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The impact of Covid-19 on Global Venture and the Case for Israel

A new report on global venture capital investment volume shows that H1 2020 investments in startups reached $129 billion (this includes all stages as well as CVC activity). It’s a 6.5% decline from H1 2019 ($138 billion), but the impact… Continue Reading

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A new report on global venture capital investment volume shows that H1 2020 investments in startups reached $129 billion (this includes all stages as well as CVC activity). It’s a 6.5% decline from H1 2019 ($138 billion), but the impact on VC funding is less than originally projected. It appears that VCs got comfortable doing deals over Zoom.

Source: Crunchbase

On a regional basis H1 2020 VC investment activity shows varied impact:

“VC investors did not shy away from either first or
follow-on investments, bringing the number of VC deals to a record in Q2/2020″

Israel tech fundning report Q2 2020, IVC

What might explain the record breaking deal activity in Israel?

It’s unclear whether Israel managed to buck a global downward trend, or wether the investment volume was driven by overly optimistic investors and high levels of dry powder in the market. Let’s examine some of the pros and cons of the current state of the Israeli tech sector

Israel’s record breaking Q2 2020 (Source)

Pros

  • Innovation never stopped in Israel – several sectors are seeing increased activity as a result of Covid-19 including health, enterprise software for remote work, cyber security, e-commerce etc. Israel attracts over 25% of global investment in cyber for example and health investments in Israel rose to 70 in the past six months.
  • More talent is getting into the tech sector – a new report by IATI and KamaTech showed that the number of Haredi (Jewish Orthodox) employed in the tech sector grew by 52% in the period between 2014 and 2018. The total number of Haredi tech employees reached 9,700 in 2018 representing approximately 3% of the tech labor force. 71% of those (6,900) were women. Talent crunch is one of the biggest pain points for Israeli startup, and while more work needs to take place to grow the inclusiveness and diversity of the sector, this is a positive trend.
  • Foreign investments remained strong in Q2 2020, reaching 52% of the total investment volume
Foreign investments in Israeli startups (Source: IVC Q2 2020 report)

Cons

  • Slowdown in exits – Despite an increase in the average exit value from $98M in H1 2019 to $112M in H1 2020, the number of exits in H1 2020 dropped significantly both in number (by 32% from 76 to 52) and in value (by 22% down to $5.82 billion from $7.47 billion in H1 2019) compared to H1/2019. Projections are for additional slow down in exits in H2 2020 as the expectation is that only cash rich corporate will be able to afford to acquire companies in times of uncertainty.
Israel exits report H1 2020 (Source IVC)
  • Covid-19 fallout – it’s too early to predict the economic impact of Covid-19 on the tech industry and wider economy as a whole. Given Israel has a small local market, startups aim to go global from day one, and many target the American market. As consumer confidence and enterprise spending slow down in the US, it has a lagging effect on Israeli startups. Many large tech companies froze hiring and conducted layoffs, including Amdocs, which plans to let go 1,000 employees, or Intel CEO’s recent cryptic announcement about outsourcing manufacturing. Much of their recovery depends on the US market and potentially on government support.

So far the Israeli tech sector has been resilient, and as a seed investor I’m optimistic about the Israeli market’s potential to not only survive in this crisis, but thrive. “It’s time to build“, said Marc Andreessen in April, and perhaps more than ever, we’re going to need tech and innovation to overcome tomorrow’s challenges.

Eze is managing partner of Remagine Ventures, a seed fund investing in ambitious founders at the intersection of tech, media, data and commerce. We are backed by some of the world’s leading media companies.

I’m a former general partner at google ventures, head of Google for Entrepreneurs in Europe and founding head of Campus London, Google’s first physical hub for startups.

I’m also the founder of Techbikers, a non-profit bringing together the startup ecosystem on cycling challenges in support of Room to Read. Since inception in 2012 we’ve built 8 schools and 31 libraries in the developing world.

