Like its American counterpart, the Israeli private equity community took a hit with the bursting of the tech bubble.
But limited partners and venture investors have found they have a new friend in Vintage Venture Partners, which closed its premier secondary fund with $65 million and has began making purchases.
The fund, which had an initial goal of $60 million, finished fund-raising in March. While the fund focuses exclusively on Israeli secondary deals, the majority of the fund’s capital has come from outside Israel. LPs consist of three European fund-of-funds, a Canadian investment bank, several U.S. endowments, three Israeli insurance companies and various family foundations and high net-worth individuals.
Alan Feld, a co-founder of Vintage and former partner and managing director with several Israel-based venture firms, says that Israel’s private equity market took until the late 1990s to become large enough to support dedicated secondary players. Still, it’s a young industry. He says that Israeli venture funds have raised only about $8 billion since 1997 and that roughly $1 billion has been invested directly by foreign corporations and foreign VCs into Israeli companies.
Vintage estimates that about $250 million in LP interests effectively goes on the auction block in Israel every year. The firm has been doing business with limited partners in VC funds and direct venture capital investors.
Feld says that several deals have been closed from the fund already. He declined to say how many deals have been closed or how much the firm has invested.
Unlike its American and European counterparts, the Israeli private equity community is comprised mostly of venture capital firms. Israel is only now developing a substantial buyouts industry. As a result, its secondary market has been focused exclusively on venture.
Being a smaller fund with an exclusive focus on Israel frequently brings Vintage into partnerships with foreign secondary investors. Feld says that Vintage has worked closely with name-brand secondary players from the United State and Europe, but he declined name any.
Vintage Ventures is a part of the Dorvat Group, an Israeli private equity firm that also initiated Carmel Ventures, which makes direct investments in software companies; Dor Ventures, which invests in imaging, printing and publishing companies and Plenus, a venture lending fund.