
in terms of venture capital.
We can touch on that.
But it might be a little bit of a contraryintake, but we're big believers in the
opportunity there in venture capital.
(00:47):
And one of the reasons I wanted to ask you isbecause you're not stuck on a specific
strategy.
You're in Europe, you're in Israel, you're inU.
S, so you don't have to be investing in Europe.
Why take the time to open up an office inLondon today and why lean into Europe?
It's a great question.
I actually see some parallels with what we sawin Israel over the past decade and a half, even
(01:11):
twenty years.
So some of that is around just simple, youknow, going to the basics of the basics, like
the demographics and saying what's the futuregoing to look like for people.
You know, Israel, know, kind of beingentrepreneurial is told people is almost like a
job like any the way I would have thought ofbeing a doctor or a lawyer or an investor back
in the day.
So I think when I look at Europe and that'sbecause there weren't there's not a ton of
(01:35):
different alternatives to begin with kind ofgoing back When I kind of feel that way with
Europe as well.
I think if you're a younger person in Europeyou may decide to pick up stakes and leave.
But I think one of the ways to get wealthythere is probably more likely to go the path of
being an entrepreneur.
So I think that's a good thing that we're goingto see more and more entrepreneurs coming to
(01:58):
market.
Again, just looking at a younger population andthe opportunities that are afforded them.
And then the second thing is I look back atIsrael, if I go getting back twenty years,
fifteen years, the foreign investors startedcoming over to Israel the way they started
going over to Europe probably about five or sixyears ago, some even before that.
(02:20):
And it ultimately just raises the bar for theentrepreneurs.
The foreign funds don't they're not satisfiedwith $100,000,000 $500,000,000 even
$1,000,000,000 exit these days.
So when they're putting money into yourcompany, you better be aiming much, much
higher.
So I think that's a fantastic thing thathappened in Israel and that's something that we
(02:40):
see going on more and more in Europe.
And then finally, think kind of success, we gotsuccess in the sense that we've seen Spotify
and then we have Revolut, which now they'retalking about being valued at, I don't whether
it's 40,000,000,000 $50,000,000,000$60,000,000,000 I mean, these are very, very
large numbers.
And then Klarna and a whole bunch of other onesthat can be expected to be public offerings.
(03:05):
So I think that entrepreneurs are seeing out ofEurope that it's possible to build very, very
large companies.
And that next generation of whether it'slovable or N8N or what have you, like again,
these are the next ones that we think canbecome bigger and bigger.
So I always say when an entrepreneur, yourneighbor sees how well you're doing, they say,
(03:26):
wait a second, that idiot can do it, then I cando it even more so.
So I think that kind of flywheel and ecosystemis developing in Europe.
It's not without its challenges.
It isn't going to be a walk in the park.
But I do think we're feeling that.
And the last thing I would say is that we'reseeing these larger companies and we saw that
in Israel as well, off the next generation ofentrepreneurs.
(03:48):
They were part of a company that got built to avery, very large scale.
And again, they say, wait a second, I see thisas possible.
You know, when you see something happen, yourealize it's possible.
I'm gonna go out and start my own company now.
So, you know, that's why we're excited aboutit.
The reason I asked you whether European VC wasdead was not necessarily to be controversial.
It's the fact that most people, at least theconsensus view, is that the future of VC, at
(04:13):
least the next decade, will be driven by AI.
And in Europe, you seem to have this weirddichotomy where you have this regulatory
landscape that's making it very difficult forAI companies to succeed, but also you have
Paris, which is the hotbed of AI.
How do you weigh these two factors?
And how are they both affecting the Europeanecosystem?
(04:34):
That's a great question.
And by the way, I think most people areskeptical about Europe and venture capital.
And I'm not saying that like I'm not alsoconcerned.
I have my concerns and we'll see how it playsout.
But I tend to think in general and again,there's no doubt that regulatory and government
and again, saw that in Israel, we see that inThe U.
(04:55):
S.
Can be a big boon for investment in tech ingeneral, investment technology, investment in
venture capital.
And maybe Europe's not there around that.
I think they do need to do a bunch of things,whether it's around like tax incentives,
whether it's bringing over more of the largecorporates to open up R and D centers and
things like that.
(05:16):
By the way, like tax incentives make all thedifference in the world in a lot of cases,
whether it's for startups or for corporates.
And so that can be a huge thing.
I know Europe is having challenges with thatand particularly The UK as well.
And it seems like in The UK, given some of whatthey're doing in the tax side is actually
driving people out as opposed to having peoplecome in.
But I'll put that on the side.
(05:37):
I think venture and entrepreneurship, it tendsto live in a bit of a bubble.
We thought regulation was going to kill Uberand Airbnb.
And these are some of the largest companies inthe world.
And I think that the talent will justultimately, you know, get beyond that.
So Paris, for example, you know, amazingengineering schools, whether it's, you know,
(05:59):
companies like Mistral or even Hugging Face hasNexus there and, you know, eleven Labs, like
we're seeing those companies come outregardless of regulation.
Now some of them may start there and then movetheir operations to The US.
And we see that with the Israeli companies aswell.
But ultimately, I think the opportunity is thatthose companies start in Europe and you can get
(06:20):
many of the European VCs or The US VCs that areover there get there first and give them the
seed capital.
So I just see that kind of stuff justoperating.
It's its own organism.
It's kind of like here in Israel that we've hada conflict going on to what we've had a
conflict going on for, you know, seventy fiveyears or maybe, you know, three thousand years.
But we we've had a conflict at least sinceOctober 7.
(06:44):
You know, you could everything, you know,venture capital investment is living in this
bubble that's just doing amazingly well.
And I think in Europe, that's going to be thesame thing with entrepreneurs want to get
something done.
They want to build something.
They're just not going to, you know, listen tothe regulation and what's going on.
Clearly, that can dampen the opportunities.
So I do think that needs to be addressed.
(07:06):
But I just think we're going to continue to seeamazing successes, because there's just going
to be more experienced entrepreneurs.
We've seen big companies getting built and wewant to build in one even bigger the next time
around.
I mean, even though I look at, know, there'sSpotify I mentioned, but look at Stripe, who
founded Stripe, you know, it was two Irish guysthat had access to the capital to do that.
(07:27):
They happened to they weren't from SanFrancisco.
They weren't from New York.
They weren't from Tel Aviv.
So I think it's possible anywhere.
Taking a step back, tell me about Vintage'sstrategy and how does Vintage invest in both
funds as well as startups?
So we actually have three separate strategies.
(07:49):
We have fund of funds, where we invest inventure capital funds, you know, when they come
back to raise their new funds.
And within the fund of funds, we have a numberof different strategies I can touch on.
We have secondary funds, which is actuallywhere we started back in 02/2003.
This was kind of the contrary in nature ofVintage and Nallenfeld who started the firm who
(08:10):
saw everybody exiting technology and ventureafter the dot com bubble burst and exiting
Israel as well.
And he said, No, I'm the opposite.
I'm long technology.
And I think that's one of the reasons why hehired me as employee number one because he saw
I was also long technology.
So we have secondary funds that buy outinvestors from their investments both in
(08:32):
venture capital funds and direct holdings incompanies.
And then we have a growth fund.
The growth fund was actually the most recentstrategy that we added.
That was back in 2011.
And the idea of the growth fund was to lookback into the portfolios of the fund of funds
and the secondary funds and cherry pick what wethought were the best emerging companies at
(08:53):
that growth stage and go in on a direct basis.
So if I think about everything we're doing,it's kind of covering the venture landscape
from the earliest early stages via our fund offunds typically going into early stage funds.
And then the secondary funds maybe going intoclick later to much later buying at LP
interests, doing direct secondaries that growthfund is kind of somewhere kind of the B rounds
(09:17):
up until the last round.
And it's across venture.
So everything is venture capital.
And in our fund of funds, we have multiplestrategies.
So we have a fund of funds specifically focusedon Israeli funds.
We have a fund of funds for smaller funds inThe U.
S.
And Europe, emerging funds in some cases, andthen a fund of funds for larger funds in The U.
(09:37):
S.
And Europe and a health fund of funds.
And they're all super synergistic.
We can get to a deal from multiple differentways and leverage each of the funds.
At the center of it, I would say, is ourrelationship though with the GPs of the funds.
You mentioned you have a fund based on smallfund of funds or emerging managers.
(10:01):
How flexible is that mandate?
Are you looking for the funds that have a 50%chance to be a 10x plus?
Or are you looking for something to bediversified within itself and predictably
deliver a 3x?
That's a great question.
So, so that fund specifically, the mandate ofit is to invest in funds in The US and Europe,
(10:22):
dollars 200,000,000 in sizes and below.
And typically, funds that are 200 and below aredoing pre seed and seed.
We, you know, I would love a 50 chance ofgetting a 10x or 5x, but that's great.
But they're definitely like it's a mix of twotypes of funds.
It's usually funds that may be on their fourth,fifth or sixth fund that just they want to be
(10:46):
small, right?
So it could be like Ludlow out of Detroit or aversion one.
These are funds that they intentionally want toremain small and may remain small forever or a
floodgate, for example.
So very, very experienced investors overmultiple cycles as well.
And then what we also try to do is find thenext great versions of those funds.
(11:07):
So it could be that it's somebody we onlyinvest in investors that have some sort of
track record.
So it could be a first time fund.
It could be a single GP.
It could be a first time team.
But we want to see a track record.
And the hope is that they can perform really,really well.
Some of these funds will grow up in size overtime.
Like we were in the $100,000,000 fund ofprimary ventures of New York and we were in the
(11:32):
$120,000,000 fund of 0.9 out of Germany.
And they've scaled up over time and kind ofmoved out of that smaller fund of funds or fund
of funds targeting smaller funds.
But we're always looking for those newmanagers.
And yes, what we see is that thediversification, we don't want to be over
diversified, lowers the risk.
And therefore we can take big bets on thesesmaller funds.
(11:55):
And we've had these $200,000,000 and belowfunds.
We have a bunch that are 10x's and above.
We have a bunch that are 5x's and above.
We even have a couple that are 20x's and above.
And then we have a few that haven't performedquite as well.
What we don't have a lot of interestinglyenough is those that have actually lost money.
So obviously we're not doing we're not makingan investment in a venture capital fund to do a
(12:18):
1X or 1.2X.
But it's very interesting to see, if you get anexperienced manager who's made money in the
past has a track record.
