Startup Nation Fundingscape

For a while now, we felt it’s about time someone mapped out the funding landscape in Israel. At iAngels, we took it upon ourselves to categorize the key investors so that each aspiring entrepreneur and investor can easily find their way in the Israeli high-tech ecosystem



The entrepreneur’s funding compass:

  1. I have an idea – You are still at your old job and have thought of a great idea for a company you feel passionate about and would like to pursue. At this stage, the best path for funding is friends and family or people that know you professionally and believe in your capabilities.
  2. I have an idea and a plan – You might still be at your old job but you have already devoted some time to your idea. This stage typically includes finding another co-founder who shares your passion, developing initial market research and forming a business plan and PowerPoint presentation. At this stage it makes sense to reach out to accelerators and incubators for funding, unless you can afford bootstrapping. Accelerators usually invest $25-50k for 5-15% of the company. Some of the best ones provide great mentorship programs that help you sharpen your value proposition, validate your concept, open doors within the business community and prepare you for seed funding.
  3. I have a team and a proof of concept – You have formed a team and are working full time or pretty close to it on your startup. You’ve done extensive research and have received indications that your startup could succeed. At this stage it is best to reach out to Angel Investors. Angels can act as your mentors and supporters early on, when you are working on validating your product and connecting with relevant players. Angels typically invest $50-100k for 5-10% of the company.
  4. I have a company and initial traction – Your company is up and running, you already have some customers, pilots and maybe even initial revenues. At this stage it makes sense for you to reach out to early stage VCs, equity crowdfunding platforms and angel clubs. These players like to invest when there are some early winds at your back and will typically put in $500-1,000k for 10-20% of the company.
  5. My company has significant traction and revenues – Contrary to what many people think, VCs typically invest only after a company has established itself and started generating revenues. If you have proved your business and need a significant amount of capital to scale, it makes sense to approach VCs. VCs invest between $2-30m over the lifetime of the investment (rounds A-D) with the goal of maintaining a 15-30% position in the company. The best VCs provide ongoing support, added value and follow-on funding.
  6. My company is approaching an exit event (M&A or IPO) in the near future – As your company is progressing nicely, it may require a significant amount of capital to support the growth required to bring it to the critical mass it needs to reach an exit event. In this case, it makes sense to approach a growth crossover fund. These funds typically invest $10-100m for 10-30% of the company.
  7. My company is ready for an exit – The moment your investors have been waiting for: your company is ready for a liquidation event, as you have caught the interest of a strategic player or the public markets. An acquisition is typically a transaction for the entire share capital of the company. An IPO is the floating of your company shares on a public exchange like the NASDAQ or NYSE. An IPO typically entails the offering of 20-25% of the company for at least $100m and usually more.

Each fundraising round will typically entail 10-25% dilution from investors and another 5-15% set aside for the option pool so you should expect a 15-40% total dilution each time you raise capital.

At any point in time, engaging foreign investors is a great idea as these typically have strong networks you can tap in key geographies like the US, China and Europe. Often though, you will discover that these investors (especially those based in Silicon Valley) prefer to invest in their backyard and might ultimately require that you establish a presence abroad.

Happy fundraising to us all!


Shelly Hod Moyal
Founding Partner, iAngels

Minding the Gap Between U.S. and Israeli Valuations

Sit down with any entrepreneur or investor in the world and the topic of valuation is sure to pop up. And who can blame them? It’s a lightning rod topic that can make or break a startup, regardless of which tech hub you call home.

According to 2010-2014 data on AngelList, the average angel valuation for Silicon Valley tech startups clocks in at an astonishing $4.7 million – more than 10% higher than the average valuation of N.Y., Boston or Seattle-based startups. When you go overseas, the gap becomes even more pronounced. Perhaps most surprising is that Israel is the second largest startup ecosystem in the world, generating an estimated average seed valuation of $1.5-$2.5 million based on research and conversations with some of the most active angels in the ecosystem.

