500 startups vc Investment thesis

VC investment thesis: 500 Startup Israel – Adam Benayoun

This is the 500 startups Israel investment thesis.

Adam Benayoun joined 500 startups as a venture partner to invest in Israel. He shared his investment thesis upon joining. It is a generalized region/stage focus with the types of team and market he looks to invest in. He has stated he will look to write a more detailed one in future..

Israel – often dubbed as Silicon Wadi (Valley in Hebrew) – has more startups and venture capital per capita than any other country in the world. In 2014, 688 companies raised $3.4bn and a total of 70 exits and IPOs netted Israeli companies more than $15bn.

Adam Benayoun’s Investment Thesis

It seems today every investor has developed an investment thesis. Good investors follow these investment thesis religiously and through time evolve them as they get more experience. I believe a good investment thesis allows you to stay disciplined and defeat the natural human bias when investing in startups. That’s why I wrote one for myself.

I expect to write a longer post in the future defining in greater details my investment thesis but for now, the following investment thesis will do:

  • Location: Israeli companies or companies founded by Israeli founders.
  • When: As soon as you have a product and early market validation.
  • How much: $50k-$100k initial check as part of a larger seed round.
  • What: B2B, developer tools, SaaS and marketplaces startups.
  • Who: 2-3 founders with at least one technical founder.

I believe the team is what leads a startup to succeed or fail. Here’s what I’m looking for in a team:

  • Customer focused: They care about their customers and are genuinely interested in making their life easier.
  • Cohesive: A team that has worked long enough together to know how to handle differences and that are complementing each other. Preferably ego free.
  • Determined yet coachable: Looking for the right blend of resiliency, persistency, determination and the ability to listen to others.
  • Good people: I want to back good and moral people.

The next thing I like to look after the team is the market. Here’s a few pointers what is a good market in my mind:

  • Large addressable market: The addressable market (TAM) has to be at least a couple of hundred of million of $ and grow reasonably fast every year.
  • Competition: A market without competitors raises a flag while a crowded market will be less than ideal since I’m always worried that it will end with a race to the bottom. However this can be countered by having a unique and a well differentiated product that drives substantial value to customers.

A couple of additional notes:

  • I’ll try to make a quick and informed decision but when I can’t form an opinion in a timely manner, expect my decision to be not to invest.
  • I’ll be as candid as possible with my feedback – I don’t like evasive answers or sugarcoating reality. If you won’t take it well then maybe we weren’t a good fit to start with.
  • Even if I say no, keep me posted about your progress. 99% of the time I’m wrong and I like to be proven wrong. If you made significant progress that warrants taking a second look – please send me an email.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.