It's rare that they'll actually lose money foryou.
It happens, but it's pretty rare.
But for sure, that's the vehicle that's a bitmore high betas the way I would put it.
(12:42):
And every LP will say they do first time funds,most will not, and most like to track the fund
over time.
Give me the thesis for why fund ones are goodinvestments.
Why should somebody invest in a fund one?
We were we actually had a discussion about ittoday in one of our investment meetings that
(13:03):
sometimes, we've seen this a lot where the fundone isn't good.
Could be timing, it could be portfoliomanagement, and then you have to make an
assessment, do I go into fund two and fund twoturns out to be amazing.
And we've had that there's a bunch of wellknown groups where their first fund was
terrible, and then they went on to do amazinglywell.
But you're saying, if I say why invest in thatfirst fund is because, first of all, like an
(13:26):
access issue, like we see something that'samazing and we really believe in that, like we
want to be there from day one.
It will give us the ability to, you know, haveball control, so to speak, be able to increase
our allocation over time.
And it also might be if we're not there fromday one and they do extremely well, we may not
be able to get into that fund too.
Now it's kind of rare that you know how stronga fund is within kind of those first couple of
(13:51):
years before they come back and raise that nextfund, but that's always a risk.
But the main idea is to get there, get inearly, get a toehold in the fund.
And then again, if they do well, you can scaleup over time.
And that's the main reason to do it.
And again, sometimes, you know, sometimes beingin the fund can teach you a lot.
So it could be that I say, okay, I'm going toskip fund one, but then I'm going to come to
(14:14):
fund two, and then fund one looks sideways, ormaybe it looks great for some reason, but you
know, and that could make me invest or notinvest, but it might having been in the fund
one and known and see how it behaves, and howthe partners behave, and the types of
investment they're doing that could actuallychange my opinion versus fund too.
So being on the inside is also worth somethingas well.
(14:37):
I mean, don't do a lot of fun ones.
We do do them.
But that's why we keep the bar like super highon those.
There's really got to be obviously there's gotto be like one sentence that you can describe
the fund in is why you think it's like superamazing and differentiated for you to go do it.
It's that edge.
Yeah, it's that we might start with a milliondollar check by the way, and that million
dollar check could become a $30,000,000 checktime, right?
(15:02):
Said another way, if you can't simply explainthe edge then there is no edge.
Or it's not being conveyed to me properly or Ican't interpret that.
So again, we've made mistakes and we've missedthings because I couldn't discern the edge.
I would say even the ones that I didn't do andI made mistakes on, I saw the edge.
I just didn't have the maybe the guts to go doit for whatever reason.
(15:26):
But I saw the edge and I'm so that kind oftells me like if you can see the edge, then
there's usually a good like a real there'susually a good case that it's gonna turn out,
well.
Obviously, Fund one is extremely risky evenfrom a entity level, whether the team stays
together.
What are some ways that you could de riskinvesting to fund once?
(15:46):
The first one, the model that we do it is a wayto de risk it.
Again, we're probably investing in that vehiclein about 20 funds, about 10 to 12 of them,
would call core checks and then another youknow, six to eight or sort of these toe in the
water ones.
So by having that diversification, it tends tode risk it.
So that's the main thing.
I think also, and again, I don't want to tootour own horn, but we've what works, what
(16:11):
doesn't work managers, and staying close tothese early stage managers, giving them
guidance, not telling them what to do,obviously.
I do think we have contributed over the yearsto making some of these groups, maybe giving
them a better chance to be successful.
So that's another way de risking just becausewe've seen so much.
(16:32):
But at the end of the day, it's you're taking abig risk, right?
And but I would say the main main de risk goingin is I always like to, I mentioned it before
is to say that, you know, we're not doing firsttime investors.
We're doing people that have made investments,maybe they haven't done it in kind of a classic
fun sense, but they've made investments.
(16:53):
There's feedback from entrepreneurs about them.
You can kind of read something into the tealeaves from what they've done before.
So it doesn't mean that somebody couldn't, youknow, come out of some large organization and,
start just making investments and do amazinglywell.
I'm sure it's happened in the past.
But I think we de risk it by avoiding those andfocusing much more on the ones that have had
(17:14):
some investment experience and at least adecently robust track record.
You've repeated this multiple times, thebenefit of having the toehold in the fund, but
also the information advantage of being anexisting investor versus observing it from the
outside.
(17:35):
What do you see on the inside that you can'tsee from the outside?
You see how people make decisions.
You see whether they're careful with them.
You see whether, know, how deeply they go onthings they see.
You could see again, how they interact withyou, what information they're willing to share
with you or not, you know, how transparent theyare.
(17:57):
Again, things are real partnerships.
Again, we're not running these funds, butyou're involved with these people for, you
know, I say ten years, it's probably more liketwenty years in many cases.
And ultimately, like you want to be involvedwith people that you can trust, that you have
fun working with and interacting with.
And again, being on the inside, you can feelthat.
And also being on the inside, it's more theit's the job of the GP at the end of the day,
(18:21):
the fund manager.
But you can also see some interesting thingslike bubbling up in the companies, right?
You can see a little bit more detail thanopposed to saying, three years from now start
telling me about what happened.
You can kind of see that time series of howthings are progressing.
Was just say, and again, I think we have okayjudgment on entrepreneurs as well, but we get
to interact with the entrepreneurs that they'veinvested over the years, listen to them, hear
(18:45):
what they're saying and that type of stuff asopposed to again, just at one point in time
when you're due diligence in a fund to have tomake a decision, I'm in or out based on
everybody being prepped to say wonderful thingsabout the funds.
Being on the inside can just make a tremendousdifference.
It's also what you're not seeing, which isyou're not just seeing a backwards applied
(19:08):
narrative to why you did X, Y and Z.
You're seeing in real time before the decisionis made, and that's just a whole different way
to view a fund versus through a narrative thatthe GPS weaved.
100%, 100%.
And again, like I said, this isn't at the endof the it's working with people in a insanely
(19:29):
dynamic market.
Like so that's the thing like you really, youwant to be in the trenches with them.
And that's really critical.
Again, we've invested in fund twos as well.
But in many cases, it's been people that we'vebeen tracking for that first fund and even
before.
Like there was one fund in our portfolio wherewe didn't do the first fund because we didn't
(19:55):
like the strategy related to the timing of themarket.
But we loved the person.
And also, there was some team dynamics as wellas two partners.
When they came back for the second fund, thestrategy had shifted a little bit, the market
had shifted a little bit, and they came back asa solo GP.
And we're like, great, you know, I'll back thatperson and all it all worked out.
(20:19):
And we kind of been following it relativelyclosely along the way also because the fund
manager very graciously was in touch with usgiving us updates as well, which is also that's
great.
Like I appreciate that also, even though again,had passed on the first fund.
And you mentioned that oftentimes the fund oneis okay and the fund two is great.
(20:41):
Would make a fund two suddenly pick up and be agood fund where it wasn't as a fund one?
Great example.
Literally was one of the first fund to fundcommitments we did.
We did back in our first fund to fund.
So the situation was the first fund to be fair.
This was the first fund was raised in ninetynine two thousand, which was like, or maybe
(21:02):
February, right?
That was the one of the worst vintage yearsever.
So ultimately, think the fund did a 1x.
So I don't know if that was top quartile or sothey didn't lose money, which I'll give them
credit for.
But what was really interesting when we wereanalyzing the first fund, we saw that out of
the whatever, 100 great exits over whateverperiod of time, they were in they had picked
(21:24):
four out of the 20 portfolio companies thatthey invested in.
I was like, wow, these guys seem to know whatthey're doing about picking.
But we analyzed the portfolio, we saw theyentered with very low percentages relative to
their fund size.
And a lot of their following capital was usedto help, let's say, the more challenged
companies survive versus putting more capitalinto their great companies.
(21:47):
Now, when we talked to them about fund two, wesat down with them, and we were going to pitch
them that that's what we saw in the first fund,okay, so why we wouldn't do the second fund.
And they literally came to us and said, Look,you know, we see where we made our mistakes.
We we wanna change it.
We think we picked good companies.
Where we went wrong was around portfoliomanagement and construction.
And that's what we plan to do differently thisnext time around.
(22:11):
Now, could have been they would have screwed itup.
But it turned out that that second fund endedup being I think it was something like a forex
net fund.
So again, I think it was that it was picking upon some of the, you know, what they were doing
well and where they weren't being able toexploit that and take advantage of that.
So again, it doesn't always work that way.
But I do think and also, by the way, I think italso says a lot about managers when they see
(22:37):
what they did wrong, and they want to correctthat.
Know, a little something that isn't necessarilypublic information, but and blame myself as
being here in the beginning.
But, you know, Vintage's first fund was ourworst fund so far.
And I think a lot of it is okay, you know, youthink you know what you're doing.
And but there's a lot of learnings and we, youknow, we do three off sites every year where we
(23:01):
beat the crap out of ourselves to figure outwhat we do wrong and what we need to do better.
And that's something that we started, you know,way back in the day in 02/2003.
And again, no fun one of ours should have beenmuch, much better for a few clear reasons.
And we changed that.
And so far, the future funds have beensubsequent funds have all been better than the
first one.
First one was okay, but the next ones have beenbetter.
(23:24):
I think the top LPs, like the top VCs, look atthe managers' rate of change.
You mentioned that fund, not only did theyreact to feedback quickly, they actually
internally generated what was wrong with thestrategy and improved before they even met with
you.
That's even better than being reactive tofeedback.
(23:46):
So you also have to look at the trajectory, notjust the point in time.
100%.
And that could be around things even likesectors that you're investing in.
This fund was also very interesting becausethey were investing in a particular sector
because they had a view on it.
And again, that first fund did a 1x in a periodof time where again 1x was not bad.
(24:07):
But a lot of it had also to do with sector theywere investing in.
And they said, Okay, this next one, we're goingto have a thesis around, you know, these three
sectors.
And that's where we're because we believethat's where, you know, the puck is going, you
know, where the world is going.
So that's also something like to think we'reseeing that I'm seeing that more and more with
funds and I respect that more and more.
(24:27):
Would say if I had to go back twenty years, heasked me, I said, oh, if, know, funds are
changing the areas and the sectors that they'refocused on, I'd be like, I'd be a little wary
about that.
I'm a little wary about that.
But even if I'm a FinTech fund, but withinFinTech, I got to always have new themes that
I'm looking at.
So I think that's critical.
