Israeli fund LionBird II will soon make an initial closure of $40 million, sources inform "Globes." The fund is the second by the LionBird group, which invests in digital health and financial services companies. The company is led by brothers Chaim and Itschak Friedman, who founded STARLIMS and sold it to Abbot in 2010 for $123 million. Another partner in the fund is former Abbot executive VP diagnostic products Ed Michael of the US.
The first LionBird fund raised $20 million in 2013, and invested in companies like Tyto, Sweetch, Fundbox, Telesofia, and Genome Compiler.
The Friedman brothers and Michael will invest 15-20% of the amount, as they did in the first fund. They will recruit private investors, family funds, private funds, and possibly also investment institutions. Thefirm has already began making investments from the second fund, based on the amount invested by the three partners. LionBird is a relatively new group, but is regarded as a rising force in digital health investment.
"We were acquired by Abbot in 2010," Chaim Friedman explains in a first interview with the fund managers. "This was the first time that Abbot acquired an Israeli company, and also the first time that Abbot acquired a software company. Suddenly, towards the end of our career, a miracle occurred. We worked under Ed Michael, and among other things, sought out on Abbot's behalf Israeli companies, and followed the development of the digital health field together with them, even before that term had been invented. We saw how Abbot, as a pharma and medical devices company, fit into this."
STARLIMS, which dealt with software for managing laboratories and recording results from laboratory devices, was founded 20 years before that, grew without raising money from funds, and was one of the first biomed companies traded on the Tel Aviv Stock Exchange (TASE). The investors made a handsome profit from the company's acquisition.
"In 2012, we decided to resign from Abbot, after our contract with them expired and the company was split into two: a pharma company and a medical devices company. We had some money from the acquisition, and we thought about what to do with it. Should we invest it all in the capital market? We decided not to. These days, companies get to the stock exchange at a later stage than in the past, and most of their value is therefore created when they are private companies.
"When we started investing, initially as angels, Ed offered to join forces with us, and we created a business with a foothold in both Israel and the US. With time, friends and acquaintances began asking us if they could invest with us. We felt like we were an voluntary investment bank, and we took advantage of the momentum to establish the fund, at first just with people who knew us."
"We didn't develop hobbies"
Friedman relates his ideas about the fund's investment focus. "One of our failures in life is that we never developed hobbies," he says. "So we spent a lot of time understanding the digital medicine market and thinking about where it was going. We decided that we would look for companies that help improve existing business models, and do not require market recognition for a new business model. As a small fund, it is risky for us to gamble on very specific applications, so we look for platforms that can yield a variety of products, based on a real, proven, and difficult-to-imitate technology."
Published by Globes [online], Israel business news - www.globes-online.com - on April 24, 2016
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