Eze Vidra
Latest posts by Eze Vidra (see all)

Source: https://www.vccafe.com/2020/07/29/the-impact-of-covid-19-on-global-venture-and-the-case-for-israel/

Private Equity

Alternative Investments: Accelerate’s Alt ETFs Now On RBC Dominion Securities A+ Platform

Accelerate Financial Technologies Inc announced this week that its alternative ETFs have been added to the RBC Dominion Securities A+ platform. RBC Dominion Securities describes the A+ as the next level of wealth management.

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Alternative Investments: Accelerate’s Alt ETFs Now On RBC Dominion Securities A+ Platform

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The A+ is for you if “you require serious investment management for your serious money.”

Accelerate Financial Technologies Inc announced this week that its alternative ETFs have been added to the RBC Dominion Securities A+ platform.

RBC Dominion Securities describes the A+ as the next level of wealth management.

For select clients with serious money, the platform provides greater convenience, customization, RBC’s Unified Managed Account technology, access to elite money managers worldwide, and tax efficiency.

Accelerate’s Alt ETFs on RBC A+

The range of alternative ETFs from Accelerate allows investors to diversify beyond stocks and bonds by including alternative asset classes in their portfolios.

The firm is known as a pioneer in institutional caliber alternative ETFs including hedge fund and private equity ETFs. It claims it is “disrupting the asset management industry by offering performance-oriented alternative investment strategies previously reserved for wealthy investors at a fee significantly lower than competitors.”

“We are pleased to be chosen by RBC Dominion Securities, a global leader in wealth management, as one of the select group of high-quality investment managers on the exclusive A+ platform for RBC Dominion Securities advisors and their clients,” said Accelerate CEO Julian Klymochko. “In an era of rock-bottom interest rates and record-high stock market volatility, we are pleased to provide investors with diversification, alternative yield, and alpha generation solutions through alternative investment strategies including absolute return, arbitrage, enhanced equity, and private equity replication.”

Selected ETFs

The alternative ETFs on the RBC Dominion Securities A+ platform include:

  • Accelerate Absolute Return Hedge Fund (TSX: HDGE) – a diversified, liquid, and performance-oriented long-short equity hedge fund
  • Accelerate Arbitrage Fund (TSX: ARB) – provides exposure to SPAC arbitrage and merger arbitrage investment strategies
  • Accelerate Enhanced Canadian Benchmark Alternative Fund (TSX: ATSX) – combines exposure to the S&P/TSX 60 plus a long-short Canadian equity overlay
  • Accelerate Private Equity Alpha Fund (TSX: ALFA) – designed to provide investors with private equity-like investment returns

Related Story:  Liquid Alt ETF Provider Accelerate Offers Ready-Made Alternative Investment Strategy                                                

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Source: https://dailyalts.com/accelerates-alt-etfs-now-on-rbc-dominion-securities-a-platform/

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Private Equity

Venture Capital: AgTech Startup Benson Hill Lands $150M

Benson Hill, an agtech startup based in St. Louis, announced Thursday its close of a $150 million Series D round led by Wheatsheaf and GV (formerly Google Ventures). It uses biotechnology and data science to enhance the nutritional qualities and sustainability of crops.

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Venture Capital: AgTech Startup Benson Hill Lands $150M

https://dailyalts.com/wp-content/uploads/2020/10/light-switch-field-bensonhill.jpg

Benson Hill uses biotechnology and data science to enhance the nutritional qualities and sustainability of crops.

Benson Hill, an agtech startup based in St. Louis, announced Thursday its close of a $150 million Series D round led by Wheatsheaf and GV (formerly Google Ventures).

The company said other strategic and ESG focused investors also participated. These included Argonautic Ventures, Caisse de dépôt et placement du Québec (CDPQ), Emart, GS Group, Louis Dreyfus Company, iSelect Fund, Fall Line Capital, Mercury Fund, Prelude Ventures, Prolog Ventures, S2G Ventures, and additional strategic and family office investors.  (FOOD navigator-USA.com)

Benson Hill technology

Benson Hill uses biotechnology, data science, and AI to enhance the nutritional qualities, flavor, and sustainability of crops and vegetables.

The firm’s “Cloud Biology” is the fusion of data, machine learning, and AI techniques with biology. Its “CropOS” is a proprietary platform that facilitates the accessibility and actionability of Cloud Biology.

