More About Sherpa InnoVentures

Sherpa InnoVentures

Sherpa InnoVentures is a unique innovation-focused investment fund, founded and managed by an experienced team with a proven track record in the high-tech industry and complementary fields, and equipped with innovation-specific skills.

Sherpa’s mission is to invest in highly innovative Israeli (and Israeli-related) technological companies, by applying innovation expertise throughout the entire range of the Fund’s activities: scouting, due-diligence, selecting, investing, accompanying and guiding portfolio companies.

Our new approach to fund management is designed to add value to both investors and portfolio companies by the combination of two major elements:

  1. Applying our unique innovation tools at all stages;
  2. Effecting harmonious and personal working relationships between all involved parties.

Our innovative model has been developed by learning from, and building on, existing best practices in the industry, while breaking with some common dogmas, so as to overcome key drawbacks and disadvantages of the current VC model.

The Opportunity

Why Israel

Ranked first in the world for innovative capacity and first in the world for entrepreneurship (according to IMD Global Competitiveness Yearbook (2014), May 2014), Israel is renowned across the globe for its thriving entrepreneurial spirit, which often enables its entrepreneurs to swiftly transform burgeoning start-ups into profitable and competitive companies.

Characterized by highly educated and creative workforce, exceptional entrepreneurial spirit, profound financial support of the Israeli government in the R&D efforts, strong academic infrastructure, a sophisticated entrepreneurial environment and military backed industry that promotes technology and innovation, Israel yields cutting edge technologies, profitable business opportunities and high investment returns.

According to official reports by the IVC Research Center, below is updated data as to Israeli high-tech exists in recent years:

In 2014, 99 Israeli high-tech-companies exits reached a record of $6.94 billion.
The above amount is comprised of $2.1 billion raised through 17 IPO’s and $4.84 billion generated by 82 M&A transactions involving Israeli and Israel-related companies.

In 2015, Israeli high-tech exits hit $9.02 billion.
The above amount is comprised of $8.4 billion generated by 96 M&A deals and $609 million raised through 8 IPO’s.

As of 2015, 80 Israeli public companies are listed on NASDAQ- comprise 20% of the foreign companies traded in NASDAQ.
VC-backed exits in 2015 reached an outstanding $4.98 billion.

In the first half of 2016, Israeli high-tech exits totaled $4.19 billion, with 49 deals so far.

*In July 2016, Playtika, an Israeli social gaming company, was sold to a Chinese consortium for $4.4 billion.

Given the current reasonable economic environment and markets remaining receptive to new tech exits and IPOs, the General Partner believes that Israel is heading into an exciting period for high tech opportunities and that the coming years will bring opportunities for attractive investments in Israeli tech companies.

Why Sherpa

A unique and effective approach to innovation

Company-wide, as well as technological, innovation

Sherpa’s focus on innovation is based on the understanding that true, company-wide innovation is a key factor in determining any venture’s success. Therefore, innovation capabilities will serve Sherpa as a key criterion for selecting venture companies with a high growth potential. Although start-ups tend to be innovative by definition, this capability is often limited to the technological realm. In Sherpa, we believe in identifying and fostering innovation within all aspects of a company’s activities. In addition to research and development, these activities include delineation of corporate strategy, business models, sales and marketing strategies, team building etc.

Dynamic and evolving, versus one-time innovation

Drawing on their extensive experience, Sherpa managers have discerned two key phenomena:
(1) Start-ups very rarely reach the market with their Plan A;
(2) Companies often start their operations with cutting-edge technologies, but then end up failing down the line for non-technology related reasons such as business models, marketing issues, management drawbacks etc.

Therefore, in selecting and accompanying early growth ventures, it makes much sense to go beyond their original idea and give attention to their ability to dynamically adapt and innovate in real-time. Sherpa believes in the crucial importance of systematically identifying companies with a flexible and creative DNA. After selection and due- diligence, Sherpa’s team will assist venture management teams to adapt their original business models to the requirements of their actual markets and volatile conditions.

Structured, as well as intuitive, innovation

While most VC’s acknowledge the importance of innovation for their success, Sherpa is unique in employing a structured approach for identifying and implementing innovation in addition to the intuitive more conventional way. With accessibility to world-class innovation expertise on its management, and with SIT® – Systematic Inventive Thinking – an Israeli-based innovation company and a world leader in this industry – as a partner, Sherpa will be able to apply SIT’s effectively proven tools to implement its innovation focused investment philosophy. A structured innovation approach becomes a powerful means for achieving the companies’ desired business objectives, thus providing higher returns for investors.

Detecting as-yet unexplored directions to extend growth potential

As part of the due-diligence process, VC’s usually examine the following elements in a prospect portfolio company: technology and IP, team, market and competition, legal and accounting issues. Sherpa will add innovation as a distinctive criterion to the due-diligence checklist.

By implementing SIT’s unique approach, Sherpa will examine the company’s innovation capabilities, assessing its potential for growth in new, hitherto unexplored directions; including hidden or under-utilized resources, new promises for existing products and business models, product pipeline and innovative go-to-market strategies. The assessment process will contribute to the Fund’s ability to identify valuation gaps and to exploit the portfolio’s full potential.

Innovation-specific consulting, in addition to professional mentoring

Both Fund managers and SIT experts will work closely with portfolio companies to develop a culture and practice of innovation. Each portfolio company will be guided by SIT professionals working on specific needs, spanning from internal alignment at early stages to go-to-market strategies, so as to maximize the chances to realize full potential and to secure a high ROI for Sherpa’s investors.

A personal and harmonious approach

Alignment of interests and expectations between all parties

Sherpa’s new model of operations will be budget-based as opposed to the percentage-based management fee model prevalent in the VC industry. The budget will be used merely to maintain an operation totally dedicated to supporting the investments. This mechanism will enable a better alignment of interests between the GP and LP’s, making all parties’ upside based solely on portfolio companies’ success.

Just the right size for optimal results

Sherpa is a medium-sized fund, intending to raise up to US$70 – 100 million. This is an optimal size: large enough to sustain a full time professional team and strong positioning towards portfolio companies but lean enough to allow Fund managers to be personally involved, on a full time basis, in handling the portfolio companies. Managing a fairly reasonable number of ventures will enable them to personally accompany each company according to need. This size of operation will also allow the Fund to be flexible and to react rapidly to threats and opportunities.

Diversified portfolio

Sherpa intends to invest in Israeli and Israel-related companies, mainly in the following sectors: (a) Internet and other Information & Communication Technologies (including FinTech) and (b) non-Pharma life sciences (including agro-tech). This means that we intend to leverage our team’s broad experience in a variety of fields to enjoy the benefits of reasonable diversification.