Technology incubator Xenia Venture Capital Ltd. (TASE:XENA) is currently raising NIS 14 million through a rights issue, after its existing investors decided to increase their holdings in it in light of its dwindling share price. The company first disclosed its intention to hold a rights issue when it filed a shelf prospectus in April.
Asked if this is a good time to raise funding in the markets, Xenia CEO Anat Segal says, "We have another NIS 5 million in cash. This is actually a very good time for us to raise funds. We're preparing ourselves for tougher times as well, and the cash we have will help us."
Xenia, which was re-launched in 2003 after it was privatized, invests in life sciences, principally medical device companies, IT, and telecommunications. The company has a number of private investors including Segal herself, Roni Einav, Eran Bendoly, Itzhak (Aki) Ratner, Dr. Orna Berry, Chaim Mer, Avi Lior, Dan Falk, Menorah Holdings (TASE: MORA1;MORA5), and law firm Shiboleth & Co.
"In view of the request by the company's parties at interest," says Segal, "we decided to hold a rights issue. The proceeds will enable us to make new and follow-on investments without raising capital from new investors. All the shareholders can take part in the offering. We feel this is fair to everyone."
Globes: Does that mean you will not be bringing in an external investor?
Segal:"Even if we do bring in an external investor, the shareholders have first rights. We listen to our institutional investors."
Segal believes that the incubator model has not merely justified itself but has been adopted by entrepreneurs as the primary route for raising money for ventures at the presentation stage. "We started out three years ago as just another privatized incubator. The field has made a giant step forward recently, with incubators becoming the leading vehicle for seed investment in Israel. That's our business - taking an idea and turning it into a company."
And what about success?
"There haven't been any really important exits, because we haven't been operating long enough. We measure our success by the number of companies that have successfully graduated from the incubator and managed to raise funding from external sources. We currently have 18 companies, of which nine have graduated and all have managed to raise funding from entities such as venture capital funds and others. Eight more companies are also on course to graduate."
Published by Globes [online], Israel business news - www.globes-online.com - on May 21, 2008
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