The CropOs platform uses plant phenotyping, predictive breeding, and environmental modeling algorithms to better control the plant breeding process and realize these advantages:

  • Produces plants that are highly productive, highly nutritious, and better tasting
  • Better texture
  • Reduce the number of processing steps
  • Reduce the need for additives
  • Grow plants that “do more with less,” thus boosting sustainability

The company’s work so far has been concentrated around soybeans.

Its new, ultra-high-protein (UHP) soy products spiked the interest of investors. They come from a highly productive non-GMO soybean that is rich in oleic oil content.

Use of funds

Benson Hill plans the commercial launch of the first Ultra-High Protein soybean varieties in 2021, among other product launches.

It also plans to expand its team by adding top talent and continue the development of Cloud Biology and CropOS.

“As a society, we’re at a crossroads made more evident as the pandemic has revealed strengths and vulnerabilities in our food system,” said Matt Crisp, Benson Hill CEO. “Food choices that create enjoyment, make us stronger, and help preserve our environment need to be accessible to everyone, and the power of plant diversity and technology innovation can help fuel that evolution.

Related Story:   Smart Farm Technology To Take The Drudge Out of Plant Breeding

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Source: https://dailyalts.com/agtech-startup-benson-hill-lands-150m/

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Private Equity

FinTech: Alliance Data Buys BNPL Fintech Bread For $450M

Alliance Data Systems (NYSE: ADS) said Thursday that it will acquire Bread and its digital platform for $450 million of which $100 will be paid through Alliance stock. The transaction would expand Alliance Data’s own digital offerings by including buy-now-pay-later (BNPL) products.

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FinTech: Alliance Data Buys BNPL Fintech Bread For $450M

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Alliance Data will pay in cash and stock for the acquisition.

Alliance Data Systems (NYSE: ADS) said Thursday that it will acquire Bread and its digital buy-now-pay-later (BNPL) platform for $450 million of which $100 will be paid through Alliance stock.

The transaction would expand Alliance Data’s own digital offerings by including BNPL products. BNPL is a major trend now that consumers have embraced the interest-free, zero-fee facility to pay in installments. Alliance is a provider of data-driven marketing, loyalty, and payment solutions. (Alliance)

Digital BNPL is particularly popular with millennials and the younger set. They prefer not to run up credit card debt and like the speed and convenience. The technology and products acquired from Bread will address this segment of the population.

Bread already has tie-ups with merchants such as online jewelry seller Noémie, the luxury watch seller Hublot and Newton Baby, the crib mattress provider.

BNPL customer experience

“Bread’s flexible, easily-integrated payment solutions, coupled with Alliance Data’s Enhanced Digital Suite, will improve the digital customer experience and support increased acquisition and checkout rates, offering the best payment product to the right consumer at pivotal moments in the customer’s online shopping journey,” Alliance said in a statement.

Alliance intends to leverage Bread’s solutions along with its own existing private label, general-purpose and commercial products.

COVID-19

Its brand partners will therefore get another advantage in the eCommerce channel, with online businesses already getting a boost from COVID-19.

“With the timing of the holiday season upon us, the COVID-19 pandemic has accelerated the adoption of digital technologies, and perhaps nowhere as significantly as in financial services and payments,” said Val Greer, chief commercial officer, Alliance Data.

BNPL is now crowded with cash-rich players

Payments giant PayPal (NASDAQ: PYPL) announced in August that it would begin offering BNPL services, recognizing that COVID-19 had triggered a dramatic increase in their popularity.

Other players in the BNPL field include Klarna, Affirm, Afterpay, and Quadpay.

In a recent study, Tech Crunch found that PayPal had the highest retailer coverage with a presence of 65% retailers. Afterpay was a distant second at 10%, then Affirm 6%, Klarna 5%, and QuadPay 2%.

The study concluded that PayPal was primed to dominate the BNPL wars.

Related Story:   PayPal Challenges Klarna In U.K. BNPL Tussle                                                

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Source: https://dailyalts.com/alliance-data-buys-bnpl-fintech-bread-for-450m/

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