Israel Ingenuity: Interview with Eze Vidra, VCCafe.com
Written by: Zack Miller | May 19, 2008
Tell us a bit about yourself.
Eze Vidra, VCCafe.com: I’m originally from Argentina. My parents moved to Israel with me in 1987 when I was just a kid. I grew up in Israel and did my army service. I moved to the US about 4 years ago. I’ve now been in Northern California for over a year. In 2003 I cofounded a firm that enabled text input solutions for PDAs ad mobile devices. At the time, it was almost impossible for Israeli companies to raise money. During the fund raising process, I met a CEO with a firm that eventually offered me a position on the spot. That firm was Gerson Lehrman Group, the hedge fund research firm. I started in IT as a project manager and grew into a position where I was managing the integration of business requirements and IT products.
How did this experience contribute to your launch of Israeli Venture Captial media company, VC Cafe (www.vccafe.com)?
EV: By translating requirements into products, I ended up creating the GLG News product which allows the Gerson Lehrman expert network to analyze current events and news. For example, if I’m a doctor and something gets suddenly approved by FDA, I can tell you from the field what I think the impact of that news could be. I started VCCafe in 2005 on the side. It originally began as a labor of love, with me writing about Israeli startups and the fund raising process. Having been through the fundraising process for my own firm, I felt that there was something missing in the market. Specifically, I wanted to help the early stage startups with tools for Israeli entrepreneurs. The site has blossomed into a real network and I’m spending more and more time consulting with startups about fund raising and business development and I’m finding myself helping the companies by acting as a matchmaker.
How does being in California affect your analysis?
EV: I’ve always wanted to be in Silicon Valley. While working in New York, it was definitely a button-down financial environment and technologists were sort of playing second fiddle. Being in the Valley, I frequently attend technology meetups and I generally feel freer to write about some of these things. I now have Israeli companies regularly contacting me to ask for advice about business models, investors and potential partners. VC Cafe acts a bridge from Israel to Silicon Valley. We’re also networking via LinkedIn and Facebook networks. There are several ways to contact me via the site but I actually prefer to connect with people through an introduction.
So, you follow the news by adding your analytical layer to current events. What else do you do?
EV: I do user tests and reviews of new products like Tech Crunch does but with more of a flavor toward the VC aspects of the firms and products I’m working with. I love products and I’m interested in the growth prospects of these firms and I happen to particularly love working on business models.
How does VC Cafe make money?
EV: About a year ago, I removed almost all Google Ads from the site as I felt that the content was paramount in the services that VC Cafe provides. Now the business model is centered about sponsorships and consulting, but I’m not concerned about making money right now. Credibility is all you have in this type of business and I don’t want to sacrifice that.
What does the 2008 environment for VCs and startups look like?
EV: 2007 was a very strong year. While we probably peaked in early 2008, we’re in for a real slowdown. We’re actually starting to feel the slowdown. Funds are having trouble raising money and with the recession in the US, it’s not helping. But in spite of it all, Israel VCs still have $2 billion in hand. (they raised $1.7 billion in 2007 and have about $300 million of funds from previous raises that they haven’t called). We read recently that 3i, the largest investor in Israeli VC, Giza, said that it will no longer invest in early stage startups. Israeli VCs have become even more conservative and are being very careful about deploying capital. While we’ve seen a couple of large raises (Project Better Place and Modu) which saw $100+ million rounds, these are anomalies.
Speaking about Modu, there’s a lot of excitement around the product. What do you think about its prospects?
EV: The product looks revolutionary. The Modu Mobile is a tiny cellphone, 1.5-ounce, 2.8-inch-long, that can be inserted into multiple jackets that enhance its functionality. In other words, the modu has the basic functionality of a cell phone: antenna, cellular radio, contact list, text messaging capabilities and a battery.
Founder Dov Moran knows a thing or two about carrying data from one device to another - he was the founder of Israel’s M-Systems, the original maker of USB flash drives, that was later acquired by Sandisk (Nasdaq: SNDK) for $1.6M. Moran invested $5M in Modu from his own capital, and was joined by Sandisk, that predicted $1 billion annual revenue in 2011.
How bad a slowdown do you think 2008 may see and do you have any advice for entrepreneurs?
EV: Projections are that 2008 should see about $800 million raised and the majority of this money won’t make it to early-stage startups. Talia Aben, formally of Gemini Funds, advised entrepreneurs to keep their budgets tight to the dollar, focus on building clear road maps and meeting product and revenue deadlines. I couldn’t agree more.
There are a few ominous signs on the horizon. According to the latest VC Indicator quarterly survey by Deloitte Brightman Almagor, 75% of Israeli venture capital managers expect to see a decrease in the number of funds operating in Israel by 2010. The main reason for closure is predicted to be difficulty in raising follow on funds.
What about M&A opportunities for Israeli startups?
EV: According to a recent study published by IVC Online, Israeli high tech M&A deals were valued at $3.2 billion in 2007, spanning across 75 deals, the second highest number of deals in a single year. Things have been busy. IBM, for example, recently bought 3 Israeli storage companies. Microsoft and AOL have been active.
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