Sunday, June 12, 2011

Gordon Gekko is not all bad!

I read Sophie Shulman's article this morning in Calcalist. I would have to say that it was not impressed. On the other hand Michael Eisenberg's blog put a smile on my face. He wrote earlier this week in response to Ze'ev Holtzman's somewhat unfortunate comments on the Israeli VC industry .

There is much discussion about the state of the VC market in Israel and whether it is "good" or "bad." In addition there is much popular debate about the concentration within the Israeli market of too many assets and businesses controlled by a small number of "tycoons."

I personally feel incredibly excited about the developments within the Israeli market, both on a wider level and also from my own personal perspective as an innovation driven investor.

Shulman complains that Gordon Gekko, the infamous corporate raider characterized in the two "Wall Street" films, is coming to town, with the obvious negative implication that this implies. The fact that major global financial investors in the form of their private equity arms are making investments in Israel is a real sign that the market here is growing and maturing. The fact that top investors, many mentioned by Michael, like Silver Lake, Bessemer, Battery, Greylock and others are building teams or dedicating resource to the Israeli economy is a GREAT sign that what we have what to offer the global markets is attractive to the highest quality investors globally.

As I have mentioned elsewhere the domestic Israeli VC industry will have to grow up and understand they are not competing with their peers in Tel Aviv and Herzliya, but their global peers at the best firms on the planet. I see this as a completely optimistic development rather than the opposite.

Their are several obvious implications:
  • at a micro level, the Israeli economy is maturing, but will need to continue to aggressively innovate with technology and upgrade its people to continue to be attractive to both strategic and financial investors as the 21st century develops
  • the local institutional funders (VC funds, PE funds, public investors etc) will need to adapt their business models as the local and global trends move dynamically. Competing for capital on a global scale is challenging and only the best will survive.
  • Recycling of human and financial capital is a healthy process, crucial in enabling the economy to build and rebuild in the most efficient way possible. The continued entry of leading global investors will accelerate this process and should be greeted with open arms!
  • Finally Apax, Citi, Permira, Francisco, Bessemer, Battery et al entering the Israeli market will keep the "usual suspects" (Dankner, Teshuva, Arison, Ofer etc) honest by increasing the financial competition for attractive Israeli assets.
We should be shouting from the rooftops about Israel as a great destination for the world's capital, at the same time as investing time, thought and money into readying ourselves for the challenges ahead. The financial community MUST mature alongside real industry, in order to provide relevant and financially efficient solutions for company building. It's not rocket science, but does require us to stop with the constant self-criticism, and replace it with a dynamic and realistic assessment of what is required to move forward.

Happy hunting!!

No comments:

Post a Comment