During 2018, Mellanox Technologies Ltd. (Nasdaq:MLNX) will include over 10 startups in its new seed program. Mellanox, which has a $3 billion market cap, develops and markets communications equipment for high-speed data transmission. The company's investment arm, Mellanox Capital, invests in startups in spheres related to its activity, and is now planning to also expand in the direction of seed-stage startups.
"Mellanox's investment fund has existed since 2009, and was publicly launched in 2014. We're investing in companies at diverse stages, including the seed stage, as a strategic investor, meaning that we're interested in places that are strategic for Mellanox in growth and technology. Last year, we emphasized the early stages more, and we thought it proper to launch a program focusing on the early growth stages," Mellanox VP M&A and head of investments Nimrod Gindi told "Globes." "We plan to call this a program, not a fund, because we regard it as a wider framework. Companies in the early stages don't necessarily need only help in financing. The program we are launching is driven by the investment arm, but in combination with Mellanox's R&D and business development, so that the startups can benefit from the help of a global company."
The program, which will be officially launched at an event on January 7, is described as an "accelerator and support program for startups at the initial financing stage." In addition to Gindi, Mellanox founder and CEO Eyal Waldman, Israel Innovation Authority VP and startup division head Anya Eldan, iAngels partner and head of partnerships & legal Lilach Danewitz, and Renen Hallak, founder and CEO of Vast Data, a software company, will participate in the event.
The program will focus on artificial intelligence (AI), machine learning, storage, high-performance computing, and cloud computing. Is Mellanox likely to invest in a startup that appears promising to it, but which does not operating in the same sectors as Mellanox? "If it's something that we see ourselves growing into in marketing or technology in two or three years, the answer is yes. If it's something like a mobile app, I can definitely answer no," Gindi says.
"Globes": What is new about your program? You could have invested in seed-stage companies before, too.
Gindi: "What's new is the focus. Up until now, we invested in companies at various stages, usually at more advanced stages. What's also new is the cooperation on the operative side - the infrastructure that Mellanox has built for the purpose of supporting startups in the early stages. The needs of a company at the seed stage differ from those of a company that already has 40 employees. That's where we're putting the resources."
What is the budget for the program? How much money is earmarked for investments in companies?
"We're not releasing numerical targets. The budget is part of our regular activity, and we have people, some whose job description is to help startups."
What help will Mellanox provide besides financing?
"There are various ways, such as equipment, time, and access. For example, if there is a company that wants to obtain financing other than through equity, we can accompany it to the Innovation Authority and provide it with sponsorship. In a case like this, it can get priority in financing, because it has sponsorship from an international company. Another example could be a startup joining Mellanox employees in meetings with our customers and presenting to them what it does. In R&D, we'll expose the companies to technologies before they become public and given them access to hardware, software, and people. It's not every day that a startup can sit down with Mellanox's CTO. Our help is beyond money; it is technological assistance and access to the market."
Will Mellanox demand first refusal rights to acquire companies, if and when they reach this stage?
"No. We're not restricting the companies. If something is very strategic, we can acquire the company, but we are not restricting the company's ability to be acquired by somebody else, or in plans to do other things. The startup has to take care of itself. As a company that grew from being a startup, Mellanox understands that this is an important perspective: you have to be a successful startup in your own right. With our help and backing, all the possibilities are open, including the possibility that we will acquire the startup."
Have you set a time for an investment? In other words, after how many years will you exit from the investment?
"We're a strategic fund. Our goal is first of all to support things that will help Mellanox. If something is ready, there can be an exit there, but when you have invested in a company, you can't say after five years, 'It's time to close down the company.' It's not my company. An exit is an option if I don't have a strategic interest."
Published by Globes [online], Israel Business News - www.globes-online.com - on December 26, 2017
© Copyright of Globes Publisher Itonut (1983) Ltd. 2017