Lgilab

LgiLab's Outbrain raises A round

Today we are happy to announce that one of our LgiLab portfolio company Oubrain is raising an A round with LightSpeed Venture and Gemini.

Outbrain provides smart blog rating and their business model will be built on their capacity to deliver powerful recommendations. Smart blog ratings provide really useful informations both for the readers and the blog/content editor.

This is the first Lab company to "graduate" to the A round stage after have been funded in seed stage. The purpose of the internet lab is precisely to fund companies until they reach a critical milestone and require more funding provided by Gemini and LightSpeed.

The news has also been covered onTechCrunch

Technorati tags: rating, blogs, techcrunch, lgilab

2007: a year of internet seed investment in Israel

TheCoils has a good post (in hebrew) that gives an overview on what happened in Israel regarding internet seed investments. 2007 was a very active year. Way more than 2006. I expect 2008 to be also an active one but many of those early investment will have to prove (including for our own portfolio companies) that a sustainable model is in place.

The interesting part of 2007 was that different models of investment were established in Israel and as TheCoils say, there is no Israeli VC that has not (tried to) put in place a special seed program to address correctly the internet companies.

If you can't read Hebrew there is a great table recapitulating the investment operations made over 2007 (click above to enlarge). The Internet Lab proves out to be one of the most active internet seed programs there. We are working very hard to make it also efficient and 2008 will be important for us in that respect.

Another trend i notices is that appetite from foreign investors (with no representation in Israel) for israeli startups: Mayfield, Spark, Mangrove (Zlio), Accel but also power angels Peter Thiel. And probably soon more (i heard about a deal or two coming up)

An important thing to spot is that many startups did not receive funding and probably won't. This is not necessarily a bad news: you do not always need VC money to succeed and you can build a very nice company without that (for example with angel money only). You can find some of those startups here

Finally 2007 was quiet in terms of M&A activity in Israel: all the attention was of course on Quigo (disclosure we invested in the new company of the founder of Quigo, Outbrain) that sold to AOL for 300+ m USD. Yedda was also acquired by AOL.

TheCoils should probably add also dPolls that was acquired by Toluna. 

2008 will reserve many opportunities for M&A as many startups will hit some nice milestones and some won't be able to pursue but still offer some nice assets to be acquired. The question will remain: Are we able to build giant internet players in Israel? I am not sure we will have the answer in 2008. Actually i think we won't. We'll need more patience for that.

2007 was a good year for the Israeli internet ecosystem and i think we are on a good learning curve. I am a bit concerned by the lack of developers and good wed design guys. But i am sure this will change soon. Really look forward for 2008

Technorati Tags: thecoils, internet, vc, startups, seed, investment

Why a seed round can make better sense than an A round

We recommend you this read from VentureBeat "When seed funding is better than Series A".

We could have written exactly the same this since this is precisely why we created the internet lab. A few quotes here

...So why do entrepreneurs think they need so much money right out of the gate? Some seem to be attempting to finance their way to profitability, but more often than not they think they need to ask for several million to get the attention of VCs. It’s become a bit of an urban legend: VCs won’t take an entrepreneur seriously if they ask for less than $5 million. That tall tale belongs in the archives with the one about how alligators live in the sewer system...

...By securing only as much capital as they initially need in a form of a seed round, entrepreneurs do themselves a big favor. First, assuming they take the seed funding as a bridge round which will convert into an eventual A round, they suffer no dilution. Second, they ensure themselves a much better valuation when they do eventually secure an A round because they have reduced one or more key risks during the seed period. Third, with this small amount of money, the entrepreneurs can get more insight and information on whether their idea is worth investing their own valuable time in before they have to make the multi-year commitment that comes with larger investments.

Announcing our 5th LGiLab investment: StyleShake

We are happy to announce our fifth LGiLab investment in StyleShake today.

For now we can't say much about the company but StyleShake is best described as an e-commerce bespoke fashion brand that operates in the UK and Israel. Apart from garment design the service has strong community identity.

The project is lead by Iris Ben David, CEO & founder who worked with top international clients on varied award winning Internet projects. She has over 10 year of international experience in various fields of new media and online advertising.

The team is also composed of

• Romina Karamanea – Creative Director, award winning bright fashion designer, who was recently selected as one of the 100 most promising worldwide fashion designers. Her work has been covered on many prestigious magazines and her recent collection has been shown on London and Milan fashion weeks.
• David Yanovsky – CTO, Chief software architect and Innovator. Formally founder and CTO of Jetro Platform. Before that, he was the CTO of RunOnWEb, San Diego. David Brings to StyleShake 15 years of comprehensive software industry experience.

