Another VC Firm Targets Israel

A new venture firm called Jerusalem Capital is trying to raise $100 million for its inaugural fund, and expects to hold a $25 million first close this fall.

Principal Michael Brous, who previously was an analyst with Israel Seed Partners, says that the new firm plans to lead or co-lead deals for early stage, revenue-producing companies in Israel that focus on communications services, infrastructure services, business/professional services or media/entertainment services. He insists that Jerusalem Capital’s targeted IRR of 30%-plus is realistic.

“Because we’re focused on services, our portfolio companies will be ones that can grow at an extraordinary rate with little cash input,” he says. “It’s what you’ve seen with Yahoo or Google or eBay.” Brous acknowledges that his firm could have some competition for such deals – from Benchmark Capital Israel, for example, which earlier this year raised its second Israel-focused fund with $250 million – but he says Jerusalem Capital has strong deal flow thanks to its team’s deep local networks.

Managing Partner Jacob Ner-David successfully built and exited such tech-enabled service companies as Delta Three (VoIP), Nomad IQ (wireless) and Ambient (broadband).

Jerusalem Capital’s other principal is Steven Zecher, former executive director of the Pennsylvania Economic Development Financing Authority, who relocated to Israel three years ago.

The firm also features two venture partners – David Brodet and Gary Liebler – and a seven-person advisory board: Scott Petrack, CEO of Alcatel’s eDial division; Tamar Ben-David, former director general of Israel’s Government Companies Authority; Richard Roberts, former managing director of Goldman Sachs; Peter Paz, partner with Nexus Global Partners; Avi Barak, president and CEO of Yissum, Hebew University; Gideon Ben-Zvi, CEO of HumanEyes Technologies Ltd.; and Shlomi Fogel, CEO of Ampa Group Ltd.

The firm expects the fund to invest in about 20 portfolio companies, with an average total investment of $4.5 million per company. It plans to charge a management fee of 2.5% for the first five years and 1.5% for the next two years (only a seven-year term, from the final close), plus a 20% carried interest structure.

The firm’s founders are contributing $1 million.