I am most interested in how these valuation gaps affect Israeli-based startups. As a venture capitalist and entrepreneur, I started the iAngels network with my partner Mor Assia to serve investors around the world interested in investing in high-tech in Israel. As an analyst at heart, valuation is a sensitive subject. It is the main driver of investor returns so it was important for us to understand it from an industry perspective and versus some of the alternatives. When I couldn’t find data driven literature on the topic, I decided to research it myself.

In the last 1 year, Israel has generated three near-billion dollar exits alone with Waze, Wix and Viber and one over 5 billion – Mobileye. Almost every angel investor that we’ve met has agreed that Israel is at least comparable to New York City and Silicon Valley when it comes to startup output, entrepreneurial talent and a robust support system.

So why is it that these ecosystems that share so much in common can command such different valuations? Should investors care? And does it even matter when it comes to predicting returns? Yes, and not necessarily.

While it’s true that the U.S. and specifically Silicon Valley has on average generated more household names like Facebook and Twitter, we think there’s more to the success story than just looking at the number of much-hyped, rare exits.

Let’s consider the amount of venture capital available to tech startups in these ecosystems. We believe that startups in Israel receive less funding simply because there’s less available capital as angels and VCs prefer to invest locally. This causes startups in Israel to scramble over limited venture capital. In Israel, there are a couple of dozens of angels and VCs over ~3,000 startups. According to our research, approximately 1,800 Silicon Valley startups received $20.5 billion of funding since April 2012. During the same time, 1,255 Israeli tech companies raised around $4.5 billion of funding.

Secondly, let’s take a look at the returns coming out of U.S. tech hubs versus Israel. Last year, CrunchBase found that the average successful U.S.-based startup raised $41 million and exited at a little over $243 million, implying a value creation ratio of 5.9x. We did a similar exercise for Israeli startups in order to understand whether or not the valuation gap was a predictor of investor returns.

Using the same methodology applied by CrunchBase, we found that since 2011 the average successful Israel-based startup raised $28 million and exited at around $192 million based on IVC Research, implying a value creation ratio of 6.9x. Keeping everything else constant, it appears that the average return profile of Israeli startups is at the minimum, not inferior to that of their U.S. colleagues and potentially better.


It’s also important to consider more than just the total size of the exits. From 2011 to October 2014, there have been around 4,600 exits in the U.S. out of 60,000 startups and around 360 in Israel out of 3,000 startups. Thus, the implied “exit rati o” during this time period was 8% in the U.S. vs. 12% in Israel. In other words, there is more to a successful track record than just higher exit valuations and Israel has an edge when it comes to capital efficiency and hit rate.

Thirdly, even though we’ve spent the better part of this article debunking the significance of the valuation gap, we believe that early stage investors must pay attention to this metric. Here’s why. Lower valuations — particularly in the lean and mean Israeli ecosystem — can translate into higher profitability resulting in better investor ROIs and more attractive exit multiples.

And now a word about the data. Ever since we began digging into exit data in Israel and the US, we’ve noticed that there is much more available data on the former. Having spent time on both sides of the Atlantic, we believe that this may be due to the fact that Israel is a much smaller country and journalists in Israel have it easier when it comes to accessing information. The typical Israeli just doesn’t rest until he or she finds out how many millions their neighbor brought home after an exit. It’s simply much more difficult to unearth a comparable amount of exit data for US-based startups.

We tested this by pulling CrunchBase data on California- and NYC-based tech startups versus IVC data on Israel-based companies. We found exit data on 65% of all Israeli exits since 2011, compared to only 40% and 25% of California and NYC exits, respectively. This wouldn’t be such a big issue if the sample of available information were representative of the population – but in this case it does present a problem because these samples don’t reflect reality.

Given that larger exits receive more publicity, the lack of information on exits of all sizes in the US creates an availability bias. The result? People believe that Israel typically generates smaller exits because they rarely hear about smaller exits in California. Out of the ~1,200 exits in California from 2011, we could find only 35 companies that were sold for less than $10 million.