A lot of times these labels we've put on thingslike strategy drift versus changing strategy or
(24:53):
evolving strategy, it's only clear inretrospect whether that was a positive or
negative and people kind of paint thesenarratives to try to highlight or deemphasize
parts of the strategy.
You guys have these off sites every year whereyou're constantly just rigorously debating your
own strategy.
(25:14):
Tell me about the process on that.
How do you evolve your strategy year over yearand what have you found that works best as a
fund?
It's a great question.
Just from a specific process point of view, wepick a number of topics, some of them return on
themselves all the time.
(25:35):
Like how do we handle or are we handling ourreserves properly in our growth fund?
In our secondary deals should we be buying LPinterest in managers that we think we don't
think quite as highly.
Things are always going, we're always doinganalysis to understand that.
But the whole idea is to focus on a fewdifferent topics, dive in deep, and then out of
(26:01):
that, come back and say, hey, let's try toimplement that in what we're doing.
So I'll give you a great example.
Like over the years, you know, we may be ableto be accused of being and this is even me
personally a bit too conservative.
And when we would price companies, for example,when we were doing growth deals or when we
(26:22):
would look at LP models on the secondary side,we would hone in on the winners and we'd often
put in like what we think the outcomes couldbe, low base high.
And we always found with the best companiesthat are high case was always too low, Right?
So, you know, and again, in the moment you lookback, you're like, you're saying, okay, wow, we
(26:44):
put, you know, a billion dollar exit on thatcompany.
And you know, now it's back then that's crazy,right?
And now it's $100,000,000,000 company.
And then in another case, it might be, oh, weput a $500,000,000 exit.
Oh, now there's going be an IPO at9,000,000,000.
So, you know, a lot of that work is then tosay, okay, when we when we look at deals, you
know, if we're if we feel good that we've honedin on who we think the great companies are,
(27:07):
let's figure out if we're not being tooconservative around pricing deals.
So that's just one example.
But that's the idea is that we go we take thedata of the deals that we've done, we look at
the analysis at the off-site, then and we comeback and try to implement it in workflow.
We had things around like, diversification ofportfolios, where if we're buying on a
(27:28):
secondary basis, like how to think about that.
A more diverse portfolio a much betteropportunity than one that maybe has a couple of
amazing companies in it or at the time that wethink are amazing companies are on and so on
and so forth.
So it's really like practical things that wedeal with when we look at transactions and then
do the analysis and see what what the outcomeshould be and then come back.
(27:51):
Now, a lot of it ends up being, as always, moreart than science, but it's just it's important
to go through that.
And then we also just talk about strategies ingeneral, like our fund of funds, for example,
our fourth fund of funds, we started with anIsraeli fund of funds only, and then started
investing outside of Israel.
By the time we got to our fourth fund of funds,it was Israel funds, big funds, small funds, US
(28:14):
funds, European funds.
It was this big mishmash of, you know, 50 or 60different lines in our fund of funds.
And, you know, what we realized it didn't makesense to have all that in one fund of funds.
And that's why we ended up breaking it up intodifferent vehicles just because they behave
differently and also to give more flexibilityto our investors, you know, to pick and choose
what type of strategy they might want.
(28:34):
So it's also those types of topics as well.
So, you know, and then now, by the way, like,we're going to have an off-site where a lot of
it is around like how do we want to play what'sgoing on in AI.
Again, this is a conversation that we've beenhaving for the past two years and it comes up
each one, but we're gonna have another one tosay, hey, where are we today in the market with
(28:56):
that?
Because we've invested in a bunch of differentcompanies.
We're doing well with a bunch of differentcompanies.
But we want to dive deeper and see like wherewe're making money and where our investors are
making money in the sector thus far.
So it's those types of things.
We'll get right back to interview.
But first, we're looking for the next greatguest.
If you or someone you know is a capitalallocator and would make for a great guest,
(29:18):
please reach out to me directly atdavid@whispercapital.com.
It sounds like a lot of what you're doing inoff sites is you pick these sacred cows, these
things that you're never supposed to question,diversification, conservatism, valuation, and
you attack it systematically, and the off-sitegives you the the mind space to have everybody
in the room talking about these things.
(29:39):
And I'm sure a lot of times, the takeaway iswe're doing things how we should be doing them.
Yeah.
It's not always let's let's change this.
This is bad.
Sometimes you double down on your strategy,which itself could have value.
Yeah.
Yeah.
For sure.
Although most of it is just us beatingourselves up for the stuff that we wish we
would have done better.
But it's interesting.
Another part of it, I mean, again, is that,Alan, who started the firm, he says that when
(30:01):
he comes to the upside, he likes to be thefirst one to talk and talk about all the
mistakes that he made.
So it kind of sets the tone and just gives itkind of that space to say, hey, you know,
that's really, you know, we want to get better.
And you're right, it's not just about like,let's beat everybody to a pulp and depress
everybody, but it's like saying, okay, let'stake a serious lift.
Like you said, these sacred cows and, you know,and and and figure out how do we get better at
(30:24):
what, at what we're doing.
So it's, yeah, it's a it's a really importantpart of what, what we do.
One of the things that makes you guys unique isyou use the same team against different
strategies, which sounds kind of intuitive, butthen you look at you have fund of funds, you
have growth investments, you have secondaries.
Personally, my bias is I consider secondaries acompletely different animal from the rest of
(30:47):
the industry.
But you guys have it in one team.
Why is that?
It's a good question.
I'll say this, from a bottom line perspective,it's just it's like data and information flow
and intelligence.
My partner, Asaf, likes to call us anintelligence organization.
You can
tell he was in the army here.
But that's really the idea is that if we had afund of funds team and a growth team and a
(31:10):
secondary team, you would just have siloedinformation and it's just so super synergistic.
Like there's not a phone call that have with aGP, where somehow something doesn't come up
around potentially doing a secondary, maybeeven a growth realm in a company could be a
secondary company could be even an LP interest.
And I think if it was then like, okay, I havethis relationship with the GP and then okay,
(31:33):
let me go turn it over to the team that doessecondaries.
I just think some of you will get lost in alongthe way and maybe even lost in translation.
So again, it's all super synergistic.
At the end of the day, it's venture capital.
The companies are the building blocks.
The fund managers are at the center.
And if I look at a secondary deal, at least theway we do them, meaning like they're very like
(32:01):
curated, this kind of rifle shot secondarysmaller deals between, I don't know, 1 and
10,000,000 typically.
They're usually things where we're workingtogether with our GPs because they might have
an LP that wants to sell.
And we know the portfolio because of therelationship with the fund.
I would say as a team, are some people whospend a bit more time working on the fund of
(32:22):
funds deals and working on the secondary dealsand working on the growth deals.
But it's all it's just too synergistic toseparate all that.
At the end of the day, it's about making, know,it's about evaluating the underlying companies
and the fund managers who are involved whateverway you want to get to it.
Even when we're doing a growth deal in acompany, we look at just as much as who else
has invested there.
(32:42):
Know, it's not going to cause us to make aninvestment or not making an investment, but
that's also a critical part.
Are these trusted partners around the table ornot?
And again, that just might get lost.
You know, somebody then had to come over to meand start asking me about, hey, you know,
there's this deal and there's these funds init, I know you're closer to them and the the
like, those conversations do come naturally.
But if it was that separation, I think itwouldn't, you know, be as we wouldn't be as
(33:05):
successful and it wouldn't be as efficient.
You recently had a successful generationaltransfer with Alan Feld, who I previously
interviewed.
Yep.
And just to give you a sense for that, I triedto interview him again, and he introduced me to
you.
So he he lives by his generational transfer.
He's a man of his word.
That's right.
What are some of the behaviors or processesthat the firm went to in order to have this
(33:29):
successful generational transfer?
Yeah.
So that was it's a great question.
And I appreciate Alan highly.
I'm gonna do all those future podcasts, Iguess.
But but with pleasure.
But no, it's really like kudos to Alanbasically about ten years ago, the trigger was
actually, I mean, I'm sure Alan had in his headbefore that.
(33:50):
Mean, Alan's very visionary type person.
But you know, when when Asaf Horace joined usas a principal and then quickly became a
partner and then, you know, promoted to generalpartner, you know, he was, I guess, you know,
in his early forties at the time.
You know, I was somewhere when he joinedprobably in my mid forties to to late forties.
(34:13):
And then, you know, Alan said, look, I wentvintage to last forever.
I guess he saw he felt between a meet myselfand a soft, there was a good core that could
take it going forward.
And he ended up doing research, among otherfunds, both that had successfully handled a
succession and those that that hadn't.
I forgot the number that he spoke with, but Ithink he came away with, a few core ideas.
(34:38):
One was that, you know, things need to be putdown on paper.
Right?
Both, you know, to sketch it out and also justlegally.
Right?
And then you had to really make clear lines ofdemarcation.
So in the case of, what Allen decided atVintage was that at the age of 62, you're no
(35:01):
longer involved in new funds.
And it just made it a clear line.
As you've raised these prior funds, you've beeninvesting out of these prior funds, you're
involved with those over time.
There's maintenance.
Again, it's probably more than maintenance.
That's probably belittling what you have to,but still it's much less.
But 62, you're not involved in raising the nextfunds.
(35:22):
That's what happened in the year that we raisedour fourth growth fund.
Now our eighth fund of funds.
So Alan isn't going to be involved in thosegoing forward, but it just set the process
going forward.
So when Amit hits 62 in a couple of years, thesame thing will happen with him.
And then when I hit 62 in about a decade thatwill happen with me and so on and so forth.
(35:45):
Then it just makes it clear to everybody.
And that's something that we've told everybodywithin the firm that that's how it works.
And we've told that to our investors as well,which is extremely important.
And we've now been telling that to our funds aswell and other people.
And so the idea is to set it down on paper,make clear lines of demarcation and then start
(36:06):
to message that well in advance of thathappening.
And, you know, so far, that's working.
It's been an important thing for myself and tomeet myself as well because we
That must help with recruiting as well, right?
Because you have a clear path for the nextgeneration.
Yeah, yeah, 100%.
And again, most people aren't going to getthere, but we have enough proof points in the
(36:30):
firm.
Would say like, technically, I don't evenremember what my title was, but I started as an
associate.
Amit was a venture partner, Asaf was aprincipal.
Again, we brought on a couple of partners aspartners as well.
But the idea that you can move up, you can stayhere forever and move up over time if you want
to, it's 100% the case.
