Building bridges between global investors and Israeli startups
Israel has more startups per capita than any other country, yet the thriving startup scene, sometimes referred to as Silicone Wadi, has less venture capitalists and angel investors than its American, European and Asian counterparts.
Shelly Hod Moyal ’13 (Kellogg-Recanati), co-founder of equity crowdfunding platform (next generation VC) iAngels, is on a mission to change that. Her company connects handpicked Israeli startups with investors from around the world. iAngels’ online platform and team of experienced technologists, investment bankers and venture capitalists allow private investors worldwide to tap into Israel’s vibrant startup ecosystem and invest under the same terms as the top angel investors and VCs in the region. To date iAngels has deployed more than $10 million in 25 companies since its founding in 2014.
Hod Moyal shared her story as an entrepreneur as well as her keys to investing in startups.
How did iAngels come about?
I began my professional career in New York, where I worked as a research analyst at Avenue Capital, a top tier US-based hedge fund and then as an investment banker at Goldman Sachs. During my time at Goldman, I was involved in several merger and acquisition transactions with a focus on high tech companies, as well as principal investments that Goldman has made into startups and prominent VCs in Israel. I was always interested in the Israeli startup scene, which has historically proven to be one of the most lucrative technology hubs in the world.
Two years ago I got together with my partner and friend Mor Assia, who worked as a developer at SAP and as a consultant at IBM and Amdocs. We had watched our friends, colleagues and families members build successful tech startups in Israel. So iAngels, for us, was a natural extension of our contacts and relationships, our understanding of the Israeli capital and technology community and our ability to bring investors the best of the best early stage deals that Israel is producing.
We have created a platform for investors from all over the world to invest in Israel in a structured and professional way under the same terms as the top investors in Israel.
Why do you think Israel has become such a huge source of tech startups?
Necessity is the mother of invention. Israel’s precarious geopolitical context has forced the country to invent in unimaginable ways. Many of these inventions are first unearthed in the military; be it defense, supply-chain, software, security, hardware, or communications. Then entrepreneurs orient these inventions towards the business world, and a start-up is born. Many of the top global companies in the world — Google, Facebook, HP, and Intel, for example — have offices in Israel because they recognize the talent and innovation here. Companies have become familiar and comfortable in establishing accelerators, acquiring companies and investing in Israel high-tech.
At what point did you recognize the desire for people to invest in Israel and realize that you could offer a solution?
In any foreign investment, and especially a new venture, the important thing is how to choose the right opportunities to make the right investments. From a distance, it’s hard to see enough about the company’s value proposition, management and competition to make a good prediction about whether it will succeed.
Even if you are in Israel, if you aren’t part of the inner technology circle, you won’t really get a sense of who’s investing in what – or how you can participate in the same way they are. Because of our connections and track record, people bring us over 85 opportunities a month and we have five people who select the best of those and analyze them. For investors to make good investments in Israel, they will benefit from having someone on the ground with the right business judgment, negotiating leverage and influence on their side to get in on the right deals on the right terms.
Walk us through how iAngels works.
The startups undergo multiple vetting, first, through vetting of the coinvestor and his or her track record. Next, the companies undergo our coinvestor’s due diligence, and finally, iAngels and our investment committee vet the companies. Once we decide we want to invest, we present the opportunity and our thesis to our investment community. We invite the investors to webinars to get to know the CEOs. Once an investment is made through our platform, we provide investors with quarterly status reports and keep them abreast of the progress of each of their investments in an easy-to-use dashboard.
iAngels also provides significant value to start-ups. Entrepreneurs that make it through our due diligence gain access to both top-performing investors and the community of co-investors who are invaluable in their collective knowledge, networks, and wisdom. This access also enables entrepreneurs to raise capital in a matter of days, rather than the months usually associated with fundraising. Furthermore, iAngels takes responsibility for legal administration, investor relations, and compliance, lessening the administrative burden so the entrepreneur can focus on what really matters most: growing his or her business.
The thought of investing in startups is appealing. What tips do you have for someone new to investing, who is looking to specifically invest in startups?
- You need to start with the philosophical question: Are you interested in the asset class? With that decision, you need to decide how much to allocate. As this is a high-risk asset class, we recommend investing up to 3% of your net worth in this asset class.
- Diversify. In spite of the reputation of the top-performing early stage VCs and angel investors for extreme selectivity, it is typical for them to invest in 25-50+ startups per portfolio managed. The profitability of their portfolios usually comes down to just a handful of those investments. Accordingly, we believe that an investor should hold at least 20 startup investments in order for these statistics to work in their favor.
- Save for follow-up on opportunities. As you see progress, you may want to continue to invest as time goes by.
How did getting your MBA through the Kellogg-Recanati program help you with iAngels?
I started the program when I was beginning my journey as an entrepreneur. The EMBA program was a wonderful platform for me to raise awareness and bounce ideas off smart people, learn from their perspectives and gain exposure in areas I didn’t have experience. I met amazing people – real friends and customers.
What has your entrepreneurial journey been like? Any advice?
Building a business has been both amazing and nerve wracking, and I’m nowhere near the end of it. It takes a lot of patience, energy and optimism.
If I had one recommendation, it’s to find a partner. It’s so challenging to do it alone. I find it’s crucial to have someone there with you during the good and bad times. Find someone who is complementary to you, a “one-and-one-makes-three” situation.
Secondly, always do your research before going into an industry. Evaluate what kind of business you’re stepping into. Your business is going to change over time, but you have to start with a feasible plan.
Shelly Mod Hoyal is the Founding Partner of iAngels and a born analyst. She has 10 years of experience evaluating investment opportunities for investment firms, private individuals and corporations all over the world.