During the same time period, out of the 360 exits in Israel, we found 50 companies that were sold for less than $10 million. We are willing to bet that out of the ~700 deals in California with undisclosed exit amounts, there are quite a few smaller transactions that would have dragged down averages.

Here’s the bottom line. The valuation gap has a lot to do with pure economics and less to do with startup quality, exit performance or investor risk/return profiles. But whether you choose to mind or not mind the valuation gap, the fact is that it exists and it’s not going away anytime soon. Investors that can look past valuation and understand the upside to investing in early stage Israeli startups can be the ones to enjoy the Wixes and Wazes of tomorrow.

This blogpost was originally published on the Wall Street Journal and has been updated for Q3 2014


Shelly Hod Moyal
Founding Partner, iAngels

Tips for the beginner Angel investor – 8 things you need to know when investing in start-up companies

There are significant differences between investing in start-up companies and investing in publicly traded stocks or real estate assets. The most important difference is that investing in start-ups entails a greater risk of losing the entire investment. None the less, in an Exit event (company acquisition or IPO), such an investment can provide unprecedented returns.

Upon choosing to invest in a start-up company, there are a few critical steps one can take to mitigate the risk involved

1.     Diversified investment portfolio

Assuming that the average investor does not have infinite capital, there is a clear advantage for splitting the capital among several start-up companies. We believe the magic number is 20. This course of action will help disperse the risk and increase the chances of an Exit event, which will further atone for potential losses in the investment portfolio. Choose the companies carefully, because there are many factors beyond the company’s ability to execute which influence the likelihood of success. Market forces and pure luck also play a role. Always remember that when dealing with long-term investments (investment horizon of 5-8 years for an Exit event), patience is key.

2.     Access to attractive deal flow in relatively early stages

In Israel, while there are only a small number of experienced angel investors and VCs, there are a colossal number of companies looking to raise funds. It is quite difficult for a private investor with limited time to research start-ups and meet with entrepreneurs to understand where to invest. One can use filtering factors such as; venture capital funds, equity crowd funding platforms and of course, personal acquaintances with industry leading super angels. These factors are almost the only entry ticket for private investors to join investment rounds in these kinds of companies. Additionally, in early stage investments, the valuation of the transaction is relatively low, bringing high risk but large potential returns.

3.     Study the entrepreneurs thoroughly

Many lead investors always say that the most important factor in start-up investments is the human asset: the talent. It is important to go over the entrepreneurs’ resumes. Are they serial entrepreneurs (previous exits)? Do they have a long-term vision? Are they a solid team (have worked together before)? Moreover, make sure that the founders complete each other in all areas of expertise (technology, management, marketing, etc.).

4.     Scrutinize the Market/Competitors/Business Model 

Scrutinize the industry and understand the field in which the company’s product/service operates. Ensure that the market is large enough, understand who the company’s competitors are (maybe there is a potential for acquisition) and what is the company’s competitive advantage. Establish that the product/service meets the needs of the target audience. Moreover, one must assess the company’s Business Model and make sure that the company has an effective monetization strategy (cash flow model) that will supply fuel for the company long term.  

5.     Study the investment round details

First and foremost, in order to calculate the expected stock holding percentage in the company, you will need to know the pre money valuation (company’s valuation before the investment) and the total round of investment (i.e. let’s assume a pre-money valuation of $4M and total round of investment of $1M). The combined value should be divided by your investment amount, which will give you the holding percentage in the company (i.e. as per our example, assume that out of the $1M investment round you are investing $50k, in this situation you will hold 1% in the company).

It is also important to check the legal documents of the company to understand which type of share is being granted. In the event of an exit, money will first flow to the preferred shareholders and then to ordinary shareholders. In addition, check whether as an investor you are eligible for data/information rights regarding the company’s progress and future participation rights in the event of further investment rounds.

