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Play Your Cards Right: The Israeli Playbook for Breaking Into the US Market

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After investing in dozens of Israeli startups that launched, scaled and set up their headquarters in the US, we have seen first-hand how founders planned and executed their US market strategy. Join us as we share the best practices and lessons learned from six years of helping Israeli founders break into the US market and raise over $400M. 

This session will cover what works, what to avoid, and what American customers, partners, and investors actually care about. (Hint: it's not your military background...)
 
Topics will include:
 
- How and when to find US-based customers and partners while still operating out of Israel
- How Israeli startups should go about raising capital from US-based investors. Do you even need to?
- Should you set up a US office? And If so, when and where?
- Mistakes you can avoid if splitting your team between Israel and the US
 
* About Gil Ben-Artzy
Gil co-founded UpWest Labs in 2012, opening up the firm’s Silicon Valley Office. Previously, Gil was the VP of Operations Management at Yahoo! for two years after working with the Corporate Development group for four years. He also served as a consultant advising Fortune 500 companies for the Boston Consulting Group in New York. He holds a BA in Economics & Business Administration from the Hebrew University of Jerusalem, and an MBA with Honors from the Wharton School of the University of Pennsylvania.

* About UpWest Labs
UpWest invests in Israel’s most promising entrepreneurs. Based in Silicon Valley, we have backed dozens of companies and helped them grow through our hands-on approach. UpWest Labs provides the essential ingredients for success: seed funding, proximity and access to markets and capital, a supportive community of talented peers, and a workspace conducive to rapid development and deployment.

