Gemini Gems September 2009

On Trust, VCs and Entrepreneurs

Earlier this month, Gemini sponsored a “town hall” style meeting between entrepreneurs and VCs that was run by TechAviv, an organization of Israeli high-tech startup founders and investors. The idea was to create an open dialog between the two groups and discuss some of the more difficult issues that arise.

As Gemini General Partner Daniel Cohen explained on his blog, one of the main topics that came up was that of trust, with a couple of questions being about whether VCs use meetings with companies to learn about portfolio competitors and then share the information they obtain. For Danny, this is totally taboo.

“Never meet companies “just for learning” and never meet “to gather information”. Every (piece of) information we share (with anyone) is done with the full understanding and endorsement of the company,” Danny wrote.

AdiThe theme is one that Gemini General Partner Adi Pundak-Mintz has also addressed. In a post for Gemini’s new blog (see below) entitled “Time To Money”, he described how his ability to build trust with an entrepreneur helped him close a deal less than two weeks after signing the term sheet.

“So much time, anger and lawyer fees saved. If we could have an industry-standard term sheet, we will all grow,” wrote Adi, who discussed these issues on his own blog as well.

There is, however, enough trust in the sector that entrepreneur Yaniv Nizan, a co-founder of Gemini portfolio company EyeView, believes that it is unnecessary and even undesirable for companies to send non-disclosure agreements to potential investors before meeting them.

“The VC business is confidential by nature and does not require a legal contract to enforce it,” Yaniv wrote in a guest contribution to Gemini’s blog.

Another entrepreneur to give succor to the notion that good faith exists in the VC sector, and at Gemini in particular, is TechAviv founder Yaron Samid, who wrote warmly about Danny and Adi on his organization’s Web site.

“I’m proud to have them as sponsors of TechAviv. These guys embody our spirit of paying things forward. I’ve known Danny for a while. He’s one of those rare VCs that tells it like it is and sincerely cares about entrepreneurs and Israel,” Mr Samid wrote.

Ed Mlavsky Turns 80

In This Issue
Gemini - the First Israeli VC to Start a Blog
  - A Unified Forum
  - Bloggers@Gemini
The Last Undiscovered Great Person of Israel's High-Tech Industry
Portfolio Updates - Investment and Company News

Gemini - the First Israeli VC to Start a Blog

A Unified Forum

On September 1, Gemini became the first Israeli VC to go live with a company blog. While some at the firm have been blogging for a long while – General Partner Daniel Cohen has been doing so since January 2006 - Gemini now has a unified forum that provides a window into its multifaceted character and a better understanding of the company. The blog is open to all of Gemini’s employees and already contains contributions from those new to blogging as well as from established writers such as Danny and General Partner Adi Pundak-Mintz.

Guy HorowitzIn the first post on the Gemini blog, Associate Guy Horowitz explained the rationale behind it.

“We feel that it's time to give the Gemini bloggers a 'formal' platform for exchanging ideas, thoughts and insights with you,” Guy wrote. “We will be writing about things that matter to you, to us as individuals, and to us as Gemini (and as VC professionals in Israel).”

Danny provided further reasoning on his own blog, which he is maintaining in addition to contributing to Gemini’s.

“I think that it’s a great way to show the personal side of the venture capitalist, and to easily communicate our thoughts on the industry, our work and our processes,” Danny wrote.

We will also use the blog to provide news about Gemini and the companies in our portfolio, and about events that we are holding.

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Although the Gemini blog is still young, its contributors have already found new ways to address familiar topics. A good example is Sigal Widman’s post entitled “The New Man, a Slightly Different Angle”. While “everybody keeps talking about how complicated it is to be a career woman in our world”, wrote Gemini’s VP of Human Capital, it is the ‘new man’ that is undergoing a greater change.

Sigal Widman“The ‘poor hunter’, responsible for bringing the bread home, now needs to be a sensitive and supportive husband, an involved father, and to conserve his energy,” Sigal wrote, adding that he has to do all this “in a global world with flexible time zones.”

Sigal, who has three children, knows much about trying to balance a career with bringing up a family, and it is little surprise that her post has struck a chord and become one of the most popular on Gemini's blog. With undisguised empathy, Sigal described the life of Gadi, a startup CEO who also has three children as well as a wife with a career.

“Gadi almost didn't sleep this week – not because of the kids. He just spent every free minute reconnecting to his work. His laptop was with him at dinner, when he read the kids a bedtime story and maybe even in the shower,” Sigal wrote.

Daniel CohenWith the lives of CEOs so hectic, VCs place great importance on providing assistance, or “value-add” to the companies in their portfolios. The most important of these value-adds, Daniel Cohen wrote, are the ability to bring money when a firm needs further financing, help with hiring top-quality management, and a vast network of contacts for use in attracting investors, partners, customers and potential acquirers. Another significant value-add, Danny added, is that “hidden nugget” - perspective.

“The combination of a broad market view and the work with a portfolio (of a number of firms), creates an important perspective, and that's something that can add a lot of value to portfolio companies,” Danny wrote.

It’s a sentiment that Gemini Venture Partner Orna Berry echoed when making a point about how entrepreneurs and VCs have much to learn from each other.