6.    Option for a future investment in the company

Startup companies go through several investment rounds during their lifecycle.  First, the seed stage (usually the proof of concept stage), then more advanced rounds such as A, B, C, in which the company has already secured a product and revenues. It’s likely that the company will conduct another round of investment. In order to keep your shareholding percentage and avoid dilution you may want to invest additional funds. Angel investment rounds are usually worthwhile if you believe in the company and its ability to succeed. Participation in more advanced rounds is often difficult as the valuation of the company may be very high. In any case, it is common to expect a 20-25% dilution following investment rounds you choose not to participate in. It is important to note that investing in start-ups needs to come from available capital. I would not advise to take a second mortgage on your house for this purpose.

7.     Research the company’s existing investors

In a case where investors have already invested in the company, it is suggested to run a background check and see if they can provide any added value to the company other than the capital invested. The ideal opportunity is to join a financing round alongside experienced angels or VCs who hold a proven track record. For example, successful exits, expertise in specific verticals and industries in which the company is working, and performing as mentors and advisors for the company and entrepreneurs post investment. Another significant contribution of investing alongside leading angels with extensive experience in the industry is the fact that they’ve already preformed their due diligence on the company in question. If they decide to invest in it, it is safe to assume that the company is fundable, and all the legal matters are in place.

8.     Finally, what does the company intend to do with the funds raised?

How is the money going to be spent, what are the development and marketing goals and how does the company intend on reaching them? How are the funds going to be distributed between development and marketing and the milestones in which any major actions are going to be taken? It is recommended to invest in companies which engage in areas familiar to you as an investor so you can evaluate the company strategy in a more professional way.

The start-up nation is thirsty for angel investors – spread your wings and go for the kill.


Ron Hadar
Business Development Associate at iAngels, serial entrepreneur and an attorney specializing in high-tech.

Israel’s Top 20 Capital Efficient Exits Over the Last 3 Years

There has been a lot of buzz recently around Unicorns (companies valued at $1 billion or over) and, while it is true that historically, Israel has created fewer unicorn investments than the US, we wanted to highlight Israel’s strong history of consistently producing smaller startup companies that have provided quick and highly profitable exits – what we like to refer to as phoenixes. 

Phoenixes are startup companies that are smaller than unicorns, more nimble, less rare, but quite valuable to venture capital and angel investors. Israel’s ability to generate Phoenixes is one of the reasons why we believe there is a distinct advantage to making angel investments in Israeli startup companies. 

Since the beginning of the year, Israel has generated several phoenixes including:

  • Viber (almost a unicorn investment) which has raised $30m and was acquired by Rakuten for $900m in less than 4 years
  • House of Fun which raised $3.5m and was acquired by Caesars for $90m in less than 3 years
  • Cyvera which raised $13m and was acquired by Palo Alto Networks for $200m in less than 2 years
  • NSO which raised $1.7m and sold to Francisco Partners for $130m in less than 4 years. 

Using public information and IVC’s database, we evaluated the most profitable exits Israel investors have seen since 2011 by looking at the size of the exits vs. the amount of funding prior to exit factoring in the average time it took to exit since the first investment:

(Size of Exit / Amount of Pre Exit Funding)^(1/Average Time to Exit)

Based on the ranking of this list which included 200 observations (of the total ~300 exits) we came up with a list of the top 20 most capital efficient exits (excluding life sciences companies). One of the most interesting observations arising from the analysis is the strong presence of of Israel’s top angel investors in these exits – 45% of the exits were backed solely by angels and 75% were backed by VCs and angels

This demonstrates Israel’s angel investor community’s indisputable impact on Israel high-tech

Israeli Exits 2012 2013 2014

In light of the above, we see great potential in Israeli startup companies that have an outstanding founding team with a great idea that are backed by strong angels. The key is being able to cherry pick the standouts that have a great chance of developing into either a full-fledged unicorn or a phoenix. Here at iAngels, we strive to provide you with a portfolio that does exactly that – by working hand-in-hand with top tier angels to do the initial groundwork, we seek to give you early exposure to the unicorns and phoenixes of tomorrow.

iAngels research on this subject was originally published by Globes


Shelly Hod Moyal
Founding Partner, iAngels

Reflecting on Israel’s Strength at this time of uncertainty

This past week in Israel has been kind of crazy. When sirens are going off at midday or in the evening, we grab the kids and run down to the shelter. After a couple minutes, we can hear the big booms of the Iron Domb shooting down the missiles over our heads.

