A New Era: Growth Funds Take Hold in the Israeli Landscape
Lior Litwak is Glilot Capital’s newest Managing Partner. He is heading up Glilot+, Glilot’s new Early-Growth fund earmarked for post-Series A enterprise software and cybersecurity companies. Lior came from M12, Microsoft’s venture fund, served in the IDF’s elite Talpiot program and 81 Unit, and earned his MBA with Distinction from Harvard. We sat down with Lior to hear his views on investing in early growth companies, as well as his decision to join Glilot.
Why Do You Believe More Israeli VCs are Investing in Growth Lately?
Over the past decade, the VC industry in Israel has really developed. If you consider Israeli software and cyber startups 10-15 years ago, at first they would typically lean on Israeli early stage funds for support and get advice on product market fit, mentorship, introductions to the right people and more. The goal of the Israeli VC was essentially to help the startup put its best foot forward with the aim of moving to the US as early as possible, because that’s where the real market was, and the speed at which you sold to US companies was indicative of further future success. As a result, we didn’t see a lot of growth funding available in Israel, which led to most Israeli startups exiting relatively early (on average, compared to US startups), selling to large US companies instead of going head to head with them. This, in turn, further limited the market for growth VC investments in Israel.
This cycle began to change over the last few years. A couple of local and global funds began making growth investments here to satisfy the needs of forward-thinking local entrepreneurs, which opened up the market for others in Israel who think big and want to build long standing independent businesses. This has gradually created an increasing need for growth capital in Israel.
The recent COVID pandemic – despite slowing down the world in almost every other area – has actually accelerated and made simple the process of selling Israeli technology to customers abroad. Gone are the days of exhaustive networking over organized happy hours or golf-course schmoozing across the US. Today, with the ubiquitous remote work model, access to the right people is easier and you cut to the chase faster. This allows Israeli entrepreneurs to lead with what they know best – world-leading tech – and really opens our market to forming hyper-growth companies.
Why Do Post-A Companies Need an Israeli Partner?
As discussed, today we have reached a new level of maturity as an industry, and you see many more VCs investing in early growth, both Israeli and international. While international VCs command strong brands and networks, we believe that Israeli startups at the early growth stage can benefit tremendously from working with a local investor with deep international connections – an investor who understands Israeli culture and often shares a common background with the entrepreneurs, but who can also give them direct access to global markets.
Glilot, in particular, has combined this fundamental advantage with a “boutique” kind of service, a tailor-made approach to supporting startups both locally and in the US. With a small team of partners, and me focusing 100% on growth, every deal we make gets a hands-on treatment. As a group, we have a high level of expertise in enterprise software and cybersecurity – the startup markets in which we invest. This combination of a hands-on approach, in-depth understanding and our network of nearly 100 deeply-engaged security and technology advisors from around the globe, has, and continues to be, a recipe for success, as evidenced by Glilot being named the Top Performing VC Worldwide four times in recent years by Preqin.
In addition to our committed Value Creation team that advises on business decisions and provides support on all levels, Glilot+ offers a flexible financing model to ensure that Israeli entrepreneurs have access to our partners’ experience and dedicated network regardless of the kind of funding round they are raising. We can lead rounds or participate, form syndicates with our LPs or other VCs, give convertible notes – if we want to be in business with you and you with us, we will find a way to make it happen. Our ultimate goal is to join the journey of amazing entrepreneurs and be there for them.
Why did you decide to join Glilot Capital?
Simple – it all came down to the prospect of joining the incredible team at Glilot, combined with the unique opportunity to lead an early growth fund through Glilot’s proven investment platform.
In my four years at M12, I enjoyed having a great platform for making investments while working with fantastic people, not to mention being part of one of the world’s leading technology organizations and working with anyone from CEO Satya Nadella downwards. But when the opportunity at Glilot presented itself, I was ready to move from a corporate setting to a financial VC firm, and I felt that Glilot had a like-minded team that shared my values and was a good personal fit. I was also very impressed with Glilot’s value creation infrastructure and believe the fund has done an excellent job in differentiating itself in the Israeli ecosystem, thanks to the hands-on support, invaluable experience of the partners and the breadth and depth of the advisory network.
Looking onward, I am very excited about our ability to generate significant value to our portfolio companies at Glilot+, and anticipate collaborating with great entrepreneurs on their path to building global leading companies in the years to come.