And I think the other thing is that Alan, likesay he's in the process of retirement, but
(36:58):
probably next year sometime he's gonna go downto one day a week and we have an equal
partnership now and there's no after there'sgonna be no long tail of the founders and
nobody's gonna get that going forward.
So he's really somebody who set the tone alsoaround that, that you have somebody you need
that.
If you don't have that, I mean, you've seen itaffirms that there's somebody who just holds on
(37:21):
forever and that can work too in some cases butI don't think that's somewhat out in one of
those, it's not what we want either.
Let's talk Israel just to give you a sense forhow quickly this has evolved.
When we had our pre interview chat Yeah.
It was before, Israel and The US had taken outIran's nuclear program.
(37:44):
That seems to be very positive for Israel.
Tell me more about Israel's ecosystem todaypost kind of the the dismantling of the Iranian
nuclear program.
So for look.
So first of all, it's like, you know, there wasthat, now it's on to the next problem.
Right?
Like, we have to deal with hostages and what'sgoing on with Gaza.
(38:05):
So it's sort of that's never ending.
But what I would say, like even day before thatand day after, I mean, I know it was only
twelve days.
I don't think like, even since October 7, Idon't think that the Israeli ecosystem has like
skipped a beat.
Like it's pretty incredible.
Like we talk about all the time, the resilienceand things like that.
(38:27):
But it's actually only getting more and moreactive.
I'm losing my track of time.
But I think immediately after that there wasthe announcement of Melio getting bought for
$3,000,000,000 That's an Israeli company.
A few months back Wizz was bought for$32,000,000,000 NEXT Insurance $2,600,000,000
the same week.
We had the IPO of eToro, which was the first VCbacked IPO.
(38:50):
This year it's an Israeli company.
But now that kind of Iran has happened, I don'tknow if more, we're gonna have to do something
else.
There's gonna be additional conflict.
I actually think like when I look at the wholeregion, it's probably been de risked
dramatically from where it was on 10/06/2023.
And maybe de risked to the point where it'sbeen less risky than ever to be frank.
(39:16):
So I think that's fantastic.
And I definitely think there's renewed momentumto end the war in Gaza.
And then there's renewed momentum to actuallyhave peace with more of our neighbors, which
when you take a step back, it's prettyincredible.
And if I had to make a bet, I suspect thatwithin the next twelve months, the war with
(39:37):
Gaza will be over and that we'll have peacewith Saudi Arabia.
And that's the craziest thing, maybe even withSyria and like, you know, who would have
thought?
So, I'm not naive enough not to worry about thenext thing that's coming around the corner,
like, who knows?
But I definitely think like all that's beenderisked.
With all that being said, in the middle of awar, Sequoia reopened up their office here,
Greylock reopened up their office here.
(40:00):
We had these massive exits and IPOs and tons ofmoney getting invested here.
Just yesterday, Nvidia announced they're gonnabuild a massive R and D center in the North
here in Israel.
I mean, right?
So I don't know.
It just keeps going on.
The Tel Aviv Stock Exchange was the bestperforming stock market, I think, over the past
(40:21):
month, including during the time of, the Iranwar.
Again, I'm not sure that's the best barometerin the world to judge things, but it just tells
you something.
And the shekel is, like, the strongest it'sbeen in a in a couple of years probably.
So if things are, things are chugging alonghere, that's, that's for sure.
And I'm pretty optimistic.
(40:42):
As an asset allocator investing in you guys areobviously based in Israel, but you're also
investing in Israel.
Do you see a peace premium, a post Iran, andmaybe a post Saudi peace deal premium to the
Israeli market, or is that all already pricedin?
Unfortunately, yes.
I don't know.
As an investor, I do think, there's this newgeneration of people who are going to be coming
(41:05):
out of the war that had a type of really uniquebonding that may lead to a real like ramp up in
the number of startups, which is amazing.
We're seeing startups getting sort of in newareas, whether it's quantum or defense.
But we're seeing is again have, have not.
So we're seeing it's much harder to raise.
And again, I feel this is in all the markets.
(41:28):
It's much harder to go from a seed round to anA round in general for you know, it's not like
2021 when anybody who raised the seed round gotto an A round pretty much.
So that's the challenge.
With that being said, we're seeing tons ofmoney flying into the best companies and tons
of M and A and companies are continuallyraising $100,000,000 rounds, dollars
(41:49):
200,000,000 rounds, dollars 300,000,000 roundsat amazing valuations.
So I do think there's already a premium on themarket.
I do think there's a chance it only goes up.
It's just simply going back to the basis kindof supply and demand.
There's only a finite number of companies toinvest in every year here And the whole world
(42:11):
is investing here.
And as soon as things calm down even more, morepeople will come over to seek investments.
So there may be something macro that goes onglobally that for some reason depresses
investing in venture.
But the supply demand dynamic in Israel is onlyjust I think there's going to be more demand
than the supply will be able to match.
And that's just going to cause prices to go up.
(42:34):
Perhaps the ultimate champagne problem, butone, just to take the counter of that is if
there are no wars, if Israel is in peace withall its neighbors, will Israeli entrepreneurs
still have that same edge that they currentlyhave?
Because they are literally battle tested.
VCs love battle tested entrepreneurs.
Israeli entrepreneurs are literally battletested.
(42:56):
That's a it's a great take.
I mean, look, I unfortunately, I don't thinkall of our conflicts are going away.
I think, for example, if I take like cyber,where it's just going to get more and more
intense globally.
There's always going to be enemies fromsomewhere.
They don't need to necessarily be yourneighbors.
(43:17):
So I think that that's something.
I also think when we see how AI is justchanging the world, Israel realizes that it
can't fall behind on that.
So it's going to continue to invest tons ofmoney around that.
And that's going to become a bigger, biggerpart of warfare in the future, for example, and
quantum.
And so I think Israel is always having thismindset to be ahead of the curve on things.
(43:44):
But you're right.
I mean, don't want to obviously I would love aworld where there are no wars, but there's no
doubt that the conflict in the region has beena big boost for the entrepreneurship in Israel.
But I don't think the conflicts are going to Ithink that some of the conflicts are going to
calm down locally, but I don't think they'regoing to go away completely forever.
(44:05):
That's for sure.
And I would just say, I also think again, we'rein an ecosystem where the Israeli teenager gets
up and he sees that somebody just sold theirvibe coding one man company for $80,000,000
Like that's something to aspire to, right?
Or that again that Wiz gets sold for$32,000,000,000 or eTour which they use on a
(44:30):
daily basis goes public.
So they have a lot of examples of what toaspire to.
I think that that's going to drive them aswell.
But I don't think we're going to beunfortunately dismantling our military anytime
soon.
You've been in venture now for twenty twoyears, which I mentioned earlier, countless
cycles, countless paradigms, countless venturesthat now ventures that again.
(44:56):
What is one thing that you wish you knew whenyou started in 2003 in venture?
What advice would you give to a younger aperight before you have started?
Wow.
That's a tough It's fine.
I probably would say like, don't let the stuffyou get wrong eat away at you too much.
(45:22):
Maybe within our business model that we couldprobably be a bit more risk tolerant is the way
I would put it, take more swings on certainthings.
And I would also say if it's advice, would saythe key thing is just building close
relationships with people as much as possiblethat you like and working with people that you
(45:43):
like.
If there's somebody who you know that you don'ttotally gel with find another deal right?
Like and there'll be something else that downthe pipe.
Now I went to a dinner with one of the localwas a local GP at a fund here and I was trying
to figure out how long I know him for and it'slike when I say wow it's been twenty years
(46:05):
already it's like it's fantastic and it'ssomebody who like, I'm glad I got to know for
twenty years.
I would say really focus, can make goodinvestments in people that you like and you can
avoid, you don't need to make in, there'll begood investments in people you don't like, but
you don't need to make them.
It's alright.
For some people, twenty years feels like twoyears, and for some people, two years feels
like twenty years.
(46:26):
That's right.
You mentioned you don't wanna be overlycritical.
I struggle with this as well.
I I'll listen to a podcast or look at a deal,and I'll look at the one thing.
I might get everything right, but I sold threemonths early in the public markets.
Have you found a solid weather as a team atyour, off-site?
Do you operationalize being kinder to yourselfand giving yourself more benefit?
(46:50):
It's not easy.
Again, on the one hand, like we said, we wantto start off the mistakes.
So I guess it does make it sort of like a safespace in that sense because if the people at
the top of the firm are talking about theirmistakes, then you realize that you should talk
about them and admit them and not just brushthem under the rug.
But look, we also celebrate our wins and wecelebrate as a team.
(47:12):
And I find out maybe that's the challenge isthat if I had to give advice to somebody is
that I find that very fleeting is that I enjoythe wins for until I have to go on to the next
one and the losses just eat away at me for avery long time.
And that's it is what it is.
But we try to celebrate the wins as well.
(47:36):
Ultimately again we've been in business now forover twenty years.
I'm very happy about even the relationshipswith our investors which I hold dear to myself.
They put us in business and they continue toput us in business.
So I try to focus on much of that, like we'redoing the right thing for them and ultimately
making them the returns that they want to make.
(47:58):
And so far we've been able to do that.
But it's hard.
I don't know.
It's very, very hard.
I'm not sure I have a great answer to say howto not let it eat
It's something I think about often.
It is hard to make those losses eat away at youless, so I think you have to do the opposite,
which is spend time doing things that you love,spend time with people that you love Yep.
(48:20):
And let that, let let that take up more spacein your life than the losses, which will be
painful.
And and maybe they should be painful.
Maybe that's how you learn from them.
Yeah.
Yeah.
Yeah.
Totally.
And, again, occasionally, I'll look back andI'll see some deals, and I'll be like, oh, wow.
That was a good one.
You know?
And then I'll chuck it up to luck and move on.
But but, yeah, it's it's not not an easy forthat.
(48:42):
That's another podcast maybe.
Well, we'll leave that for the next podcast.
Abe, this has been absolutely wonderful.
Thanks for jumping on podcast.
My pleasure.
Was great.
Really appreciate it.
Thanks for listening to my conversation.
If you enjoyed this episode, please share witha friend.
This helps us grow.
Also provides the very best feedback when wereview the episode's analytics.
Thank you for your support.
So is European Venture dead?
(00:05):
You're the first person that ever, asked methat.
Look.
I don't think so.
As a firm, we don't think so.
You know, I think I think you saw it recently.
