Fresh from the oven

Fresh.Fund is banking on Jerusalem’s students.

By ARIEL DOMINIQUE HENDELMAN
Talking to students about fresh.fund (photo credit: HIDAY GOLDSMITH)
Talking to students about fresh.fund
(photo credit: HIDAY GOLDSMITH)
Jerusalem is ripe with students who infuse it with innovation and optimistic capability. Fresh.Fund, Israel’s first student-run venture fund, is looking to nurture this entrepreneurial environment.
“We will be empowering a team of 15 students from Jerusalem to comprise our investment committee,” Zaki Djemal, managing partner, says.
“Just like any venture capital fund has an investment committee, so does Fresh.Fund, except ours will consist of some of the brightest and most talented students from around the city, across various institutions and academic disciplines. The idea here is to find cool and exciting opportunities at very early stages that typically go unnoticed by bigger venture funds.”
Fresh.Fund essentially has two components: the by-student investment committee and the for-student funding focus. Once the investment committee is chosen, Djemal and his team, consisting of co-founder Oded Barel, project manager Nitzan Adler and managing partner Hiday Goldsmith, will focus on funding student-run companies.
“In this for-student, by-student model,” Djemal elaborates, “we define students quite broadly. Fresh.Fund will invest in any company that has at least one full-time student among its founders, or a recent graduate. We define it broadly because no one has done what we’re doing, so it’s difficult to assess how many opportunities we’ll actually have in Jerusalem. If we don’t see enough companies coming out of universities, we’ll expand further to include early- stage companies across the board in Jerusalem. So that’s the model.”
Zaki Djemal, managing partner at Tzvi.vc and founder and managing partner at Fresh.Fund; Anna Proviz, incoming CEO of Siftech; Nitzan Adler, director of operations at Siftech and Fresh.Fund program director; and Hidai Goldsmith, managing partner at Tzvi.vc and founder and managing partner at Fresh.Fund (photo credit: ODED BAREL)
Zaki Djemal, managing partner at Tzvi.vc and founder and managing partner at Fresh.Fund; Anna Proviz, incoming CEO of Siftech; Nitzan Adler, director of operations at Siftech and Fresh.Fund program director; and Hidai Goldsmith, managing partner at Tzvi.vc and founder and managing partner at Fresh.Fund (photo credit: ODED BAREL)
Fresh.Fund itself is a joint venture between two organizations: Djemal’s micro-fund, tzvi.vc, and Siftech, a Jerusalem- based nonprofit accelerator. Siftech was founded by two graduates of Hebrew University who were excited about creating a framework for student entrepreneurs. Thus it is a fitting partnership with Fresh.Fund.
“We’re now focusing on student entrepreneurship with a little bit of a different lens,” Djemal states. “Tzvi.vc is the venture side of things and Siftech is the creation and content side. Those are the two organizations that are at play. Tzvi.vc is myself and a partner, with an investor who is backing us. That’s the structure we set up to invest in companies. We’ve invested in a bunch of companies already and Fresh.Fund is our new big project. We’re financing Fresh. Fund, so we are also taking a risk because we believe in it.”
Djemal recently concluded interviews for Fresh.Fund’s student investment committee. They received 83 applications and are currently processing them. Students applied from such diverse institutions as the Hebrew University, Bezalel Academy of Arts and Design, and the Jerusalem College of Technology.
“What is so exciting is that we have students from every single background, which is very Jerusalem,” Djemal adds.
“We have medical students, a haredi woman who started her own business, design students, computer science students, and of course business students. We have a really talented group from across the board, which will allow us to look at a variety of investment opportunities from all these different perspectives. Creating this team and selecting has been hard because all of the applicants are so good.”
Diversity is a key aspect of Fresh.Fund’s model. The investment committee will be comprised of men, women, Arabs and haredim. This enables access to the many worthwhile student initiatives that stem from all of the divergent student populations, which typically go untapped.
Djemal points out that higher education in Jerusalem generally integrates these diverse populations into its institutions, but sadly this stops after graduation. Fresh.Fund’s commitment to diversity is not based solely on an altruistic notion of equal entry into the start-up world for all; it is also strategic. A sundry student investor committee is more likely to cull opportunities from peers in underrepresented communities and to understand how to gauge the real potential of those opportunities.
“These students, once they’re chosen for the committee, will be trained by us,” Djemal explains.
