"Startups try to speed-up the proof of concept (POC) process without thinking about the important issues for investors such as, exclusivity and IP," Adv. Guy Lachmann told a startup conference in Tel Aviv.
Adv. Guy Lachmann provided his professional insights at last week’s startup conference organized by Fusion LA Israeli Startups Accelerator program in Los Angeles, the toDay Ventures fund, Pearl Cohen Zedek Latzer Baratz law firm and Bank Hapoalim
"Increasingly more deals are falling through each year due to a lack of understanding of the overseas business mentality," Senior Partner of Pearl Cohen’s High-Tech Group Adv. Guy Lachmann added.
He continued, "In order to facilitate a startups' success it is important to understand the DNA of the strategic body sitting in front of you, are they keen on your technology , your intellectual property, and whether it will create a network of relationships that will essentially generate revenue. There will be several corporations that will talk to you from the outset regarding the first right of refusal and the options, as well as the readiness to be purchased. Investors want peace of mind and are aware that if they invest in your technology and bring you into the company, then the competitors won't snap you up."
The conference, "Working with Enterprises 1010 - the Guide for Startups," was led by Yossi Vinitski, Bank Hapoalim Head of High-Tech, with the participation of Ofer Smadari, founder of cyber security company Luminate Security, which was acquired last year by Symantec for about $250 million.
Smadari said, "There have been instances of individuals leaving big organizations,such as banks, with a certain product and then have discovered that it has not been suitable for the market. In order to undertake a successful Proof of Concept (POC), it is important to understand the market niche and the potential customers."
He added, "The best way to reach them is through somebody connected to you, and it is important that the connection with the people will be 'warm' and not directly through somebody that they don't know."
Intel Capital director Noam Kaiser said, "You have to consider whether your product is mature enough for you to be prepared to pay for it. You must also be able to explain to the investors sitting in front of you what you bring to the table, what you can solve and what distinguishes you from your rivals. Those vital decision makers are confronted by countless numbers of people every day and you only have one chance to make a successful pitch. One of the best ways to get to an investor is to be in contact through somebody that knows him personally in order to push you up his list of priorities."
Shay Michel, co-Managing Partner today Ventures explained that many startups have a tendency to go straight to the large companies and sometimes this is not justifiable. "There is a tendency to rush straight ahead too quickly because they want to see progress, but they miss out on the essence surrounding the fact that startups must be suitable for the market. Young entrepreneurs do not need to be ashamed to bring in medium sized customers. The big customers are good for 'scale up' but also go to the medium-sized and small customers. That is a good way to start. It is important to link up with partners within the particular ecosystem in order to leverage yourself."
Noam Inbar, Orbia VP (formerly Mexichem), which acquired Netafim for $1.9 billion, provided another tip to young startup entrepreneurs. He said, "I think that in Israel there is a tendency not to work with the innovation department out of a belief that they do not have the same business approach. In my opinion, you have very broad knowhow and it seems to me that this is one of the most important things as part of the business's key performance indicators (KPI).
Amir Jerbi, CTO of Aqua Security, which last year raised $62 million, recounted as an example the process that Aqua Security went through. He said, "When we went to the market, we were a small company with 4-5 people, and we wanted to do the POC and run forward. We were lucky that they held us up at the start, otherwise we would have been finished. We got back to work and subsequently found a design partner and began a series of meetings and interviews. We went to companies that deal with open code, presented ourselves and explained how we are creating a solution to their problem, and offered to work together with them. The conclusion is that along the way you must choose the right partner, and when you do it right, you start appearing at conferences with companies like Google and Spotlight. Part of the way to develop a startup is also to learn from mistakes, and you are going to make mistakes."
Published by Globes, Israel business news - en.globes.co.il - on February 19, 2020
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