Israeli venture group Team8 today announced the closing of three new funds totalling $500 million. Two of the three new funds are based on the venture creation model, in which the fund builds startups from scratch.
The other $110 million fund is based on the venture creation enterprise model for building and investing in startups in the cybersecurity, data infrastructure and AI sectors through collaborations with leading entrepreneurs in the field.
One of the new $70 million venture creation funds is in the digital health sector for collaboration with entrepreneurs that can bring about significant digital transformations in the field.
The third fund, also on the venture creation model, totals $235 million for investing in seed and Series A financing rounds in early stage startups in cybersecurity, enterprise infrastructures (devops, cloud, AI and big data), fintech, and digital health. In addition Team8 has raised $85 million for follow-on investments to support companies already in its investment portfolio.
Team8 managing partner and chairman Yuval Shachar said, “The model of traditional venture capital funds is a more statistical model because there is a lot of risk, because we mostly invest early. Traditional funds usually build a relatively broad portfolio of investments, so that even if some companies do not succeed, if there are a number of companies that experience great success it will compensate. Our model, on the other hand, is narrower and more focused.”
Shachar adds, “We took this whole world of management fees, which drives many of the traditional funds, and put all the management fees towards paying the salaries of people who will work for our companies. From the outset, we waived the management fees and said that we are investing all the money back into the team we have formed, which is about 90 people, to work together and on behalf of the entrepreneurs. We are 100% ‘aligned’ with our entrepreneurs.”
He explains, “This world of venture capital was born decades ago and has hardly changed since then, while the world of entrepreneurship has changed so much and is still changing.” He recounts that Team8 remained cautious even in the bubble years when others were more lavish, and this allowed Team8 to be more resistant to market shocks.
Since launching in 2014, the Team8 model has innovated and extended the traditional venture capital approach by taking a more aligned and operationally intensive approach to investing. To date, Team8 has built 20 companies, invested in an additional 21, and achieved eight exits, including the recent cybersecurity exits of Dig and Talon for a combined total of about $1 billion.
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These latest funds bring Team8’s total assets under management to well over $1 billion.
Published by Globes, Israel business news – en.globes.co.il – on March 5, 2024.
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