“For the VCs, they simply see companies go through the same cycles and can help from experience, while the managements of the VC-backed companies can teach their expertise,” Orna wrote in an article entitled “Thoughts on the Future of VC-Backed Entrepreneurship in Israel”.

This expertise is also an important element in contributing to the quality of a company’s management, which Danny has written is one of four key pillars upon which a firm is built, the others being the size of the market, the product, and the company’s business achievements.

So, as Guy Horowitz wrote in a post about “speed dating” between entrepreneurs and investors, when a VC meets a company, they are looking for facts and figures, as well as chemistry and a basic fit.

“Show me that the market is huge, that you have a differentiator, and that you know how much money will get you to the next financeable milestone,” Guy wrote.

Elsewhere on Gemini’s blog, Managing Partner Yossi Sela has provided some succinct career advice and Guy a low-down on “Over-the-top-TV”, while on his own blog Danny has written about the importance of analytics and the difficulties of competing against the incumbent.

Ouriel Ohayon, whose blog has been a great source of material for previous editions of this newsletter, is leaving Gemini and returning to being an entrepreneur. We wish him every success in the future.

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The Last Undiscovered Great Person of Israel's High-Tech Industry

In previous editions of Gemini Gems, we have written about the contribution of founding Partner and Chairman Ed Mlavsky to Israel’s high-tech industry, but since this comes from Gemini, it is easy to dismiss as bias. However, the release of Ed’s autobiography, Milk and Honey and High-Tech, a few months ago has prompted others - who have been aware of his work for a long while but are not connected to him through his family or Gemini - to express similar sentiments, not least leading Israeli economist Professor Shlomo Maital.
Ed Mlavsky

“Ed Mlavsky is the last undiscovered great person of Israel's high-tech industry,” Professor Maital wrote in the August 31 edition of The Jerusalem Report magazine, citing how Ed’s name was absent from a recent list of Israel's great business leaders of the decade.

Notwithstanding this omission, Professor Maital said that Ed made “two seminal contributions” to Israel's high-tech industry, the first being his leadership of the BIRD Foundation from 1979-1992.

“BIRD-F played a key role in the birth and growth of Israeli high-tech by successfully partnering Israeli startups with American strategic partners and funding half of joint US-Israel R&D projects,” Professor Maital wrote.

Ed’s second contribution was in helping to form Israel’s venture capital industry by founding Gemini, the country’s first major VC firm.

“(This) ultimately catalyzed the attraction of enormous additional VC funds to Israel,” Professor Maital wrote.

As well as paying tribute to Ed and expressing the hope that Milk and Honey and High-Tech will bring him the recognition that his contribution warrants, Professor Maital praised the book itself.

“It contains enormous wisdom for entrepreneurs, managers and all those who seek to understand what drives the creative genius of Israeli startup pioneers and innovators,” Professor Maital wrote.

Milk and Honey and High-Tech is available from Weill Publishers.
To buy a copy, please click here.
You can also read an article about Ed on the Israel21C Web site.

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Future Trends of the Web - Roundtable With Google
Rob SwerlingIn June, Robert Swerling, the Principal of New Business Development at Google, led a roundtable about the future trends on the Internet. The topics that Mr Swerling discussed included e-commerce, which he argued is still way behind traditional retail, a view that Danny agreed with in his blog about the event.

You can see pictures of the roundtable here.

For more about Gemini events, please click here.

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Portfolio Updates
Investment News

Gemini Invests in Virtual Tweens B Round
In September, Gemini invested in the B round of Virtual Tweens, a company that operates an online virtual world for children aged 7-14 called ekoloko, which emphasizes environmental values and social awareness. Daniel Cohen, who managed the investment on behalf of Gemini, was appointed to the board.
Since it was founded in March 2008 by Guy Spira, the CEO, and Gal Darom, the Chief Technological Officer, Virtual Tweens has made impressive progress. The company launched its beta Web site in Israel in English and Hebrew in October 2008 and has since gained 350,000 members, including from abroad. Virtual Tweens now plans to expand into Europe and eventually the US.


Gemini Invests in ColorChip
Gemini has invested in the latest round of ColorChip, which raised $3.5M. The company develops and manufactures optical communication components and subsystems for the telecom and data-communications (datacom) sectors. These products enable high-bandwidth networks to operate at increased speeds compared with rival equipment while using less power and space. Menashe Ezra managed the investment on behalf of Gemini and has been appointed Chairman of the Board. Israeli VC firm Vertex also invested in the round.


Portfolio Company News
To read the following stories, please click on the headlines.

Prime Sense's 3D Sensor Voted "Best New Product Idea" by Cable Industry Executives


Confidela Launches Pro Version of WatchDox's Web-Based Document Control


modu Launches its Novel Cell Phone

- modu and Philippines Operator Globe Telecom Ink Tie-Up
- Industry Veteran Les Yetton Joins Neocleus as President and CEO as Company Expands US Operations
- Neocleus Ships Next-Generation NeoSphere Client Computing Management Solution
- OpTier Posts Record Sales for the First Half of 2009 with Significant Customer Wins, Industry Accolades and Prestigious Awards
- Deutsche Bank Selects OpTier's CoreFirst for Business Transaction Management
- Interview with Amit Daniel, VP of Marketing at Starhome
- Mobile Operators Seeking Solutions for New European Voicemail Regulation
For more headlines about companies in Gemini's portfolio, please click here.



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