Benchmark Israel Won’t Raise Third Fund

Benchmark Capital confirmed last month that it will not raise a third fund focused on investments in Israel, which was first reported by Israeli newspaper The Marker.

Menlo Park, Calif.-based Benchmark Capital launched its Israel affiliate, located in Herzliya Pituach, in 2001 with a $260 million fund, and it then raised a $250 million follow-up fund in 2005.

In a June 2008 interview with PE Week, a VCJ affiliate publication, Benchmark General Partner Steve Spurlock said that Benchmark Israel would return to the fund-raising market in 2009. This was despite the Israel affiliate’s then-recent loss of two founding partners: Mark Kremer and Nachman Shelef.

General Partner Alex Balkanski last month confirmed The Market’s initial report. He also said that Benchmark never began trying to raise a third Israeli fund, and that a strategic decision was made to do all future investing out of a single fund. Benchmark Israel II will continue to do follow-on investments for existing Israeli portfolio companies, but all new deals will come out of the flagship fund.

Balkanski said that the firm is still “enthusiastic” about opportunities in Israel. He added that all three Benchmark Israel general partners, Michael Eisenberg, Arad Naveh and Elie Wurtman, will remain with the firm to manage both new and existing investments.

It is worth noting that this isn’t the first time that Benchmark has scaled back its expansion plans. In 2007, the firm allowed its European affiliate, Benchmark Capital Europe, to spin out into an independent firm called Baldterton Capital (see “Benchmark Cuts Ties to Europe,” July 2007 VCJ). Benchmark now makes select European investments out of its general fund, but does not have any full-time staff in Europe. —Dan Primack