The company is in stealth mode but will be soon offering a great innovative service. The idea is quite powerful and we look forward to see how it is going to be adopted by consumers.

In addition to StyleShake, LGilab has invested in Bp Tech Interactive Technologies, Vestopia, OutBrain and TimelessCities

More things are on the way. Stay tuned.

Technorati Tags: styleshake, lgilab, vc, israel, uk, fashion, internet

VesTopia launches in private beta, invitations left

VesTopia, one of our portfolio companies (named until now Increditrade) , just launched their private beta, and we are very excited about it.

We have said much so far about it, on purpose. Their service actually lets you follow, in real-time, the real transactions and holdings within the personal portfolios of professional investors. All is done in a completely transparent mode, and while you get the pure transactions, you can also read about the strategies and opinions in the Investment Directors' blogs, and get alerts in RSS, SMS, email etc.

In the screenshot below you can see the real profile of one of the Investment Directors, Mike Gooson. You can see more pics and previews here

VesTopia are currently in a private, invitation mode only, but they still have some beta invitations left. So if you're interested, Click here or use invitation code LGI1ST in registration page

Many more exciting features are in the pipeline so stay tuned for the public beta and for great announcement VERY soon!

Technorati Tags: vestopia, startups, investement, portfolio

LGiLab invests in OutBrain and Timeless Cities

Today we are announcing two new investments with the Internet Lab of LightSpeed and Gemini. Number 3 and Number 4.

The news just broke on TheMarker by Raphael Fogel (website and newspaper).

Unfortunately there are some imprecisions i will try to highlight here. Both investments are not by Gemini as the Title mention but by The LightSpeed Gemini Internet Lab.

OutBrain

We made an investment in OutBrain (the URL in TheMarker article is not working at the moment and there is a typo on the printed magazine..) a service to deliver personnal content recommandation with a secret but really innovative business model. Yaron Galai is the founder of OutBrain (with Ori Lahav from Shopping.com) and Yaron is probably one of the savviest Israel internet entrepreneurs. He co-founded Quigo, a very successful challenger to Google Adsense in the USA. Since i am a heavy blogger, i hooked with Outbrain idea and business model right away, just like my partners. The very young company has already a web service composed  that will evolve very soon.

I’d like to precise that the information in TheMarker regarding the amount invested jointly with other investors in OutBrain is not correct (“about a million dollar”).

OutBrain provides a rating system you can use directly in Bloglines and Google reader from Firefox and let you embed on your blog you best rated blog content (look on the right of this blog for the widget). But this will be more powerful than that and the secret-for-now business model is really smart. You can also read their blog

Timeless Cities

We also made an investment in Timeless Cities which will provide a 3D immersive world coupled with original social networks features where we invested 1 million dollars. Yes i know it sounds like Second Life, but the concept is very different and very focused to a simple adoptable idea. The project is the brainchild of israeli artist Doron Nesher and has Michael Weissman co-author of the best selling book The Paradox of Excellence as CEO. The company based in Silicon Valley, is still in heavy stealth mode and hopefully we ll be able to tell more very soon.

Our PR is available here for download

The interesting part is that both those projects are located in the US. The Internet Lab is also committed to invest in internet projects lead by Israelis abroad.

A lot has been going in the lab since we started. Our current portfolio companies, Bp Intech and Increditrade are making great progress and will be able to offer soon the service we all expect.

We have met many companies during the past months, and we will have more announcements very soon.

PS: the news is already on some blogs and alarm clock has already caught the news (thanks Jon, you are fast!). Update: it just got also in Mashable

Update 2: the news just made it in TechMeme, between TechCrunch and NYTimes

Tags: lgilab, internet, israel, outbrain, timeless+cities, techmeme

No, LGiLab is not an incubator

Since we receive the question/comment every other meeting, i thought it was important to precise that LGiLAb is not an incubator (“Hamama” as we say in hebrew)

So let me precise what i mean by that: LGiLab is a joint venture of two funds dedicated to invest in israeli internet startup at very early stage. So far nearly no difference with an incubator and maybe the “lab” expression combined with “very early stage” can bring some confusion.

We are providing initial cash (up to a million dollars) to entrepreneurs to start off quickly their business and prove there is a good market feedback before taking an option on investing further. We are not hosting companies, or providing vertical services such as HR, marketing, finance, legal, which is what an incubator also does.