We actually added a, a partner in London, ourfirst partner outside of Israel.
So we're actually long European venture.
(00:25):
We've been investing in Europe for aboutfifteen years now, have done extremely well.
I don't want just look backwards.
I am looking forwards, but I definitely thinkthe best years for Europe are ahead of itself
in terms of venture capital.
We can touch on that.
But it might be a little bit of a contraryintake, but we're big believers in the
opportunity there in venture capital.
(00:47):
And one of the reasons I wanted to ask you isbecause you're not stuck on a specific
strategy.
You're in Europe, you're in Israel, you're inU.
S, so you don't have to be investing in Europe.
Why take the time to open up an office inLondon today and why lean into Europe?
It's a great question.
I actually see some parallels with what we sawin Israel over the past decade and a half, even
(01:11):
twenty years.
So some of that is around just simple, youknow, going to the basics of the basics, like
the demographics and saying what's the futuregoing to look like for people.
You know, Israel, know, kind of beingentrepreneurial is told people is almost like a
job like any the way I would have thought ofbeing a doctor or a lawyer or an investor back
in the day.
So I think when I look at Europe and that'sbecause there weren't there's not a ton of
(01:35):
different alternatives to begin with kind ofgoing back When I kind of feel that way with
Europe as well.
I think if you're a younger person in Europeyou may decide to pick up stakes and leave.
But I think one of the ways to get wealthythere is probably more likely to go the path of
being an entrepreneur.
So I think that's a good thing that we're goingto see more and more entrepreneurs coming to
(01:58):
market.
Again, just looking at a younger population andthe opportunities that are afforded them.
And then the second thing is I look back atIsrael, if I go getting back twenty years,
fifteen years, the foreign investors startedcoming over to Israel the way they started
going over to Europe probably about five or sixyears ago, some even before that.
(02:20):
And it ultimately just raises the bar for theentrepreneurs.
The foreign funds don't they're not satisfiedwith $100,000,000 $500,000,000 even
$1,000,000,000 exit these days.
So when they're putting money into yourcompany, you better be aiming much, much
higher.
So I think that's a fantastic thing thathappened in Israel and that's something that we
(02:40):
see going on more and more in Europe.
And then finally, think kind of success, we gotsuccess in the sense that we've seen Spotify
and then we have Revolut, which now they'retalking about being valued at, I don't whether
it's 40,000,000,000 $50,000,000,000$60,000,000,000 I mean, these are very, very
large numbers.
And then Klarna and a whole bunch of other onesthat can be expected to be public offerings.
(03:05):
So I think that entrepreneurs are seeing out ofEurope that it's possible to build very, very
large companies.
And that next generation of whether it'slovable or N8N or what have you, like again,
these are the next ones that we think canbecome bigger and bigger.
So I always say when an entrepreneur, yourneighbor sees how well you're doing, they say,
(03:26):
wait a second, that idiot can do it, then I cando it even more so.
So I think that kind of flywheel and ecosystemis developing in Europe.
It's not without its challenges.
It isn't going to be a walk in the park.
But I do think we're feeling that.
And the last thing I would say is that we'reseeing these larger companies and we saw that
in Israel as well, off the next generation ofentrepreneurs.
(03:48):
They were part of a company that got built to avery, very large scale.
And again, they say, wait a second, I see thisas possible.
You know, when you see something happen, yourealize it's possible.
I'm gonna go out and start my own company now.
So, you know, that's why we're excited aboutit.
The reason I asked you whether European VC wasdead was not necessarily to be controversial.
It's the fact that most people, at least theconsensus view, is that the future of VC, at
(04:13):
least the next decade, will be driven by AI.
And in Europe, you seem to have this weirddichotomy where you have this regulatory
landscape that's making it very difficult forAI companies to succeed, but also you have
Paris, which is the hotbed of AI.
How do you weigh these two factors?
And how are they both affecting the Europeanecosystem?
(04:34):
That's a great question.
And by the way, I think most people areskeptical about Europe and venture capital.
And I'm not saying that like I'm not alsoconcerned.
I have my concerns and we'll see how it playsout.
But I tend to think in general and again,there's no doubt that regulatory and government
and again, saw that in Israel, we see that inThe U.
(04:55):
S.
Can be a big boon for investment in tech ingeneral, investment technology, investment in
venture capital.
And maybe Europe's not there around that.
I think they do need to do a bunch of things,whether it's around like tax incentives,
whether it's bringing over more of the largecorporates to open up R and D centers and
things like that.
(05:16):
By the way, like tax incentives make all thedifference in the world in a lot of cases,
whether it's for startups or for corporates.
And so that can be a huge thing.
I know Europe is having challenges with thatand particularly The UK as well.
And it seems like in The UK, given some of whatthey're doing in the tax side is actually
driving people out as opposed to having peoplecome in.
But I'll put that on the side.
(05:37):
I think venture and entrepreneurship, it tendsto live in a bit of a bubble.
We thought regulation was going to kill Uberand Airbnb.
And these are some of the largest companies inthe world.
And I think that the talent will justultimately, you know, get beyond that.
So Paris, for example, you know, amazingengineering schools, whether it's, you know,
(05:59):
companies like Mistral or even Hugging Face hasNexus there and, you know, eleven Labs, like
we're seeing those companies come outregardless of regulation.
Now some of them may start there and then movetheir operations to The US.
And we see that with the Israeli companies aswell.
But ultimately, I think the opportunity is thatthose companies start in Europe and you can get
(06:20):
many of the European VCs or The US VCs that areover there get there first and give them the
seed capital.
So I just see that kind of stuff justoperating.
It's its own organism.
It's kind of like here in Israel that we've hada conflict going on to what we've had a
conflict going on for, you know, seventy fiveyears or maybe, you know, three thousand years.
But we we've had a conflict at least sinceOctober 7.
(06:44):
You know, you could everything, you know,venture capital investment is living in this
bubble that's just doing amazingly well.
And I think in Europe, that's going to be thesame thing with entrepreneurs want to get
something done.
They want to build something.
They're just not going to, you know, listen tothe regulation and what's going on.
Clearly, that can dampen the opportunities.
So I do think that needs to be addressed.
(07:06):
But I just think we're going to continue to seeamazing successes, because there's just going
to be more experienced entrepreneurs.
We've seen big companies getting built and wewant to build in one even bigger the next time
around.
I mean, even though I look at, know, there'sSpotify I mentioned, but look at Stripe, who
founded Stripe, you know, it was two Irish guysthat had access to the capital to do that.
(07:27):
They happened to they weren't from SanFrancisco.
They weren't from New York.
They weren't from Tel Aviv.
So I think it's possible anywhere.
Taking a step back, tell me about Vintage'sstrategy and how does Vintage invest in both
funds as well as startups?
So we actually have three separate strategies.
(07:49):
We have fund of funds, where we invest inventure capital funds, you know, when they come
back to raise their new funds.
And within the fund of funds, we have a numberof different strategies I can touch on.
We have secondary funds, which is actuallywhere we started back in 02/2003.
This was kind of the contrary in nature ofVintage and Nallenfeld who started the firm who
(08:10):
saw everybody exiting technology and ventureafter the dot com bubble burst and exiting
Israel as well.
And he said, No, I'm the opposite.
I'm long technology.
And I think that's one of the reasons why hehired me as employee number one because he saw
I was also long technology.
So we have secondary funds that buy outinvestors from their investments both in
(08:32):
venture capital funds and direct holdings incompanies.
And then we have a growth fund.
The growth fund was actually the most recentstrategy that we added.
That was back in 2011.
And the idea of the growth fund was to lookback into the portfolios of the fund of funds
and the secondary funds and cherry pick what wethought were the best emerging companies at
(08:53):
that growth stage and go in on a direct basis.
So if I think about everything we're doing,it's kind of covering the venture landscape
from the earliest early stages via our fund offunds typically going into early stage funds.
And then the secondary funds maybe going intoclick later to much later buying at LP
interests, doing direct secondaries that growthfund is kind of somewhere kind of the B rounds
(09:17):
up until the last round.
And it's across venture.
So everything is venture capital.
And in our fund of funds, we have multiplestrategies.
So we have a fund of funds specifically focusedon Israeli funds.
We have a fund of funds for smaller funds inThe U.
S.
And Europe, emerging funds in some cases, andthen a fund of funds for larger funds in The U.
(09:37):
S.
And Europe and a health fund of funds.
And they're all super synergistic.
We can get to a deal from multiple differentways and leverage each of the funds.
At the center of it, I would say, is ourrelationship though with the GPs of the funds.
You mentioned you have a fund based on smallfund of funds or emerging managers.
(10:01):
How flexible is that mandate?
Are you looking for the funds that have a 50%chance to be a 10x plus?
Or are you looking for something to bediversified within itself and predictably
deliver a 3x?
That's a great question.
So, so that fund specifically, the mandate ofit is to invest in funds in The US and Europe,
(10:22):
dollars 200,000,000 in sizes and below.
And typically, funds that are 200 and below aredoing pre seed and seed.
We, you know, I would love a 50 chance ofgetting a 10x or 5x, but that's great.
But they're definitely like it's a mix of twotypes of funds.
It's usually funds that may be on their fourth,fifth or sixth fund that just they want to be
(10:46):
small, right?
So it could be like Ludlow out of Detroit or aversion one.
These are funds that they intentionally want toremain small and may remain small forever or a
floodgate, for example.
So very, very experienced investors overmultiple cycles as well.
And then what we also try to do is find thenext great versions of those funds.
(11:07):
So it could be that it's somebody we onlyinvest in investors that have some sort of
track record.
So it could be a first time fund.
It could be a single GP.
It could be a first time team.
But we want to see a track record.
And the hope is that they can perform really,really well.
Some of these funds will grow up in size overtime.
Like we were in the $100,000,000 fund ofprimary ventures of New York and we were in the
(11:32):
$120,000,000 fund of 0.9 out of Germany.
And they've scaled up over time and kind ofmoved out of that smaller fund of funds or fund
of funds targeting smaller funds.
But we're always looking for those newmanagers.
And yes, what we see is that thediversification, we don't want to be over
diversified, lowers the risk.
And therefore we can take big bets on thesesmaller funds.
(11:55):
And we've had these $200,000,000 and belowfunds.
We have a bunch that are 10x's and above.
We have a bunch that are 5x's and above.
We even have a couple that are 20x's and above.
