Pitango intends to raise $350 million new fund

Most Israeli VC funds have been given the cold shoulder by investors, but Pitango hopes to succeed through its skilled team of partners.

By GLOBES/ BATYA FELDMAN
shekel versus dollar 521 (photo credit: REUTERS)
shekel versus dollar 521
(photo credit: REUTERS)
Pitango venture-capital fund intends to raise $350 million for what will be its sixth fund, people familiar with the matter have told Globes.
Most Israeli VC funds have been given the cold shoulder by investors, but Pitango hopes to succeed through its team of partners who are as skilled in marketing as they are in investing in companies that yield results.
Pitango declined to comment.
Pitango is one of Israel’s largest, oldest and best-known venturecapital funds, and it currently has $1.3 billion under management in five funds. This year is looking good for Pitango, which has had some handsome exits over the past two years, mainly in the life sciences.
The annual meeting of Pitango’s investors was held last week, and representatives of the investors met in Provence, France, to hear about the funds’ portfolios and future plans. Participants saw a movie in which the CEOs of Pitango’s portfolio companies talked about the good situation their companies are in.
Pitango invests in a range of companies in communications, Internet, mobile technology, clean-tech, semiconductors and life sciences, in a range of start-up phases. Through the endeavors of general partner Ruti Alon, biomed has become one of the fund’s leading investment fields. Half of the Pitango IV Fund was invested in life-science companies. This policy has proven itself with successful exists such as ColBar Life Science Ltd., Disk-O-Tech Medical Technologies Ltd., Ventor Technologies Ltd. and BioControl Medical Ltd..
However, the California Public Employees’ Retirement System (CalPERS), one of the investors in Pitango’s funds, reports that Pitango’s III $500m. fund, which was raised in 1999, has recorded negative returns of 6 percent. Pitango IV from 2004 has a positive yield of 2%. Few funds raised in 1999 were profitable, and Pitango IV still has time to show improved returns.
Pitango was ranked second in the Globes 2011 list of quality venture- capital funds, and its managing general partner, Rami Beracha, was chosen as Israel’s best VC fund partner for 2011.
The fund is managed by six managing general partners: founders Rami Kalish and Chemi Peres, as well as Aaron Mankovski, Isaac Hillel, Beracha and CFO Zeev Binman. The firm has three general partners: Rona Segev-Gal, Alon and Bruce Crocker.
The founding partners are both in their 50s, and like other venture- capital funds in Israel, one of the challenges they face is to raise a young generation who will take over the reins from them. No VC fund has currently fully met this need.
Pitango is setting up its new fund at a challenging time. Last year, only the Israel Cleantech Fund raised new capital, something that raised concerns throughout the industry. A large number of other Israeli VC funds that haven’t raised capital for three or four years are now sitting on the fence; they are likely to be next in line to set up new funds.
These funds include Evergreen, Genesis Partners, Giza Venture Capital, Vertex, JVP, Gemini Israel Funds and Magma, and they will be following the fortunes of Pitango’s new fund with great interest.
In the past few years it has been difficult, and sometimes even impossible, to raise new funds both in Israel and worldwide.
Consequently, some fund managers feel under great pressure today. After putting off raising new funds again and again, they have to raise new funds, otherwise their funds will be considered dead.
One interesting question is whether Pitango’s sixth fund will be the first-ever Israeli fund to attract an Israeli institutional investor. So far only foreigners have been prepared to invest in Israeli venture-capital funds.