Benhamou Global Ventures, founded by Jewish high-tech entrepreneur Eric Benhamou, has decided to invest at least one third of its second fund in Israeli companies, and will set up an office in Israel for this purpose. The Israeli office will be headed by Dr. Barak Ben-Avinoam, a partner in the firm, a former CEO of the LabOne incubator, and co-founder of Flash Networks and Prolify.
"Benhamou Global Ventures' first fund made five investments in Israel, but did not make an issue of this, in contrast to the second fund, for which Israel will have a more dominant role. I hope that we'll invest in at least one Israeli company by the end of the year."
Benhamou Global Ventures' second fund has already raised tens of millions of dollars of its $70 million target or higher end-of-year target. It will focus on enterprise IT, which includes infrastructures, security, cloud services, and mobile enterprise networks. It is bucking the latest trend of investing in Internet and app technologies. It chose enterprise IT because Benhamou started his career in it, including a stint as CEO of 3com Corporation, and because the sector does not depend on consumer caprices or marketing maneuvers, which the fund's partners believe are harder to predict than corporate conduct and the success of selling to them.
"A stigma has emerged that enterprise companies suck up a lot of capital," says Ben-Avinoam, "but it's now financially cheaper and more efficient to found enterprise companies than in the past, because of the development of cloud services and open source. In addition, demand for enterprise products has not fallen; it's inflexible."
Ben-Avinoam adds that, in the enterprise IT sector, Israel is especially strong in information security, mobile enterprise, and Internet of Things.
Benhamou Global Ventures will invest in companies' first financing rounds, and it might bring in partners later. One of the fund's unique characteristics is that it charges no management fee. "In our view, the management fee model is bankrupt, and we only work on the basis of success," says Ben-Avinoam. He adds that the first fund held a 'multiples number' for investors.
Benhamou Global Ventures' Israeli investments include Voltaire, Finjan, and Contextstream.
Eric Benhamou is a prominent Silicon Valley entrepreneur. Although he does not reside in Israel, he has an apartment in Tel Aviv, and makes frequent trips to the country. He has also founded a foundation for social investments. He was born in Algiers, grew up in France, and studied at Stanford. He founded a company that merged with 3Com, where he was appointed CEO a few years later, contributing much to its growth. Hewlett Packard Co. (NYSE:HPQ) acquired 3Com for $2.7 billion in 2013.
Published by Globes [online], Israel business news - www.globes-online.com - on May 8, 2014
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