However we are trying to work with our portfolio companies and help them in specific issues

• recruiting some key employees
• review regularly their activity
• access to specific internet companies
• open doors here and there by leveraging our network

But this is not done on a full time basis and certainly not a by a team dedicated to it (i am the only full time personn on the internet lab).

We are very close to the way angels work with their companies, bearing in mind we are looking a step further and try to help our company grow enough to get to an A round.

If you are an entrepreneur what you should know is that the Internet Lab has a format of investment that can help you get quickly some money so you can run your company as fast as possible to a milestone of success.

Look forward to questions/comments if any

 

Can you build a world class winner without being in Silicon Valley?

If you are an entrepreneur i urge you to read this post by Saul Klein, current VP at Skype and recently appointed Venture Partner at Index Ventures.

He explains how and why internet giants can be built out of the US (this is already the case). He even mentions Gemini in is examples of supporting VC to this new wave.

I think his analysis could have been totally extended to Israel where what is missing most is not so much the entrepreneurial culture, the technical know how, or VC structures but the understanding of what it takes to build a true consumer internet play.

I believe also this is changing. There are already signs of it (ICQ and Shopping already did it) and some companies are on a good way (MetaCafe could do great for example) and there is a list of new web israeli companies that start to get there.

What is certain is that innovation in internet is no longer the monopole of some happy few graduates from Stanford or Harvard. And big players start to be financed in Europe and also in Israel.

Tags: saulkein, indexventures

Announcing LgiLab second investment: IncrediTrade

Today we announced an investment of LgiLab in Increditrade. This is our second investment since the creation of the Lightspeed Gemini Internet Lab (first was BP inTech). (Ofer Hi-Tech where the idea was born took also a minor stake). Increditrade will provide a range of services for simple retail investors that seek simple solutions and powerful information to make effective investment decision on financial markets

IncrediTrade empowers retail investors to make better investment decisions by leveraging reliable information in a simple and transparent format, which until now has been available to professional investors only.

The opportunity is great. The idea (we cannot disclose right now) is purely outstanding. The team (picture below of founders Assif Stoffman and Guy Hirsch CEO) is strong and brings heavy expertise both in investment fields and in internet marketing (Eran is part of the team).

We cannot say much right now since the company is in stealth mode and service will be released later this year. But i can tell you it is going to change the way investments are made. The challenge is big though. Making it in the financial world requires a lot of sharp efforts. We will work hard at LgiLab to make sure Increditrade gets the best support.

At this moment all you can do is register to their temporary homepage to get an alert when the service is released. 

I will join the advisory board of Increditrade along with Dan Ciporin .

• You can download our press release here
• More on themarker (hebrew) and thecoils (hebrew)

 

 

Why we do not sign NDAs

We are often asked to sign NDAs (confidentiality agreements). We never do that and there are good reasons.

Jeremy Liew at LightSpeed Blog, points to two excellent posts on why VCs do not sign NDAs. i strongly advise you to read those

As far as i am concerned, if i had to through NDAs each we receive a new company, then i would need to do that as a full time job. I would add that one of the core assets of a VC is its reputation. Serious VCs can’t afford to break that by disclosing information on other deals, in particular to its portfolio companies. Quoting Ask a VC

Reputable VCs, however, aren’t going to go around town blabbing about your plans. Besides, if I pass on your deal, I really don’t see the reason why I’d want to talk about it.  And if I fund your deal, I'm certainly not going to do anything to injure my investment. 

Eventually, i would say this, the success of a project is very rarely related to the idea itself. I believe it is more a question of execution, people and….chance. Things you cannot explain in a business plan and that certainly cannot be replicated and disclosed…

 

Video interviewed on TheMarker TV on our first investment

Thanks to Guy Grimland for the interest in interviewing us (Bp inTech entrepreneurs, our first investment and me). TheMarker TV is the online tv of the news paper themarker.

In hebrew only

 

Video - Is this the life of a VC?

Interesting point of view. Just a little caricatural. Thanks to Guy Grimland for passing

 

LightSpeed Venture Partners launch a new VC blog

Happy to announce that LightSpeed Venture Partner is just joining the community of VC blogging. It is hold by Jeremy Liew, now partner at LightSpeed previously MD at Netscape (other partners contribute too).  Rss feed is here

As i said in the past (read 10 reasons a VC should blog), there are many reasons VCs should blog. Gemini already do it, LightSpeed now does it and Lgilab also. Reading on LSVP blog on why launching a blog now

The truth is we debated the idea internally and ultimately decided we need to do a better job of two things:

1. Sharing our personal ideas, beliefs and lessons with the community of entrepreneurs we are in the business of serving.

