Group 11, one of the few venture capital firms active in the Israeli market that publishes its results, reported a 14% decline in the value of assets between the end of 2022 and the end of 2023. At the end of 2022, Group 11’s fifth fund reported assets valued at $245 million, whereas the valuation at the end of 2023 was $208.7 million. As is customary in the venture capital industry, the firm charged a management fee, totaling $3.5 million, 1.6% of its assets. The fund also reported income of $14 million, apparently from the sale of its shares in Papaya Global.
Following the press coverage that Global 11 founder and CEO Dovi Frances received, in which the results were described as "a disappointment", Frances posted a rebuttal of the criticism of his fund’s performance on LinkedIn. "Not a single shekel was lost by the Group 11 fifth fund, and its value on the books, even after the conservative revaluation (by me), is not lower than the amount raised for it in 2021 - $198 million. We live in an interesting world in which, in the (targeted?) yellow press, a quarterly revaluation carried out by a venture capital fund manager becomes ‘a disappointment’, ‘a loss’, ‘two years that the investors will want to forget’," Frances wrote, adding that in the coming years the value of the assets in the fund would rise and fall, but that what was important was the liquidity events measured at the time of a sale or flotation.
As it looks at present, even the sale of the fund’s holding in Papaya Global, although it took place at a discount of 90% on the company’s valuation in 2021, still gave a profit, because of the fact that the investment was made at an early stage.
Most funds post decline
Group 11 Is not alone in this context: most venture capital funds have posted declines in the value of their assets in comparison with 2021 or 2022, with the IPO market stagnant, but most venture capital funds investing in Israel, among them huge ones such as Pitango, Viola, Insight and TLV Partners, do not disclose their performance.
This remains hidden in the books of the limited investors, generally university investment institutions, pension funds, and Israeli insurance companies. The funds boast of their new investments in new companies and young entrepreneurs, but it is very difficult to estimate their performance when the numbers are never shared with the public, despite the growing demand that pension funds in Israel should invest in them.
According to venture capital database PitchBook, Group 11 raised its fifth fund in 2021, and has so far invested from it in eight companies, among them Masterschool, Healthee, Sorbet, Equitybee, and Sunbit, which is considered the fund’s greatest success so far, with the possibility of an IPO within the next few years. PitchBook also reveals that Group 11 closed its sixth fund at the end of February at just $90 million.
Published by Globes, Israel business news - en.globes.co.il - on April 8, 2024.
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