"I see companies from all over the world, and Israeli companies have an abundance of creativity when it comes to IP. They're quick, on the ball, global and original. Israel most certainly has not run out of steam when it comes to technology," says Dror Nahumi, who three months ago joined veteran US venture capital fund Norwest Venture Partners (NVP) as partner, and focuses on investments in Israel, in an exclusive interview with "Globes." Nahumi has worked extensively in both the US and in Israel holding various senior positions at companies such as ECI Telecom, I-Link, Bell Labs and AT&T Inc. (NYSE: T). NVP is due to open an office in Israel in 2009.
Globes: Now of all times? The leading US venture funds have had offices here for years.
Nahumi:"Norvest is a fund that moves slowly. The timing is coincidental. We've been considering this step for nearly a decade now, and it is being taken with the long-term in mind. The fund is in the process of becoming a global fund; the onset of the crisis came just as we were in the middle of implementing a long-term decision. In a certain sense, the crisis has not affected the implementation of this decision."
NVP, which is headed by managing partner Promod Haque, manages $2.5 billion and has invested in a total of 450 companies since 1961. The fund invests in the software, services, communications systems, semiconductors, components, media, and consumer product industries. Among the companies it has invested in are Tivoli (acquired by IBM), Open-Silicon (acquired by Unicorn Investment Bank), Actel Corp. (Nasdaq: ACTL), Cerent Corporation (acquired by Cisco), PeopleSoft (acquired by Oracle), and Siara Systems (acquired by Redback Networks). NVP has 16 partners, and it is currently investing from its tenth fund, which was raised in 2006 and manages $650 million. The fund has also invested in a number of Israeli companies - Qumranet Inc., which was recently acquired by Red Hat Inc., Veraz Networks Inc. (Nasdaq:VRAZ), Double Fusion, ConteXtream, Timebridge , and Unisfair.
More haste, less speed
Globes: Why did you wait?
Nahumi:"Unlike start-up companies, we believe that in venture capital funds, more haste means less speed. You don't just disregard 47 years of experience on a whim. There's no reason to be in a rush to be the first or even the fifth fund in a new geographic region or field. We prefer to get it right and work methodically, and we don't necessarily look for speed."
How did you manage to land the prestigious role of partner with one of the world's top VC funds?
"I knew Haque from our joint membership on the Veraz board, and the dialogue between us was constructive. I started work at the fund last year in order to get to know it and become known there. The appointment wasn't confirmed until the end of the trial year."
NVP does not allocate funds to specific geographic regions or fields, so the investments in Israel will also be made from the general fund. This is an approach which not all funds follow. Greylock Partners, Sequoia Capital and Benchmark Capital, for example, have all raised designated funds.
"We believe the right way for us is to invest from the same fund with the same partners who manage the investments at the companies themselves," says Nahumi.
Do you have confidence in a model which has been coming under fire recently from every direction?
"There have been times in the past when there were no offerings, but they will return. No one knows what shape this will take, but in the future it will be possible once more to bring companies onto the public market. Every period has a different style. We are in no hurry, even if it takes another four years.
"I came from the world of technology, and I believe in the future of the field. Anyone who doesn't would be better off not working in venture capital. In the 1980s there were no cutting-edge technologies, and everyone was already saying that venture capital had no future. Then came the client server, which created a new world and a wave that has continued right up to today. What will the next wave be? Technology has always moved the world in waves lasting 10-20 years that boosted the economy. That won't change.
"Norvest has a multistage strategy. It invests in companies at all stages, with a publicly-stated preference for early-stage companies in a range of fields, except for healthcare. We recently appointed a partner who specializes in investment in mature companies, largely because we had seen opportunities in India."
The fund, says Nahumi, has not been in any rush to invest in the field that has been a big hit of late - cleantech. "We don't know what we don't know," he says by way of explanation for this. "The models for an exit in this field are still unclear. However, I presume that in future we will be more active in cleantech."
Published by Globes [online], Israel business news - www.globes-online.com - on November 30, 2008
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