And then we have a few that haven't performedquite as well.
What we don't have a lot of interestinglyenough is those that have actually lost money.
So obviously we're not doing we're not makingan investment in a venture capital fund to do a
(12:18):
1X or 1.2X.
But it's very interesting to see, if you get anexperienced manager who's made money in the
past has a track record.
It's rare that they'll actually lose money foryou.
It happens, but it's pretty rare.
But for sure, that's the vehicle that's a bitmore high betas the way I would put it.
(12:42):
And every LP will say they do first time funds,most will not, and most like to track the fund
over time.
Give me the thesis for why fund ones are goodinvestments.
Why should somebody invest in a fund one?
We were we actually had a discussion about ittoday in one of our investment meetings that
(13:03):
sometimes, we've seen this a lot where the fundone isn't good.
Could be timing, it could be portfoliomanagement, and then you have to make an
assessment, do I go into fund two and fund twoturns out to be amazing.
And we've had that there's a bunch of wellknown groups where their first fund was
terrible, and then they went on to do amazinglywell.
But you're saying, if I say why invest in thatfirst fund is because, first of all, like an
(13:26):
access issue, like we see something that'samazing and we really believe in that, like we
want to be there from day one.
It will give us the ability to, you know, haveball control, so to speak, be able to increase
our allocation over time.
And it also might be if we're not there fromday one and they do extremely well, we may not
be able to get into that fund too.
Now it's kind of rare that you know how stronga fund is within kind of those first couple of
(13:51):
years before they come back and raise that nextfund, but that's always a risk.
But the main idea is to get there, get inearly, get a toehold in the fund.
And then again, if they do well, you can scaleup over time.
And that's the main reason to do it.
And again, sometimes, you know, sometimes beingin the fund can teach you a lot.
So it could be that I say, okay, I'm going toskip fund one, but then I'm going to come to
(14:14):
fund two, and then fund one looks sideways, ormaybe it looks great for some reason, but you
know, and that could make me invest or notinvest, but it might having been in the fund
one and known and see how it behaves, and howthe partners behave, and the types of
investment they're doing that could actuallychange my opinion versus fund too.
So being on the inside is also worth somethingas well.
(14:37):
I mean, don't do a lot of fun ones.
We do do them.
But that's why we keep the bar like super highon those.
There's really got to be obviously there's gotto be like one sentence that you can describe
the fund in is why you think it's like superamazing and differentiated for you to go do it.
It's that edge.
Yeah, it's that we might start with a milliondollar check by the way, and that million
dollar check could become a $30,000,000 checktime, right?
(15:02):
Said another way, if you can't simply explainthe edge then there is no edge.
Or it's not being conveyed to me properly or Ican't interpret that.
So again, we've made mistakes and we've missedthings because I couldn't discern the edge.
I would say even the ones that I didn't do andI made mistakes on, I saw the edge.
I just didn't have the maybe the guts to go doit for whatever reason.
(15:26):
But I saw the edge and I'm so that kind oftells me like if you can see the edge, then
there's usually a good like a real there'susually a good case that it's gonna turn out,
well.
Obviously, Fund one is extremely risky evenfrom a entity level, whether the team stays
together.
What are some ways that you could de riskinvesting to fund once?
(15:46):
The first one, the model that we do it is a wayto de risk it.
Again, we're probably investing in that vehiclein about 20 funds, about 10 to 12 of them,
would call core checks and then another youknow, six to eight or sort of these toe in the
water ones.
So by having that diversification, it tends tode risk it.
So that's the main thing.
I think also, and again, I don't want to tootour own horn, but we've what works, what
(16:11):
doesn't work managers, and staying close tothese early stage managers, giving them
guidance, not telling them what to do,obviously.
I do think we have contributed over the yearsto making some of these groups, maybe giving
them a better chance to be successful.
So that's another way de risking just becausewe've seen so much.
(16:32):
But at the end of the day, it's you're taking abig risk, right?
And but I would say the main main de risk goingin is I always like to, I mentioned it before
is to say that, you know, we're not doing firsttime investors.
We're doing people that have made investments,maybe they haven't done it in kind of a classic
fun sense, but they've made investments.
(16:53):
There's feedback from entrepreneurs about them.
You can kind of read something into the tealeaves from what they've done before.
So it doesn't mean that somebody couldn't, youknow, come out of some large organization and,
start just making investments and do amazinglywell.
I'm sure it's happened in the past.
But I think we de risk it by avoiding those andfocusing much more on the ones that have had
(17:14):
some investment experience and at least adecently robust track record.
You've repeated this multiple times, thebenefit of having the toehold in the fund, but
also the information advantage of being anexisting investor versus observing it from the
outside.
(17:35):
What do you see on the inside that you can'tsee from the outside?
You see how people make decisions.
You see whether they're careful with them.
You see whether, know, how deeply they go onthings they see.
You could see again, how they interact withyou, what information they're willing to share
with you or not, you know, how transparent theyare.
(17:57):
Again, things are real partnerships.
Again, we're not running these funds, butyou're involved with these people for, you
know, I say ten years, it's probably more liketwenty years in many cases.
And ultimately, like you want to be involvedwith people that you can trust, that you have
fun working with and interacting with.
And again, being on the inside, you can feelthat.
And also being on the inside, it's more theit's the job of the GP at the end of the day,
(18:21):
the fund manager.
But you can also see some interesting thingslike bubbling up in the companies, right?
You can see a little bit more detail thanopposed to saying, three years from now start
telling me about what happened.
You can kind of see that time series of howthings are progressing.
Was just say, and again, I think we have okayjudgment on entrepreneurs as well, but we get
to interact with the entrepreneurs that they'veinvested over the years, listen to them, hear
(18:45):
what they're saying and that type of stuff asopposed to again, just at one point in time
when you're due diligence in a fund to have tomake a decision, I'm in or out based on
everybody being prepped to say wonderful thingsabout the funds.
Being on the inside can just make a tremendousdifference.
It's also what you're not seeing, which isyou're not just seeing a backwards applied
(19:08):
narrative to why you did X, Y and Z.
You're seeing in real time before the decisionis made, and that's just a whole different way
to view a fund versus through a narrative thatthe GPS weaved.
100%, 100%.
And again, like I said, this isn't at the endof the it's working with people in a insanely
(19:29):
dynamic market.
Like so that's the thing like you really, youwant to be in the trenches with them.
And that's really critical.
Again, we've invested in fund twos as well.
But in many cases, it's been people that we'vebeen tracking for that first fund and even
before.
Like there was one fund in our portfolio wherewe didn't do the first fund because we didn't
(19:55):
like the strategy related to the timing of themarket.
But we loved the person.
And also, there was some team dynamics as wellas two partners.
When they came back for the second fund, thestrategy had shifted a little bit, the market
had shifted a little bit, and they came back asa solo GP.
And we're like, great, you know, I'll back thatperson and all it all worked out.
(20:19):
And we kind of been following it relativelyclosely along the way also because the fund
manager very graciously was in touch with usgiving us updates as well, which is also that's
great.
Like I appreciate that also, even though again,had passed on the first fund.
And you mentioned that oftentimes the fund oneis okay and the fund two is great.
(20:41):
Would make a fund two suddenly pick up and be agood fund where it wasn't as a fund one?
Great example.
Literally was one of the first fund to fundcommitments we did.
We did back in our first fund to fund.
So the situation was the first fund to be fair.
This was the first fund was raised in ninetynine two thousand, which was like, or maybe
(21:02):
February, right?
That was the one of the worst vintage yearsever.
So ultimately, think the fund did a 1x.
So I don't know if that was top quartile or sothey didn't lose money, which I'll give them
credit for.
But what was really interesting when we wereanalyzing the first fund, we saw that out of
the whatever, 100 great exits over whateverperiod of time, they were in they had picked
(21:24):
four out of the 20 portfolio companies thatthey invested in.
I was like, wow, these guys seem to know whatthey're doing about picking.
But we analyzed the portfolio, we saw theyentered with very low percentages relative to
their fund size.
And a lot of their following capital was usedto help, let's say, the more challenged
companies survive versus putting more capitalinto their great companies.
(21:47):
Now, when we talked to them about fund two, wesat down with them, and we were going to pitch
them that that's what we saw in the first fund,okay, so why we wouldn't do the second fund.
And they literally came to us and said, Look,you know, we see where we made our mistakes.
We we wanna change it.
We think we picked good companies.
Where we went wrong was around portfoliomanagement and construction.
And that's what we plan to do differently thisnext time around.
(22:11):
Now, could have been they would have screwed itup.
But it turned out that that second fund endedup being I think it was something like a forex
net fund.
So again, I think it was that it was picking upon some of the, you know, what they were doing
well and where they weren't being able toexploit that and take advantage of that.
So again, it doesn't always work that way.
But I do think and also, by the way, I think italso says a lot about managers when they see
(22:37):
what they did wrong, and they want to correctthat.
Know, a little something that isn't necessarilypublic information, but and blame myself as
being here in the beginning.
But, you know, Vintage's first fund was ourworst fund so far.
And I think a lot of it is okay, you know, youthink you know what you're doing.
And but there's a lot of learnings and we, youknow, we do three off sites every year where we
(23:01):
beat the crap out of ourselves to figure outwhat we do wrong and what we need to do better.
And that's something that we started, you know,way back in the day in 02/2003.
And again, no fun one of ours should have beenmuch, much better for a few clear reasons.
And we changed that.
And so far, the future funds have beensubsequent funds have all been better than the
first one.
First one was okay, but the next ones have beenbetter.
(23:24):
I think the top LPs, like the top VCs, look atthe managers' rate of change.
You mentioned that fund, not only did theyreact to feedback quickly, they actually
internally generated what was wrong with thestrategy and improved before they even met with
you.
That's even better than being reactive tofeedback.
(23:46):
So you also have to look at the trajectory, notjust the point in time.
100%.
And that could be around things even likesectors that you're investing in.
This fund was also very interesting becausethey were investing in a particular sector
because they had a view on it.
And again, that first fund did a 1x in a periodof time where again 1x was not bad.
(24:07):
But a lot of it had also to do with sector theywere investing in.
And they said, Okay, this next one, we're goingto have a thesis around, you know, these three
sectors.
And that's where we're because we believethat's where, you know, the puck is going, you
know, where the world is going.
So that's also something like to think we'reseeing that I'm seeing that more and more with
funds and I respect that more and more.
