US venture capital fund focuses on Israel

Until numbers are calculated at year-end, venture capital professionals said there was no way to quantify affect of war on industry.

"One man's trash is another man's treasure," they say, so while some foreign investors may be shying away from Israel following the war in Lebanon, others are taking advantage of what they see as an opportunity. "Now is an excellent time to invest in Israel," said David Anthony, founder of 21Ventures, LLC, a NYC-based venture capital fund that has decided to shift its investment strategy focus primarily on Israeli start-ups as a result of the conflict. He feels a combination of factors creates a ripe environment for "angel investors" in the country. "My prediction is that as a result of the costs associated with Israel's military operations the budget for office of The Chief Scientist at the Israeli Ministry of Industry, Trade and Labor [the government body that assists with the development of new technologies in Israel] will be cut, which will create opportunity for our fund," explained Anthony. Anthony further remarked that "a derivative problem of war is that corporate investors are going to be more likely to avoid Israel so the supply of angel capital [private, early-stage equity financing] in Israel will decrease while the demand will remain." That is a void Anthony hopes to fill. Until the numbers are calculated at year-end, venture capital professionals said there was no way to quantify the affect of the war on the industry. "We do not expect a slowdown in direct investment in companies, but we do expect a slight slowdown in investment in venture capital funds," said Yoram Oron, founder and managing partner of Vertex Venture Capital and Chairman of the Israel Venture Association, an organization that represents the venture capital industry in Israel. Oron noted that during the second Intifada there was a similar decrease in foreign venture capital investments in the country. "Investing in Israel requires visiting Israel and during the war and the Intifada people cancelled their visits." Oron said that during the war some conferences and seminars were cancelled or moved overseas, but he expects that by the beginning of September business meetings in Israel will be back to normal levels.