US Battery Ventures associate Adam Boehler has told “Globes” that Battery Ventures plans to expand its business in Israel, and invest in additional high-tech companies. He added that representatives of the fund would visit Israel on a quarterly basis to maintain close connections with the companies trying to raise capital, and with entrepreneurs trying to found companies and find investors. He stated that Israeli high tech was and remained attractive to Battery Ventures: “I was in Israel at the end of last month, and I, or one of the partners, will soon visit Israel again. We’ve invested a lot in successful Israeli companies, and we believe that these past successes can be repeated.” Boehler was referring to Seabridge Networks, formerly Radnet, which was sold to Siemens (NYSE: SI; XETRA: SIE) and Newbridge Networks for $75 million.
Battery Ventures currently has investments in two Israeli companies: Kashya and Veraz Networks. The fund also invested in Sepaton (formerly SANgate Systems), but decided not to participate in the company’s most recently financing round, following a legal dispute.
Founded in 1983, Battery Ventures manages $1.8 billion in capital. General partners Kenneth Lawler and founder Rick Frisbie manage the Boston-based fund, which is one of the leading East Coast venture capital funds.
”Globes”: Does Battery Ventures plan to allocate capital specifically to Israeli companies?
Boehler: ”I don’t think we’re planning to allocate a specific sum for investments in Israel, but we certainly plan to look for more investment opportunities in Israel. In general, Battery Ventures invests according to opportunities. If we find good companies in Israel, which we believe can succeed, we’ll invest in them.” Boehler says that the fund plans to meet as many entrepreneurs as possible, in order to compare them with US companies in the same sectors. “What we’ve seen up until now is that Israel has a great many good opportunities for us,” he states.
Doesn’t the geographic distance prevent you from finding the really good opportunities?
”It’s true that its easier to find the good opportunities when you’re nearby, but I believe that frequent visits and keeping in close touch can also help us to avoid missing opportunities. We take care to stay in touch with people here who know the market. Israel is a small place, and it’s easy to find out about interesting companies. We feel that we’re inside the Israeli dealflow. Up until now, we’ve been exposed to promising opportunities, and I assume that won’t change.” Boehler explains that Battery Ventures also maintains close connections with local venture capital funds for purposes of joint investment.
What kind of companies are you looking for, in which fields, and at which growth stages?
”It’s hard for me to answer that question. Battery Ventures is looking for good opportunities. We’ll certainly invest in companies’ first capital raising round, and definitely in companies in the later stages. That goes for all sectors. Battery Ventures doesn’t deal in the life sciences, but we’re very interested in IT and telecommunications companies. Where other sectors are concerned, I can say that we usually invest in more mature companies, which already have products and customers, and sometimes even revenue. Investments in companies in the earlier stages are usually in markets we believe are about to become the focus of attention. A new field in which we invested only recently is media content and infrastructure. We believe that this sector will soon experience rapid growth. The number of broadband and TV and video on demand users will make these fields very profitable.”
Boehler says that Battery Ventures believes in the people who make the companies more than in sectors or growth stages. “One of the outstanding things that you can say about Israel recently is that it’s clear a great many entrepreneurs who have already done it once are doing it again for the second and third time. There have always been interesting technology companies here, but experience was lacking. That has now changed, which is making Israeli companies more attractive. They know how to do it better.”
Do you prefer investing in Israeli companies to European companies, for example?
”Although Israel seems more distant, we feel that the mentality of Israeli entrepreneurs is closer to that of Americans. Many of them have worked or studied in the US. There are similarities that make cooperation easier.”
Don’t the political problems worry you?
”Political problems have little effect on companies. Since Israel is a relatively small market, companies turn to the US, so when a terrorist attack takes place, it doesn’t really affect the markets. The terrorist attack in New York, on the other hand, severely affected the markets. Everyone just stopped buying.”
During Boehler’s most recent visit to Israel, he attended the Homeland Security Conference 2004. Like other investors, he contemplated whether Battery Ventures should invest in the field.
Is homeland security a real field that will grow, or is it only hype?
”It’s hard for me to answer that. It’s not a conventional sector for venture capital. On the other hand, there’s a great deal of money in it, which is hard to ignore. Like other venture capital funds in the US and Israel, we’re hesitant, but we’re checking it out. As in any other new field, we’re trying to keep an open mind, and consider any opportunity. If we find the right companies, we’ll do it, and soon.”
Can you estimate in how many Israeli companies you’ll invest over the next year?
”There's no set limit but we're considering opportunities. We think that, more than ever, this is a good time to invest in Israeli technology companies.”
Published by Globes [online] - www.globes.co.il - on June 7, 2004