(24:27):
Would say if I had to go back twenty years, heasked me, I said, oh, if, know, funds are
changing the areas and the sectors that they'refocused on, I'd be like, I'd be a little wary
about that.
I'm a little wary about that.
But even if I'm a FinTech fund, but withinFinTech, I got to always have new themes that
I'm looking at.
So I think that's critical.
A lot of times these labels we've put on thingslike strategy drift versus changing strategy or
(24:53):
evolving strategy, it's only clear inretrospect whether that was a positive or
negative and people kind of paint thesenarratives to try to highlight or deemphasize
parts of the strategy.
You guys have these off sites every year whereyou're constantly just rigorously debating your
own strategy.
(25:14):
Tell me about the process on that.
How do you evolve your strategy year over yearand what have you found that works best as a
fund?
It's a great question.
Just from a specific process point of view, wepick a number of topics, some of them return on
themselves all the time.
(25:35):
Like how do we handle or are we handling ourreserves properly in our growth fund?
In our secondary deals should we be buying LPinterest in managers that we think we don't
think quite as highly.
Things are always going, we're always doinganalysis to understand that.
But the whole idea is to focus on a fewdifferent topics, dive in deep, and then out of
(26:01):
that, come back and say, hey, let's try toimplement that in what we're doing.
So I'll give you a great example.
Like over the years, you know, we may be ableto be accused of being and this is even me
personally a bit too conservative.
And when we would price companies, for example,when we were doing growth deals or when we
(26:22):
would look at LP models on the secondary side,we would hone in on the winners and we'd often
put in like what we think the outcomes couldbe, low base high.
And we always found with the best companiesthat are high case was always too low, Right?
So, you know, and again, in the moment you lookback, you're like, you're saying, okay, wow, we
(26:44):
put, you know, a billion dollar exit on thatcompany.
And you know, now it's back then that's crazy,right?
And now it's $100,000,000,000 company.
And then in another case, it might be, oh, weput a $500,000,000 exit.
Oh, now there's going be an IPO at9,000,000,000.
So, you know, a lot of that work is then tosay, okay, when we when we look at deals, you
know, if we're if we feel good that we've honedin on who we think the great companies are,
(27:07):
let's figure out if we're not being tooconservative around pricing deals.
So that's just one example.
But that's the idea is that we go we take thedata of the deals that we've done, we look at
the analysis at the off-site, then and we comeback and try to implement it in workflow.
We had things around like, diversification ofportfolios, where if we're buying on a
(27:28):
secondary basis, like how to think about that.
A more diverse portfolio a much betteropportunity than one that maybe has a couple of
amazing companies in it or at the time that wethink are amazing companies are on and so on
and so forth.
So it's really like practical things that wedeal with when we look at transactions and then
do the analysis and see what what the outcomeshould be and then come back.
(27:51):
Now, a lot of it ends up being, as always, moreart than science, but it's just it's important
to go through that.
And then we also just talk about strategies ingeneral, like our fund of funds, for example,
our fourth fund of funds, we started with anIsraeli fund of funds only, and then started
investing outside of Israel.
By the time we got to our fourth fund of funds,it was Israel funds, big funds, small funds, US
(28:14):
funds, European funds.
It was this big mishmash of, you know, 50 or 60different lines in our fund of funds.
And, you know, what we realized it didn't makesense to have all that in one fund of funds.
And that's why we ended up breaking it up intodifferent vehicles just because they behave
differently and also to give more flexibilityto our investors, you know, to pick and choose
what type of strategy they might want.
(28:34):
So it's also those types of topics as well.
So, you know, and then now, by the way, like,we're going to have an off-site where a lot of
it is around like how do we want to play what'sgoing on in AI.
Again, this is a conversation that we've beenhaving for the past two years and it comes up
each one, but we're gonna have another one tosay, hey, where are we today in the market with
(28:56):
that?
Because we've invested in a bunch of differentcompanies.
We're doing well with a bunch of differentcompanies.
But we want to dive deeper and see like wherewe're making money and where our investors are
making money in the sector thus far.
So it's those types of things.
We'll get right back to interview.
But first, we're looking for the next greatguest.
If you or someone you know is a capitalallocator and would make for a great guest,
(29:18):
please reach out to me directly atdavid@whispercapital.com.
It sounds like a lot of what you're doing inoff sites is you pick these sacred cows, these
things that you're never supposed to question,diversification, conservatism, valuation, and
you attack it systematically, and the off-sitegives you the the mind space to have everybody
in the room talking about these things.
(29:39):
And I'm sure a lot of times, the takeaway iswe're doing things how we should be doing them.
Yeah.
It's not always let's let's change this.
This is bad.
Sometimes you double down on your strategy,which itself could have value.
Yeah.
Yeah.
For sure.
Although most of it is just us beatingourselves up for the stuff that we wish we
would have done better.
But it's interesting.
Another part of it, I mean, again, is that,Alan, who started the firm, he says that when
(30:01):
he comes to the upside, he likes to be thefirst one to talk and talk about all the
mistakes that he made.
So it kind of sets the tone and just gives itkind of that space to say, hey, you know,
that's really, you know, we want to get better.
And you're right, it's not just about like,let's beat everybody to a pulp and depress
everybody, but it's like saying, okay, let'stake a serious lift.
Like you said, these sacred cows and, you know,and and and figure out how do we get better at
(30:24):
what, at what we're doing.
So it's, yeah, it's a it's a really importantpart of what, what we do.
One of the things that makes you guys unique isyou use the same team against different
strategies, which sounds kind of intuitive, butthen you look at you have fund of funds, you
have growth investments, you have secondaries.
Personally, my bias is I consider secondaries acompletely different animal from the rest of
(30:47):
the industry.
But you guys have it in one team.
Why is that?
It's a good question.
I'll say this, from a bottom line perspective,it's just it's like data and information flow
and intelligence.
My partner, Asaf, likes to call us anintelligence organization.
You can
tell he was in the army here.
But that's really the idea is that if we had afund of funds team and a growth team and a
(31:10):
secondary team, you would just have siloedinformation and it's just so super synergistic.
Like there's not a phone call that have with aGP, where somehow something doesn't come up
around potentially doing a secondary, maybeeven a growth realm in a company could be a
secondary company could be even an LP interest.
And I think if it was then like, okay, I havethis relationship with the GP and then okay,
(31:33):
let me go turn it over to the team that doessecondaries.
I just think some of you will get lost in alongthe way and maybe even lost in translation.
So again, it's all super synergistic.
At the end of the day, it's venture capital.
The companies are the building blocks.
The fund managers are at the center.
And if I look at a secondary deal, at least theway we do them, meaning like they're very like
(32:01):
curated, this kind of rifle shot secondarysmaller deals between, I don't know, 1 and
10,000,000 typically.
They're usually things where we're workingtogether with our GPs because they might have
an LP that wants to sell.
And we know the portfolio because of therelationship with the fund.
I would say as a team, are some people whospend a bit more time working on the fund of
(32:22):
funds deals and working on the secondary dealsand working on the growth deals.
But it's all it's just too synergistic toseparate all that.
At the end of the day, it's about making, know,it's about evaluating the underlying companies
and the fund managers who are involved whateverway you want to get to it.
Even when we're doing a growth deal in acompany, we look at just as much as who else
has invested there.
(32:42):
Know, it's not going to cause us to make aninvestment or not making an investment, but
that's also a critical part.
Are these trusted partners around the table ornot?
And again, that just might get lost.
You know, somebody then had to come over to meand start asking me about, hey, you know,
there's this deal and there's these funds init, I know you're closer to them and the the
like, those conversations do come naturally.
But if it was that separation, I think itwouldn't, you know, be as we wouldn't be as
(33:05):
successful and it wouldn't be as efficient.
You recently had a successful generationaltransfer with Alan Feld, who I previously
interviewed.
Yep.
And just to give you a sense for that, I triedto interview him again, and he introduced me to
you.
So he he lives by his generational transfer.
He's a man of his word.
That's right.
What are some of the behaviors or processesthat the firm went to in order to have this
(33:29):
successful generational transfer?
Yeah.
So that was it's a great question.
And I appreciate Alan highly.
I'm gonna do all those future podcasts, Iguess.
But but with pleasure.
But no, it's really like kudos to Alanbasically about ten years ago, the trigger was
actually, I mean, I'm sure Alan had in his headbefore that.
(33:50):
Mean, Alan's very visionary type person.
But you know, when when Asaf Horace joined usas a principal and then quickly became a
partner and then, you know, promoted to generalpartner, you know, he was, I guess, you know,
in his early forties at the time.
You know, I was somewhere when he joinedprobably in my mid forties to to late forties.
(34:13):
And then, you know, Alan said, look, I wentvintage to last forever.
I guess he saw he felt between a meet myselfand a soft, there was a good core that could
take it going forward.
And he ended up doing research, among otherfunds, both that had successfully handled a
succession and those that that hadn't.
I forgot the number that he spoke with, but Ithink he came away with, a few core ideas.
(34:38):
One was that, you know, things need to be putdown on paper.
Right?
Both, you know, to sketch it out and also justlegally.
Right?
And then you had to really make clear lines ofdemarcation.
So in the case of, what Allen decided atVintage was that at the age of 62, you're no
(35:01):
longer involved in new funds.
And it just made it a clear line.
As you've raised these prior funds, you've beeninvesting out of these prior funds, you're
involved with those over time.
There's maintenance.
Again, it's probably more than maintenance.
That's probably belittling what you have to,but still it's much less.
But 62, you're not involved in raising the nextfunds.
(35:22):
That's what happened in the year that we raisedour fourth growth fund.
Now our eighth fund of funds.
So Alan isn't going to be involved in thosegoing forward, but it just set the process
going forward.
So when Amit hits 62 in a couple of years, thesame thing will happen with him.
And then when I hit 62 in about a decade thatwill happen with me and so on and so forth.
(35:45):
Then it just makes it clear to everybody.
And that's something that we've told everybodywithin the firm that that's how it works.
And we've told that to our investors as well,which is extremely important.
And we've now been telling that to our funds aswell and other people.
And so the idea is to set it down on paper,make clear lines of demarcation and then start
(36:06):
to message that well in advance of thathappening.
And, you know, so far, that's working.
It's been an important thing for myself and tomeet myself as well because we
That must help with recruiting as well, right?
Because you have a clear path for the nextgeneration.
Yeah, yeah, 100%.