It is bizarre to think that this is the kind of reality our kids are growing into. When my son asks me why we are going down to the shelter, I try to explain to him the sirens are a warning sign for danger, and we have to go to a safe place until it is over. He is only three years old and knows about danger. It is a good time to reflect and think on what we really want our kids to learn, what Israel’s strength really is.

I say it is technology and innovation. Even at times like this, we see the good and think of new ways to overcome the situation. It makes me think of the Iron Domb, an amazing Israeli development, which is keeping us safe these days and has yet to fail us. The remarkable brain power of this country, paired with its inherent will to survive and thrive is constantly fueling innovation and fostering new technologies. This is what we do best.

Last week we were at the Demo Day of the 8200 Unit Entrepreneurship Program, prior to that was the Junction Incubator Demo Day. Every month there are new startups emerging. Just being part of this unique eco system where the sharing of ideas is bringing up new ones is inspiring. The successes of these programs go on to become Israel’s promising new startups. The community is pushing for disruptive technology and for game changing solutions for problems one never knew existed. We export these ideas to the world as our only commodity.

At iAngels, we see a lot of innovative companies, products which are going to change the world and make an impact. We have the luxury of cherry picking from a highly curated and vetted angel deal flow and offer these opportunities to our global investor community. No doubt it fuels me to get up in the morning and drive down to work in midtown Tel Aviv, in a building which has no shelter, and conduct business as usual. I urge you to get more involved in the Startup Nation’s main strength and start investing in Israel’s future, in the most promising startups, together.

Join us to empower the next generation of angel investing at


Mor Assia

Founding Partner, iAngels

How do you like your coffee?

I scheduled a personal meeting with Itai Herman, Askem CEO, as Chairman of iAngels in order to evaluate the opportunity for the platform. 

Askem is a Q&A application allowing users to generate multiple choice questions to the community and gather responses in a quick, efficient, quantitative way in order to make real life decision. This is a fantastic tool for publishers or retailers as well obviously, rather than conducting traditional, costly and long processes of focus groups.

We conducted the meeting from my residence and out of common courtesy, we started off by walking over to the kitchen and making ourselves an espresso, all the while entertaining in small talk.

Itai started talking about Askem and his vision of how Q&A can replace polling for brand managers as they make business decisions around product launches and marketing events. I am always excited to see someone who dares to challenge the status quo and think big. The key ingredient to any successful startup is a strong team, and Itai has definitely left that impression on me, gathering around him people who understand product and branding. It is not a coincidence that he has managed to get some excellent investors on board with him to support his venture such as Tal Barnoach, Joey Low and Microsoft Ventures. To me it was just a reinforcement that Askem is going places. 

As we were going to conclude, Itai shared with me a question he sent on Askem not even an hour earlier. “How do you like your coffee?” with 3 possible answers. He already received over 100 responses from the Askem network, aggregating the answers in a simple, quantitative way, making me smile all over again as I drink my coffee in the morning since. 


I was impressed with Itai and I am happy to join Askem on iAngels.

Join iAngels today to learn more about this unique opportunity:


David Assia
Chairman of iAngels

What you need to know about angel investing

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What you need to know about angel investing

iAngels hosts Gigi Levy at Avenue Capital in NY


iAngels hosts Gigi Levy at Avenue Capital in New York

Israel High Tech is on Fire – You can participate too

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Israel High Tech is on Fire – You can participate too