2. Engaging on a consistent basis with entrepreneurs and opening up direct channels of communication.

 

LGiLAB at LeWeb3 next Week

Yoni and I will be attending leweb3 conference in Paris next week, which is certainly the largest web event in Europe this year (1000 attendants from 30 countries and massive PR coverage) and probably one of the best since january 06.

Lots of Israelis are attending. I will personnally be involved in 2 panels and that will be too a great opportunity for networking.

Let us know if you are also there.

10 reasons a VC should blog

I orginally posted this on my personnal blog. But Yoni suggested this should appear also here. Actually a challenging follow up post will arrive soon. stay tuned and read that first.

_____

I am often asked the question “what is the benefit of blogging for a VC?”. To be honest for me this has become so obvious that i did not ask myself this question.

I started blogging before i join a VC but as i did, i started to write more about Venture Capital as i discover this industry from the inside. We even decided to launch a blog for LgiLab. So i would not say starting a VC blog came because i thought of the good reasons first. It just came naturally.

As i got into the blogosphere i discovered many VCs run a blog. And most of the time they are really EXCELLENT. Curiously in Israel, not enough VCs are blogging (Gemini is well represented)

With retrospect here are, i believe, the TOP 10 reasons a blog should blog.

 

• 1. Gives a human voice to your VC: VCs are mostly considered as arrogant and “know it all”. A blog is your opportunity to express your human side and give a true down to earth feel to your readers. Specially if you write not only about VC (a VC does that really well)
• 2. Helps entrepreneurs prepare their meeting: you can’t even imagine how many entrepreneurs start a meeting by telling me “we read your blog”. I think this is great. By knowing how i think and what i like or don’t they can fine tune the meeting and make it better. Not meaning this is enough
• 3. Helps you with lead more efficient meeting: By helping entrepreneurs preparing better their meetings your allow yourself to run more efficient encounters. If for no better reason you can save the 5min intro on yourself.
• 4. A window to outstanding network: with the time, you will attract more readers and some of them, probably VCs and industry experts, will contact you and eventually meet you. I found those contacts to be outstandingly qualitative
• 5. Keep touch with internet reality: with a food in a blog you are closer to the internet. You understand better what user generated content is about and you are more tempted to keep up to date and try all those new services.
• 6. Create different relation with your colleagues: your colleagues will discover another you and will probably be curious to read you.
• 7. Help create some true differentiation/authority: What is the uniqueness of a VC? i believe the people. And what is the best way to showcase your uniqueness? By expressing who you are. I think a website is too static and too cold to give the right impression on who you are.
• 8. Get a Free PR Channel: i discovered that many journalists and other opinion leaders read my blog. Sometime what i write here and there is re-used (like here). A blog is a communication channel. A powerful one, free and instant one.
• 9. Source new deals: eventually some entrepreneurs will consider your blog as “special” entry door out of the official channel. I receive a big chunk of our deal flow through my personnal blog.
• 10.Help you structure your thoughts: VCs are overwhelmed with new ideas, articles, news, business plans, ..I found out that writing about something helps you clear out the fuss and produce more articulate thoughts and feedbacks (specially in meetings)

Bonus reason: Step up to the next generation before it is too late: my bet is that most VCs will have a blog within 2 years maybe less. Just like emails became popular, blog will become standard. So don’t be last and show you’re fast in adoption

My recommandation: if you still don’t have a blog, START ASAP. Like Biking, the only way to learn that is by making. If you want to know more on how to start, read blogs here is a good selection of VC Blogs

But like any communication channel it requires time, dedication, persistancy and regularity. One unique thing about blog is that you have to be open to conversations, as comments will come, and be ready too to criticism and sometime personnal attacks. I can live with that.

In a word a blog is a good investment for a VC

I recommand this complementary reading by BeyondVC

 

 

No, LightSpeed Venture Partners and Gemini Israel Funds are not merging!

The questions come back too much: I am oftenly asked whether LightSpeeed Venture Partners and Gemini Israeli Funds are on the way to get married. The answer is clearly NO. Those are 2 separate VC funds that decided to launch a common programm called LGiLAB dedicated to jointly fund young israeli related internet startups. That’s all. Both funds have their own separate agenda and separate teams.

LGiLab appraoch is a bit unusual and generates a lot of questions (justified most of the time). Partnering with another fund is not unusual though, many deals (specially A/B/C rounds) happen by VCs joining others in the investment. The only difference here is that we have chosen to do it persistently and at very early stage in a special frame of cooperation.