“We’ll be evaluating possibilities together with stakeholders from the venture world across the country. These are senior investors from different established funds, who are helping to expose students to how these investors are thinking, which is also a great networking opportunity for students. We get some of the smartest investors helping us choose companies. From their point of view, they’re excited about meeting young talent and mentoring students. It’s a win-win situation.”
Fresh.Fund is designed to not only fund companies and train student investors, but additionally, to create high-level vocational training for the students. Unlike an internship, these students will work as decision-makers who invest money according to their intuition, knowledge and experience. It is also about stimulating the ecosystem in Jerusalem; training people who may very well start companies of their own further down the line.
“A company that doesn’t raise capital is not going to succeed,” Djemal says. “Not only are we finding great opportunities, but we’re also helping stimulate the next generation of entrepreneurs. We have an opportunity here to create the first experience with venture capital. That’s exciting, but it’s also a huge responsibility.”
The question Djemal and his team are faced with repeatedly is why they are willing to bet on students. Students are inexperienced and often will not succeed right out of the gate, but they also bring a fresh set of eyes to any problem. They’re connected to innovation on a grassroots level. They’re willing to try technology and are exposed to it more than anyone else. Israeli students in particular are typically older and more experienced than their international counterparts because they’ve often served in the military, traveled extensively, and have held a job before beginning their academic careers. Another key factor with students is that they are learners who are actively in a learning mode.
“Learning is such an important part of building a new company; learning how to work with a new team is paramount,” Djemal says.
“Snapchat, Facebook, and Microsoft were all started by students. These were students who were willing to take a leap, be open-minded and do something that seemed crazy at the time. You need guts to build a company. Students have an optimism that you need at that very critical time of starting something new. What makes it even easier in today’s day and age is that a lot of the material is available online, so you can learn a lot of stuff by yourself today from blogs and podcasts, which makes it easier to start something from your dorm room.
“Another important issue that is essential to starting a new company is having the right peer group. Universities offer this. You meet smart people who are at a similar stage, who make potential co-founders, which is really important. I’ve met with hundreds of slightly older companies who have come to us for investing, but they don’t have co-founders. They’re just not in a framework to find that talent. What makes or breaks a company at the beginning stage is having a kick-ass team. What better place to find that than in a computer science class? You also want smart mentors, and you have a professor. So there is something about this ecosystem that really lends itself to taking great ideas and cultivating them.
“But it is super high risk and we have to be honest about that.”
Inexperienced founders typically do less well than experienced founders; a fact Djemal and his team readily acknowledge. Yet they believe there is also an opportunity to succeed. Fresh. Fund has the potential to build a powerful community of entrepreneurs in Jerusalem who will work with the fund as founders or investors. Although these students may not succeed in their first company, chances are high that they will succeed in their second or third down the line. Djemal and his team hope that they will be included in that success. Hence there is a long view to Fresh.Fund that is crucial.
“If we didn’t think that this model was sustainable, we wouldn’t be doing it,” Djemal adds. “Right now, we’re taking a risk at a time when few people are willing to take similar risks. But we believe there is a lot of gain to be made at later stages by cultivating a sense of community and helping to build a more competent community of entrepreneurs.”
Djemal grew up in Jerusalem, but spent a lot of time overseas. He attended Harvard and launched a company when he was a senior with an investment he received from a student-focused fund called Dorm Room Fund in Boston. The investment allowed Djemal to devote all of his time to the fledgling company. When he decided to return to Israel years later, he looked for something similar here and was surprised not to find it.
“Even though there is so much innovation here, there is a real shortage in early-stage capital and certainly there is a real shortage of capital around student ventures,” Djemal states.
“For me, it’s really exciting to have experienced something like that when I was a student and now to make that same experience possible for students in Israel. After eight months of being back in Israel, I’m playing a big part in the local start-up scene and that’s really fun and exciting. Jerusalem is booming. It’s a city I love, and I’m excited to be part of its renaissance in terms of the startup scene.”
Djemal and his team talked about starting Fresh.Fund in Tel Aviv, which many would say is the obvious choice, but Djemal wanted it to be in Jerusalem. He loves the city and feels that it is the ideal testing ground for what Fresh.Fund is doing. Djemal views this stage as piloting the program in one city, and hopefully in the future, expanding to other cities. Jerusalem is the space to prove the Fresh.Fund model.
“Of course I’m nervous; Fresh.Fund is a new model and we’re taking risks with investors’ money,” Djemal says.
“I have a fiduciary duty to do well. But that’s part of the game. If you don’t risk it, you’re never going to make it. I really believe in what we’re doing.”