Wanaka Capital Partners has raised $40 million for its new found out of the $50 million that it plans to raise by the end of the year. Wanaka is the venture capital arm of Odin Investments Ltd.
Wanaka Capital has marked itself as Israel's first fund targeted exclusively at early stage Israeli Mid-Tech companies. Mid-Tech companies are companies that answer three criteria: technology that is targeted at low-tech, or non-tech industries; relatively small the R&D investments, typically less than $5 million, needed to develop a marketable product; and defendable intellectual property.
Wanaka Capital is run by co-founder Ronen Melnik, a former partner at McKinsey & Co. Wanaka co-founder, Gabriel Pearl was a senior executive VP at Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) and IDB Holding Corp. Ltd. (TASE:IDBH), and founded and is general manager of Odin Investments.
Melnik and Pearl said that they began raising money for Wanaka in September 2006. Pearl said, “We decided to limit the fund to $50 million, even though we could have raised a lot more.”
“Globes”: Why mid-tech?
Melnik: “These are technology products for a non-technology market, such as water and manufacturing. The high-tech industry targets the technology market, and has a narrow window of opportunity. It must spot a trend and offer products ahead of everyone else, especially the big companies. We come from the field of risk management and in the case of mid-tech, the development risk is fairly low because the market is more predictable. That does not mean that we don’t require companies to show us proprietary intellectual property and patents. This leaves a new company with only management risk and reaching market.”
What companies meet your criteria?
“Netafim Ltd., Ormat Industries Ltd. (TASE: ORMT), and both Syneron Medical Ltd. (Nasdaq: ELOS) and Iscar Ltd. when they started out. There are a lot of such companies in Israel, but they don’t get media coverage and they’re not suited for venture capital funds. I believe that if Iscar had approached a venture capital fund 12 years ago, it wouldn’t have obtained investment. We’ve already met about 80 companies that could be candidates for investment.”
Pearl: “We’re a venture capital fund for all intents and purposes. Except that instead of investing $20 million in a company and hoping for a $500 million exit, we’ll invest $5 million and be satisfied with an exit of $30-50 million.”
What fields will you invest in?
“We’ll focus on four core areas: technology for manufacturing; consumer products, especially in the quality of life sector and for the elderly; medical devices, but not stents or pharmaceuticals, which require long and expensive development; and products for the energy, water and infrastructures markets. In our definition of markets, we focused on those that will give companies a low risk profile.”
What company stages will you invest in?
“Early stages, and we’ll aim to reach a 25% holding in a company.”
Published by Globes [online], Israel business news - www.globes.co.il - on July 3, 2007
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