Ofer Schreiber is an Associate at YL Ventures. He has responsibilities across deal sourcing, investment due diligence and portfolio company value-add. He told us something more about the Tel Aviv, Israel- and San Francisco, CA-based venture capital firm, their activity, and investment strategy, and shared some thoughts about startup founders’ right attitude.
FinSMEs: Can you tell us a bit more about YL Ventures?
Ofer: YL Ventures is a venture capital fund, founded in 2007 by Yoav Leitersdorf. The fund invests in early-stage technology companies in and around the internet with investments of around $1m initially. YL Ventures already invested in six companies: ClickTale, AcceloWeb (acquired by Limelight Networks), Seculert, Upstream Commerce, 6Scan and Blazemeter.
FinSMEs: What’s your investment strategy in terms of sector/stage/geography/number of investments?
Ofer: YL Ventures targets seed and series-A deep-technology B2B SaaS companies. Typical areas of interest include: Cloud Computing, Analytics, Performance, Cyber Security, Big-Data, Ecommerce Infrastructure, Mobile Technologies, etc. All of our current portfolio companies are based in Israel and that is our major geographical focus, although we can invest in Europe or US-based companies as well. Our target is around two new investments per year, in addition to follow-on investments in our portfolio.
FinSMEs: What do you look for in entrepreneurs? Which qualities do you like to see? What don’t you like to see?
Ofer: The founding team is one of the most important things in a start-up. We look for a combination of strong engineering skills, and deep business understanding. The founders must be extremely passionate about their product, hard-working, and open-minded. A start-up can go through rough times, and so the founders have to be agile, adapt quickly and implement changes. Most of the qualities we don’t appreciate in entrepreneurs are the opposite of the above.
FinSMEs: Which are the other criteria or key variables that determine your investment decision?
Ofer: Besides the team and the technology, there are some key criteria we look for:
Market potential – what’s the Total Addressable Market (TAM) and what are the trends in it for the next few years.
Capital Efficiency – We deeply believe that capital efficiency is very important for early-stage companies, especially in the internet world. Capital efficiency enables long-term financial flexibility, and so we look for companies that can leverage our initial investment and gain substantial progress.
Our ability to add value – YL Ventures invests in companies that we can provide significant added-value. We have expertise in building SaaS companies and our business network to potential customers, partners and strategic acquirers are within this sector.
FinSMEs: Startup failure, what do you think about it?
Ofer: Unfortunately, most start-ups fail. This is a fact. Having said that, the best entrepreneurs are the ones who are able to fail fast (learn quickly that what they are doing is not working) and adapt. Entrepreneurs that can’t admit failure, or not open for feedback, are bound to fail more often.