And again, most people aren't going to getthere, but we have enough proof points in the
(36:30):
firm.
Would say like, technically, I don't evenremember what my title was, but I started as an
associate.
Amit was a venture partner, Asaf was aprincipal.
Again, we brought on a couple of partners aspartners as well.
But the idea that you can move up, you can stayhere forever and move up over time if you want
to, it's 100% the case.
And I think the other thing is that Alan, likesay he's in the process of retirement, but
(36:58):
probably next year sometime he's gonna go downto one day a week and we have an equal
partnership now and there's no after there'sgonna be no long tail of the founders and
nobody's gonna get that going forward.
So he's really somebody who set the tone alsoaround that, that you have somebody you need
that.
If you don't have that, I mean, you've seen itaffirms that there's somebody who just holds on
(37:21):
forever and that can work too in some cases butI don't think that's somewhat out in one of
those, it's not what we want either.
Let's talk Israel just to give you a sense forhow quickly this has evolved.
When we had our pre interview chat Yeah.
It was before, Israel and The US had taken outIran's nuclear program.
(37:44):
That seems to be very positive for Israel.
Tell me more about Israel's ecosystem todaypost kind of the the dismantling of the Iranian
nuclear program.
So for look.
So first of all, it's like, you know, there wasthat, now it's on to the next problem.
Right?
Like, we have to deal with hostages and what'sgoing on with Gaza.
(38:05):
So it's sort of that's never ending.
But what I would say, like even day before thatand day after, I mean, I know it was only
twelve days.
I don't think like, even since October 7, Idon't think that the Israeli ecosystem has like
skipped a beat.
Like it's pretty incredible.
Like we talk about all the time, the resilienceand things like that.
(38:27):
But it's actually only getting more and moreactive.
I'm losing my track of time.
But I think immediately after that there wasthe announcement of Melio getting bought for
$3,000,000,000 That's an Israeli company.
A few months back Wizz was bought for$32,000,000,000 NEXT Insurance $2,600,000,000
the same week.
We had the IPO of eToro, which was the first VCbacked IPO.
(38:50):
This year it's an Israeli company.
But now that kind of Iran has happened, I don'tknow if more, we're gonna have to do something
else.
There's gonna be additional conflict.
I actually think like when I look at the wholeregion, it's probably been de risked
dramatically from where it was on 10/06/2023.
And maybe de risked to the point where it'sbeen less risky than ever to be frank.
(39:16):
So I think that's fantastic.
And I definitely think there's renewed momentumto end the war in Gaza.
And then there's renewed momentum to actuallyhave peace with more of our neighbors, which
when you take a step back, it's prettyincredible.
And if I had to make a bet, I suspect thatwithin the next twelve months, the war with
(39:37):
Gaza will be over and that we'll have peacewith Saudi Arabia.
And that's the craziest thing, maybe even withSyria and like, you know, who would have
thought?
So, I'm not naive enough not to worry about thenext thing that's coming around the corner,
like, who knows?
But I definitely think like all that's beenderisked.
With all that being said, in the middle of awar, Sequoia reopened up their office here,
Greylock reopened up their office here.
(40:00):
We had these massive exits and IPOs and tons ofmoney getting invested here.
Just yesterday, Nvidia announced they're gonnabuild a massive R and D center in the North
here in Israel.
I mean, right?
So I don't know.
It just keeps going on.
The Tel Aviv Stock Exchange was the bestperforming stock market, I think, over the past
(40:21):
month, including during the time of, the Iranwar.
Again, I'm not sure that's the best barometerin the world to judge things, but it just tells
you something.
And the shekel is, like, the strongest it'sbeen in a in a couple of years probably.
So if things are, things are chugging alonghere, that's, that's for sure.
And I'm pretty optimistic.
(40:42):
As an asset allocator investing in you guys areobviously based in Israel, but you're also
investing in Israel.
Do you see a peace premium, a post Iran, andmaybe a post Saudi peace deal premium to the
Israeli market, or is that all already pricedin?
Unfortunately, yes.
I don't know.
As an investor, I do think, there's this newgeneration of people who are going to be coming
(41:05):
out of the war that had a type of really uniquebonding that may lead to a real like ramp up in
the number of startups, which is amazing.
We're seeing startups getting sort of in newareas, whether it's quantum or defense.
But we're seeing is again have, have not.
So we're seeing it's much harder to raise.
And again, I feel this is in all the markets.
(41:28):
It's much harder to go from a seed round to anA round in general for you know, it's not like
2021 when anybody who raised the seed round gotto an A round pretty much.
So that's the challenge.
With that being said, we're seeing tons ofmoney flying into the best companies and tons
of M and A and companies are continuallyraising $100,000,000 rounds, dollars
(41:49):
200,000,000 rounds, dollars 300,000,000 roundsat amazing valuations.
So I do think there's already a premium on themarket.
I do think there's a chance it only goes up.
It's just simply going back to the basis kindof supply and demand.
There's only a finite number of companies toinvest in every year here And the whole world
(42:11):
is investing here.
And as soon as things calm down even more, morepeople will come over to seek investments.
So there may be something macro that goes onglobally that for some reason depresses
investing in venture.
But the supply demand dynamic in Israel is onlyjust I think there's going to be more demand
than the supply will be able to match.
And that's just going to cause prices to go up.
(42:34):
Perhaps the ultimate champagne problem, butone, just to take the counter of that is if
there are no wars, if Israel is in peace withall its neighbors, will Israeli entrepreneurs
still have that same edge that they currentlyhave?
Because they are literally battle tested.
VCs love battle tested entrepreneurs.
Israeli entrepreneurs are literally battletested.
(42:56):
That's a it's a great take.
I mean, look, I unfortunately, I don't thinkall of our conflicts are going away.
I think, for example, if I take like cyber,where it's just going to get more and more
intense globally.
There's always going to be enemies fromsomewhere.
They don't need to necessarily be yourneighbors.
(43:17):
So I think that that's something.
I also think when we see how AI is justchanging the world, Israel realizes that it
can't fall behind on that.
So it's going to continue to invest tons ofmoney around that.
And that's going to become a bigger, biggerpart of warfare in the future, for example, and
quantum.
And so I think Israel is always having thismindset to be ahead of the curve on things.
(43:44):
But you're right.
I mean, don't want to obviously I would love aworld where there are no wars, but there's no
doubt that the conflict in the region has beena big boost for the entrepreneurship in Israel.
But I don't think the conflicts are going to Ithink that some of the conflicts are going to
calm down locally, but I don't think they'regoing to go away completely forever.
(44:05):
That's for sure.
And I would just say, I also think again, we'rein an ecosystem where the Israeli teenager gets
up and he sees that somebody just sold theirvibe coding one man company for $80,000,000
Like that's something to aspire to, right?
Or that again that Wiz gets sold for$32,000,000,000 or eTour which they use on a
(44:30):
daily basis goes public.
So they have a lot of examples of what toaspire to.
I think that that's going to drive them aswell.
But I don't think we're going to beunfortunately dismantling our military anytime
soon.
You've been in venture now for twenty twoyears, which I mentioned earlier, countless
cycles, countless paradigms, countless venturesthat now ventures that again.
(44:56):
What is one thing that you wish you knew whenyou started in 2003 in venture?
What advice would you give to a younger aperight before you have started?
Wow.
That's a tough It's fine.
I probably would say like, don't let the stuffyou get wrong eat away at you too much.
(45:22):
Maybe within our business model that we couldprobably be a bit more risk tolerant is the way
I would put it, take more swings on certainthings.
And I would also say if it's advice, would saythe key thing is just building close
relationships with people as much as possiblethat you like and working with people that you
(45:43):
like.
If there's somebody who you know that you don'ttotally gel with find another deal right?
Like and there'll be something else that downthe pipe.
Now I went to a dinner with one of the localwas a local GP at a fund here and I was trying
to figure out how long I know him for and it'slike when I say wow it's been twenty years
(46:05):
already it's like it's fantastic and it'ssomebody who like, I'm glad I got to know for
twenty years.
I would say really focus, can make goodinvestments in people that you like and you can
avoid, you don't need to make in, there'll begood investments in people you don't like, but
you don't need to make them.
It's alright.
For some people, twenty years feels like twoyears, and for some people, two years feels
like twenty years.
(46:26):
That's right.
You mentioned you don't wanna be overlycritical.
I struggle with this as well.
I I'll listen to a podcast or look at a deal,and I'll look at the one thing.
I might get everything right, but I sold threemonths early in the public markets.
Have you found a solid weather as a team atyour, off-site?
Do you operationalize being kinder to yourselfand giving yourself more benefit?
(46:50):
It's not easy.
Again, on the one hand, like we said, we wantto start off the mistakes.
So I guess it does make it sort of like a safespace in that sense because if the people at
the top of the firm are talking about theirmistakes, then you realize that you should talk
about them and admit them and not just brushthem under the rug.
But look, we also celebrate our wins and wecelebrate as a team.
(47:12):
And I find out maybe that's the challenge isthat if I had to give advice to somebody is
that I find that very fleeting is that I enjoythe wins for until I have to go on to the next
one and the losses just eat away at me for avery long time.
And that's it is what it is.
But we try to celebrate the wins as well.
(47:36):
Ultimately again we've been in business now forover twenty years.
I'm very happy about even the relationshipswith our investors which I hold dear to myself.
They put us in business and they continue toput us in business.
So I try to focus on much of that, like we'redoing the right thing for them and ultimately
making them the returns that they want to make.
(47:58):
And so far we've been able to do that.
But it's hard.
I don't know.
It's very, very hard.
I'm not sure I have a great answer to say howto not let it eat
It's something I think about often.
It is hard to make those losses eat away at youless, so I think you have to do the opposite,
which is spend time doing things that you love,spend time with people that you love Yep.
(48:20):
And let that, let let that take up more spacein your life than the losses, which will be
painful.
And and maybe they should be painful.
Maybe that's how you learn from them.
Yeah.
Yeah.
Yeah.
Totally.
And, again, occasionally, I'll look back andI'll see some deals, and I'll be like, oh, wow.
That was a good one.
You know?
And then I'll chuck it up to luck and move on.
But but, yeah, it's it's not not an easy forthat.
(48:42):
That's another podcast maybe.
Well, we'll leave that for the next podcast.
Abe, this has been absolutely wonderful.
Thanks for jumping on podcast.
My pleasure.
Was great.
Really appreciate it.
Thanks for listening to my conversation.
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