Published in: Technology

Play Your Cards Right: The Israeli Playbook for Breaking Into the US Market

  1. 1. Gil Ben-Artzy, UpWest Labs Google Campus, July 17 2017
  2. 2. WORK LIFE EDU
  3. 3. Silicon Valley Fund Focused on Investing in Israeli Founders Targeting the US Market
  4. 4. $400M In Follow-On Funding 1200+ average seed round $1.2M>70% People employedraised funding
  5. 5. This is Just the Beginning ... Market Access Mentorship Funding “Phase I”: 4-Month Sprint
  6. 6. “Phase II”: Every Day that Follows… Operations Fundraising Scaling Know-how Follow-on Investing
  7. 7. Case Study: Adapting to the US Market Oz Alon, CEO & Co-founder, 2012 UpWest Invests; Product Pivot 2013 Seed Round, US HQ 2014 Market Expansion, Series A 2015 Series B 2016 Two Acquisitions, 100x Growth 2017 Revenue Growth
  8. 8. Case Study: Launching and Scaling in the US Tomer Weingarten, CEO & Co-founder, 2013 UpWest Invests; Customers, Advisors, Seed Round 2014 Series A, Exec Hires 2015 Series B 2016 Rapid Growth 2017 Series C
  9. 9. Multiple Domains Wide Investment Scope Pre/Post Product Pre/Post Funding
  10. 10. Today’s Agenda I. Misconceptions & Avoidable Mistakes II. Fundraising Mindset & Expectations III. Best Practices for Gaining Momentum
  11. 11. Why US? Benefits & Reality Customers Employees Investors Culture High value, open for beta (esp. SV), in-person Tech talent at premium, hard to retain More $$$ @ better valuation, many options, new network, high expectations More different than expected…. Competitors Tough, well connected, “talk the talk” Market Breeds huge companies, often gateway to ROW
  12. 12. “I Know I Need to Come, But…” “…I need to first do a pilot in Israel, so I have something to sell and not ‘burn’ myself” “… coming every few months is enough” “… I will hire a US Sales person to do the work” “…I have the best tech, so they will buy from me”
  13. 13. Aiming too low & not building a long-term vision Hiring a “Ghost CEO” to Act on Your Behalf in the US Product-centric vs market-centric Mistaking fake validation as real feedback Believing Your Homegrown Street Cred Is Transferable to US Common Traps Source: Shuly Galili, Co-founder, UpWest Labs. https://medium.com/@shulygalili_12357/six-common-traps-foreign-founders-repeatedly- fall-for-in-the-us-market-d7224f06575c
  14. 14. Today’s Agenda I. Misconceptions & Avoidable Mistakes II. Fundraising Mindset & Expectations III. Best Practices for Gaining Momentum
  15. 15. 38.1 7.4 4.8 California New York Israel Venture Capital Investment in 2016 ($B) “Let’s Go Abroad, It’s Easier to Raise Money in the US!”
  16. 16. Pension Funds, University Endowments, Wealthy Families, Corporations, etc Bonds, Stocks, etc. VC Capital Allocation to Venture Capital = 3-10% Who Invests in VCs?
  17. 17. Top 20 VC Funds Other VC Funds <1x 1-2x 2-3x >3x VC ReturnsVC Funds 98% 95% 2% 5% 50% 35% 10% 5% VC ReturnsVC Funds Do VCs Meet Investor Expectations?
  18. 18. Fund Returns Exits $1B $3B $15B 3X 20% Equity * Few Investments per Partner How Do VCs Make Money?
  19. 19. Option A Option B Exit 1 Exit 2 Exit 3 Exit 4 Exit 5 Exit 1 Exit 2 Exit 3 Returns = $3B Returns = $3B How Do The Best VCs Reach 3x? Imagine you made 30 investments….
  20. 20. * VC could agree to smaller exits if you are not going to be big as they had hoped, IRR & fundraising considerations, founding team really insist, etc. Startup “I need to show potential for $50M in Revenues in Year 5 (or >100M users)” VC Partner “Should I bet part of my career on this startup?” Investors Want to Fall in Love
  21. 21. Large Funds Micro-Funds Angel Investors “I need large exits” “Small exits are unlikely… Need micro- funds to invest in my startups” “Medium-size exits are unlikely… Need large funds to invest in my startups” VC Economics Impacts ALL Investors
  22. 22. Goal: Invest in the Outliers
  23. 23. • No “2-week funding roadshows” • Get local proof: customers, advisory board, etc • Learn from Israeli entrepreneurs (R&D in Israel, etc) • Move before the round (50%+ can work too) • Ask for help, leverage friendly intros Early Stage Investing is a Local Business If You Are Raising In the US….
  24. 24. Today’s Agenda I. Misconceptions & Avoidable Mistakes II. Fundraising Mindset & Expectations III. Best Practices for Gaining Momentum
  25. 25. The More Time You Spend in the US… … The faster you get to product-market fit … the more extensive and stronger your network of partners, advisors, etc … the odds (and size) of an exit increases
  26. 26. >> Lightweight engagement >> Deciding to move >> The Split Gaining Momentum
  27. 27. • It’s Always Good Timing (advice/feedback, trial, sell) • Plan ~6 Wks Ahead, Visit for at Least 2 Wks (Anchor, conference/meetups, 50-75% planned) • Identify Customers, Partners, Sources of Feedback (relevant, motivated, LinkedIn) • Ask for Help! (friends, etc) Lightweight – Planning Ahead
  28. 28. • Know Your Story (Team, Market, Momentum) • Build Relationships, Emphasize Context (listen & learn, project continuity vs. quick hit) • Ask for & Schedule Follow-Up Meetings • Allow for Semi-Planned Networking (Meetups, “Stand in Luck’s Way”) • Meet *Some* Investors (friends) • Ask for Even More Help! Lightweight – The Visit
  29. 29. • Track & Summarize • Send Personalized Messages (recap, give back) • Ensure Momentum (action items, updates) • Plan Your Next Trip (In person > Skype) Lightweight – The Follow Up
  30. 30. • Make the US Part of Your Routine • Focus on Creating Momentum • Plan Ahead, Ask for Help Lightweight – Summary
  31. 31. Noam Bardin, Waze CEO: “Splitting up a small company across 7,000 miles, a 10-hour time zone difference and a ~24hour+ connecting flight is one of the worst things you can do as it adds tremendous execution risk. But the only thing worse is not doing it. Between the execution risk (that is within your control) and the risk of not being there (which becomes out of your control), I choose the former. I want to choose the risk I take.” The Decision
  32. 32. • STSSTIAP  Early product When: Establishing US Presence • Don’t wait for funding • Don’t wait to complete Pilot in Israel • Part of company’s DNA
  33. 33. How: Establishing US Presence • CEO/Founder in US, founder in Israel • Functional concentration, Product/Eng. alignment • Constant flying • Leverage funds/programs for softer landing • Get out of the building • Hire well-connected US employees
  34. 34. “Power is a lot like real estate. It’s all about location, location, location. The closer you are to the source, the higher your property value” - Frank Underwood
  35. 35. Thank You gil@upwestlabs.com

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