The great venture capital sea contains many sharks. Another shark, Gilo Ventures, named after owner Davidi Gilo, was added to the pack yesterday. Gilo, who was a relatively anonymous figure in the Israeli business world before his bid to acquire Scitex five years ago, has become a strong brand name. Gilo Ventures, founded at the beginning of the year in Silicon Valley, was slated from the start to invest in Israeli or Israel-linked companies, Gilo explains. The obvious incentive was the high quality of ventures and technology originating in Israel.
Gilo says he considered launching the activity in Israel only at the beginning of next year, but decided to bring the announcement forward because of the security situation. Among other things, he noted his disagreement with Dell Computers founder Michael Dell, who was quoted as saying, “The situation in Israel does not give us good reasons to invest there.” According to Gilo, investment strategy should not be judged over a period of weeks or months, but over years. A long-term investor is much less vulnerable to events such as those we have recently experienced. “I’ve operated in the technology market for 15 years. I’ve been through the Intifada, the Gulf War, the Rabin murder, and terrorist strikes. Despite all these individual events, Israel has continued to exist, build and create high tech companies, large companies that will continue existing in the long-term. In my opinion, therefore, Michael Dell’s viewpoint is fundamentally flawed.”
Gilo has quite a few holdings – and we are referring to actual holdings, worth millions of dollars - in several of the biggest Israeli high tech successes of recent years, such as DSPC, acquired by Intel for $1.6 billion, and listed companies DSPG (traded at a value of $761 million), Vyyo ($944 million), and Zen Research ($385 million). Thanks to these successes, he explains: “I have no need to invest more than $100 million of my own money that I have set aside for the purpose. If more money is required, we will join hands with other funds and investment companies.”
The investment company is managed by Emiko Higashi, who was a senior executive in the Merrill Lynch investment bank, among other things managing the West Coast mergers and acquisitions division.
Gilo Ventures has three branches. Five people are located in Silicon Valley, including Higashi and Gilo himself. Two optical communications specialists will be in North Carolina. The Tel Aviv branch with three or four employees will be managed by Adv. Avi Fisher, a childhood friend of Gilo, who will chair the company, and former Gilo group senior executive Ilan Judkiewicz, who will manage the company’s Israeli activity. Judkiewicz told “Globes” that investments will include companies at all stages of development, including seed and companies with difficulties, with which Gilo has a great deal of experience. Gilo invested in Phasecom when it was failing and turned it into a successful wireless communications company under the name of Vyyo.
The investment company will focus on communications technology companies, with an emphasis on broadband communication infrastructures, switching platforms, chips and semiconductors. Gilo stressed the tremendous added value he and the company’s management team can provide for companies in these fields, due to Gilo’s investment and managerial experience with companies dealing in these exact fields: Vyyo (broadband communications), DSPG (chips), and DSPC (cellular). The Gilo group has the experience, know-how, and many connections to help companies in these areas. Gilo Ventures’ emphasis will be on global strategy. “Part of the time, I managed DSPG from Japan, and on other occasions, I managed companies from geographically remote locations. I’m familiar with global management and that is how I want Gilo Ventures to be managed.”
Gilo does not regard the question of where the company is incorporated as one of principle, but he believes that today the management of a successful company must be located near the market and customers. He himself utilized this concept in the companies he founded, which all had their headquarters in the US. “The main experience we will bring to the companies in which we invest is our extensive global operating experience.”
Gilo agrees that the venture capital market in Israel is saturated, but sees no direct competition between himself and the various funds. On the contrary, he sees room for cooperation. Incidentally, Gilo group sources mention that quite a few employees have resigned from the expanded group in order to join the venture capital funds. Prominent among them are Yossi Sela from Gemini Capital Fund Management and Allan Barkat of Apax Israel. Of course, the range of Gilo Ventures’ cooperation is not limited to these names.
Published by Israel's Business Arena on November 16, 2000