A presentation I gave as part of abrt fund (Russia) Garage day in Hertzelia. The audience was mostly startups entrepreneurs that were preparing for their first round.

2. Funding in Israel - What do local
ecosystem investors are looking for?

3. Background
Yariv Levski
• 15 Years of Business Development, Marketing and management in 4
industries: Television, Telecom, Payment and now Digital Health
• Consulted foreign investors re investments in Israel
• Former Board of Directors – TVTak (acquired), Appforma and Tekoia
• Current: CEO of Second Opinion Group

4. Background – Current Market Trends (Investors Market)
Thinking like an investor – chasing Unicorns
Questions Investors Ask
Ideal narrative (and pattern) investors like
Great ways to ‘turn-off’ investors
The good news are..

5. September 2015
2015 was great year for Israeli Startups

6. If an Alien would arrive Tel Aviv
these days, he (or she) would think
that it’s very easy for a startup to
raise money from investors, right?

7. In recent years,
3000+ startups try to raise money
every year,
800-900 succeed (less than 30%)
only 150 would succeed in next
round (17%)

8. BTW,
What is the most common reason
for startups not succeeding in next
round?
Main Reason – not reaching a significant
milestone

9. From investor’s point of view:
Yes, there are more opportunities
So It means
I have to be more selective!

10. Angel
Expect to return
X3-X5 on his
investment
Past – Idea phase
Now – product phase,
maybe even revenue
Invest in early
stages, most risky
phase

11. VC
Expect to return
10X on their
investments
Past – product phase
Now – Revenue Phase
Interested in
decreasing their risk

12. Which phase are you?
Which kind of investors are relevant
to your venture?

13. And what those investors would
look for?

14. Let’s try to think like investors

15. Background – Current Market Trends (Investors
Market)
Thinking like an investor – chasing Unicorns
Questions Investors Ask
Ideal narrative (and pattern) investors like
Great ways to ‘turn-off’ investors
The good news are..

16. The goal – finding the next
Unicorn*
before others
*Unicorn – 1B$ Valuation
company

17. So, how do we recognize Unicorn ?
Especially in its’ early stages?

18. A research by Shasta Ventures
32 Unicorns

19. What was common to all of
them?

20. 1. Easy to Dismiss ideas
By the time the startup reach 1B$ valuation,
The idea is understood.
But it wasn’t the case before

21. Easy to Dismiss ideas
Driving Black cars?
Watching other people
playing video games?
A disappearing message
with a picture?
Renting someone else’s
couch at home?

22. 2. Competitive Markets
Surprisingly, Unicorns started in hyper
competitive markets

23. 3. Reinventing existing
consumer behavior
Not innovative, but improving an existing
consumer behavior

24. 4. Untested Founders
Not without experience at all, but 75% of the
founders were first time founders

25. 5. Zero Monetization
Does the business model work?
No business model (yet)

26. The research conclusion:
There are large companies to be built by
offering new, innovative and superior
customer experiences to large markets,
regardless of how competitive the sector
already is or how successful the founders
have been before.

27. As investor, does it mean that
when I meet a venture with:
1. No revenue
2. Easy to dismiss idea
3. Low innovation (evolution but not
revolution)
4. Operate in competitive market
5. First time founders
Should I invest?

29. It’s like finding a needle
In a haystack

30. So, what can I do?
(Like in other areas)
I search for patterns

31. Background – Current Market Trends (Investors
Market)
Thinking like an investor – chasing Unicorns
Questions Investors Ask
Ideal narrative (and pattern) investors like
Great ways to ‘turn-off’ investors
The good news are..

32. General
1. What does the company do?
2. What problem do they solve?
3. Market potential
*The idea is that when you solve an existing problem,
you don’t need to educate the market
* 5B$-10B$ market size

33. Team
1. Do the team member know each other?
2. What is their motivation (money?
changing the world?

34. Product
1. Do users love your product? Daily average
use? Monthly?
2. What are the milestones?
3. Is the product unique? Chances for IP?

35. Competition
1. How does the market
look like? How would it
look in 5 years? 10
years?
2. Planned market share?
3. What’s your unique
point of value?

36. Marketing and Customer Acquisition
1. What’s the CAC?
2. What’s the TLV?
3. Does the economics work?
4. Traction (downloads, daily behavior,
revenue)

37. Risks
1. Company main risks factors
2. How can you decrease the risks?

38. More..
1. Business Plan
2. Size round and what would you achieve
(milestones)
3. What’s the round valuation

39. Background – Current Market Trends (Investors
Market)
Thinking like an investor – chasing Unicorns
Questions Investors Ask
Ideal narrative (and pattern) investors like
Great ways to ‘turn-off’ investors
The good news are..

40. Example
1. Team – served together in the army or worked in
the same R&D group
(It means that they have history and know how to
get a long)
2. The problem they solve – ideally experienced it as
users
3. The value proposition is understood
4. Development has started. You can show Alpha,
even better Beta, even better commercial version
5. There is a momentum (train is leaving
the station)

41. What does it mean – the train is
leaving the station?
Even if the investor, (especially angels)
Likes the idea, team, product
His initial motivation is to keep his money in
the bank.
You need to motivate him to actually invest
(and saying – “we are meeting other
investors” doesn’t work ..)

42. Train is leaving the station
It means that you’re in progress,
And soon the train is leaving and it would be too
late - To join

43. Background – Current Market Trends (Investors
Market)
Thinking like an investor – chasing Unicorns
Questions Investors Ask
Ideal narrative (and pattern) investors like
Great ways to ‘turn-off’ investors
The good news are..

44. NDA
“Please sign our NDA”
(So, you want me to trust you with my
money, but you don’t trust me?..)

45. Exit Model
“We believe Google is a potential
buyer”
)But be ready to answer)

46. Competition
We don’t have competition
(Well, is it a good sign?)

47. Team
“We know each other for couple of weeks,
but the chemistry is great (until now)"

48. Funding
“Once we would receive it, we would
plan what to do with it”
(That’s not a good sign as well, right?)

49. Background – Current Market Trends (Investors
Market)
Thinking like an investor – chasing Unicorns
Questions Investors Ask
Ideal narrative (and pattern) investors like
Great ways to ‘turn-off’ investors
The good news are..

50. The good news:
It’s really easy (and cheap) to develop a prototype. It cost
more to develop a Beta – but still affordable.
Israel is a great market to develop Digital Health products
(Great HMO, great health system, great doctors and more)
Foreign investors are here – it’s a global market!

51. Thanks!
Yariv Levski