 

 

LgiLab / CRV comparison in Red Herring

A couple of weeks ago Charles River announced a seed programm called “QuickStart” in many ways similar to what we do at LGiLab (with a few differences). RED HERRING picked the comparison and published it in a good article. The only thing the article is not precising is that we starting 6 months before CRV.

 

 

Off to Silicon Valley/San Francisco

Blogging will slow down the next 10 days. I am off to California to attend Web2.0 Conference and IsraelWebtour as well as many other events and meetings. I will of course meet with Daniel Cohen, Gemini Partner in the valley as well as LightSpeed Venture team.

This is my very first trip to Silicon Valley. Look forward to see and feel this world i am reading/writing about everyday day for a long time now.

If you are around and want to meet up contact me at ouriel (at ) lgilab – dot – com. © Andre Pogodin - FOTOLIA

Announcing our 1st investment: bp Interactive Technologies

What a great 3rd post! We are announcing our first investment today. 6 months after the launch of LGiLab we are proud to have completed our first operation in bp interactive technologies, a new very innovative fantasy sport service.

The very young founders, Tal Ben Simon and Tomer Pascal (picture below) impressed us from day one by their deep understanding of this huge industry, by their professionalism and their execution skills. We can’t say much for now about the company which is preparing a great new service. Here is a hint:

The company's first project, currently known as "playSPEX- The Sports Exchange", will revolutionize the way sports fans and fantasy sports players from around the world enjoy the exciting feeling of being "part of the game". 

The company is still very young and the product will be launched next year. Now for us the real challenge starts as bp intech will have to face competition with heavy players like ESPN, Fox and Yahoo. We believe there is room for an innovative player, at least we will work hard on it to proove it.

The english Press Release is here and the hebrew one is here. Guy Grimland from The marker already covered the story (in hebrew) as well as TheGlobes. More also on the AlarmClock and Thecoils (hebrew)

Expect more soon. 

The LGiLab model inspires other VC funds

I think that when the Internet Lab was created back 8 months ago, we were anticipating some kind of change in the way new internet projects should/could be funded mainly because cost of technology is lower and that with less money you can test market validation.

I remember at the beginning it rose a lot of questions/interests and also doubts from all sorts of players (it still does). But with the time we believe we have a great model. Apparently we are not the only one to think that way.

We read this morning in TechCrunch, that Charles River, a very respected Venture Capital Firm in the US has launched “Quick Start” on a very similar model.

Quick Start, they are looking to invest relatively small amounts of capital ($100k - $500k) in very early stage companies that have little more than an executive summary, a few powerpoint slides and maybe a demo. This early capital is supposed to get these startups to the point where they can raise a more traditional Series A round of financing, or even get acquired.

… target investment of $250k in debt which converts in an equity financing or acquisition. The debt will convert at a discount to what the new investors are paying

There are few differences though: we invest only in Israeli related projects, up to 1 million dollars and we are a joint venture of 2 funds and not a one VC show.

I am sure we can anticipate more moves like those soon. In the US, and other places where innovation is growing. More also on venturebeat

Lightspeed Gemini Internet Lab’s Blog: day 1

That’s it! We decided to open our own blog. When we started thinking about it, we wanted to find a better way to explain what we do and share with whoever could be interested in our experiences, views and thoughts on the internet industry.  

A blog was a natural solution to this question. Blogs are a perfect format to establish an ongoing communication process too. Communication with those interested in what we do, Communication with those interested with what we think, Communication with those who share our passion. 

The new internet is a complex environment and as we found ourself, like most players in the industry, in a learning process we wanted to be closer to this new ecosystem made of entrepreneurs, ideas, companies, products, investors, thinkers ….A blog is helping us in doing that. 

Many VCs have already chosen a blog format to share and express themselves. Some of them are remarkably well written (like Union Square, First Round Capital…). In Israel too this starts also to be the case, but this is still a shy trend. 

This blog is the voice of several persons contributing to Lgilab activities and now also to this blog. We hope it will help our readers understand better what we do and how we work. We believe it will also be useful for entrepreneurs that are intending to contact us and meet with us. I realized that most people were reading my blog before joining a meeting. We think LgiLab Blog will be a better addition. We also think this blog could be useful for us and we look forward to your comments and reactions along with our posts.  

So what will we talk about here? We will discover it with you on the way, but expect posts about internet, web2.0 (we prefer the expression “new web”), startups, venture capital, Israel high tech and of course news about LgiLab. For information the pictures you see on the right of this blog are a selection composed of our own LGiLab photos and a random web2.0 tag from flickr. 

Hope you’ll enjoy.