The last few years have mostly been very good for Israel’s technology industry. They also made many tech entrepreneurs and executives extremely rich. Such people, now interested in preserving their wealth, are the target membership of the TIGER 21 group, which is expected to launch operations in Israel very soon.
TIGER 21 is a kind of exclusive members' club, a group that currently consists of about 1,300 people worldwide, who collectively manage over $150 billion in assets. Its members are entrepreneurs, investors, and senior executives with liquid capital of at least $20 million, and willing to pay membership fees of $33,000 a year. They gather once a month to discuss their investments in a discreet, closed forum, and to learn from each other, with the aim of preserving the wealth they have accumulated.
This means that the way they manage their investments is not necessarily in accordance with prevailing market trends. A look at their asset allocation can provide insight into how the members see the markets.
TIGER 21’s founder is real estate entrepreneur and philanthropist Michael Sonnenfeldt (67). The organization was founded in 1999, and currently operates in dozens of cities in the US, Canada, Great Britain, and Switzerland.
TIGER 21 held its annual conference last March in Florida. Guests included former prime minister Naftali Bennett, who gave an overview of Ukraine, Israel and China, actress-entrepreneur Brooke Shields, who spoke about the position of women over 40, and the late legendary investor Sam Zell, who shared insights about the real estate market.
"The members of our network are mostly entrepreneurs who’ve made an exit, others who still own their businesses, and also people in senior management who have retired," explains Sonnenfeld in an interview with "Globes". "When they join us, they join a group, generally on a geographical basis," he says, and takes the opportunity to announce that "we are in the process of opening a group in Tel Aviv."
"In New York we already have dozens of groups, three in London and two in Zurich. Each group has 12-15 members who meet one day a month, 11 times a year," he adds.
Each group is headed by a professional chairperson who is a group member; in Tel Aviv this will be former Microsoft executive and start-up investor Beny Rubinstein.
"In the past, the main topic the groups discussed was the moment of transition for people who were very successful and then sold their business," Sonnenfeldt says. "This is a life-changing event that’s perceived very differently by others: the people around them think 'how lovely, life is good, everything is nice and easy', but for them, suddenly, they are no longer managers and entrepreneurs, and their focus is on preserving their wealth.
"Previously, they were focused on building a business, and this is different. Over time, our agenda has expanded to include people's legacies, and the question of how their children will learn from them but not be affected by their success, as well as their effect on society as a whole. The world has become more complex, and so strategies for wealth preservation have as well. People share these challenges in their groups and everything is kept confidential. Our members cumulatively manage over $150 billion - we’re not the size of the largest banks, but we’re relatively large. But we’re not asset managers - members manage their assets for themselves, and we represent an infrastructure."
"We mapped which cities to invest in, and Tel Aviv is on the list"
Once a year, each member presents their portfolio and its performance to the group. "At first, people usually say, ‘That won't happen,’ but the value of learning from the group and from everyone's perspective, about the advantages and disadvantages, wins out. Many people see this as the most important thing we do," says Sonnenfeldt.
He adds that the organization’s size makes it possible to create subgroups with common interests. "Let's say there is a member in Tel Aviv who’s interested in investing in climate issues, or in crypto. So, they join a subgroup in that area," he explains. "We also like to travel together, so we organize trips for members, and in this case, our next trip is to Israel."
Philanthropy is another topic discussed by TIGER 21 groups. Sonnenfeldt himself recently donated to establish the Goldman Sonnenfeldt School of Sustainability and Climate Change at Ben-Gurion University of the Negev.
Why did you decide to operate in Israel?
Sonnenfeldt: "Israel is quite unique because we have many members who have family or friends here. Many of our members are familiar with the ‘Startup Nation’ and the entrepreneurial environment in Israel. We mapped cities around the world where people invest, and Tel Aviv was on the list. It took us a while to go beyond Europe, but now we are in a position where we can expand globally, towards Tel Aviv and Singapore. I know quite a few successful Israelis, and each has to balance between domestic and foreign opportunities and challenges. A network like ours connects them to views that could not easily gain access to. This is a community like no other."
Who can join TIGER 21?
"The most important thing is that our members must have good character. They need to be able to leave their ego at the door, because each of them was a leader of an organization, but they also need to know how to participate in a group sitting around a table. The goal is peer-to-peer learning. Our group members manage personal wealth in the range of $20 million to $1 billion, with the average being a little over $100 million."
What do TIGER 21 members think are the best investment channels today, given the macroeconomic environment of rising interest rates, and an expected economic slowdown?
"It’s important to note that we’re not investment advisors. We summarize our members’ allocations, and look at their collective wisdom. The unique thing about our members’ portfolios, and perhaps not surprisingly, is a dominant allocation to private equity, shares in public companies, and real estate, which together usually add up to 75%-80% of the portfolio [77% as of the first quarter of this year - S.H.V.].
"Our members are all great entrepreneurs and they want to be involved in things they themselves understand. Over the years, real estate has been the number one category. The main change in the last fifteen years has been the increase in private equity. In public companies, it’s mainly about investing in indices.
"On the other hand, our members have about 11% in cash. In historical terms of high-net-worth individuals, this is a lot. So, if there is a slowdown, they won’t have to liquidate assets during a challenging period. Investment in fixed-income products has decreased, and the investment in hedge funds also isn’t large."
What about technology stocks, which have performed strongly in recent months?
"Obviously in the technology sector there were headwinds from the interest rate hikes, because while this sector is relatively less leveraged, valuations always look at future events, and when interest rates rise, future value falls.
"However, when you consider the growth potential of start-ups in areas like AI, health, climate, mobility - that’s where our members get excited about investing. Another factor was the US banking crisis; SVB gave loans to many tech companies, meaning that good projects financed by SVB will still happen, but with other sources of financing, and that creates opportunities for investors."
Is AI also a hot topic among your members?
"At our monthly meetings, we talk about what’s changed on the landscape, and of course AI is one of the most talked about areas. We also bring in experts from all over the world."
Published by Globes, Israel business news - en.globes.co.il - on June 26, 2023.
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