TEL AVIV, Israel – Genesis Partners in July held a final close on its second fund, the $260 million Genesis Partners II, which will target early-stage technology companies based in Israel, or founded by Israeli entrepreneurs, said Managing Partner Eddy Shalev.
At press time, Fund II had made 10 investments, accounting for some 15% of the fund, Shalev said. Genesis Partners will invest the vehicle in about 20 to 25 communications, wireless, Internet infrastructure and software companies, with investments averaging between $8 million and $15 million, over several rounds, he said. The firm seeks to be a lead investor in its deals.
Genesis Partners, like many of its counterparts, helps its portfolio companies founded in Israel relocate management of the company – specifically sales and marketing efforts – to the U.S. Over the past few years, it has become common for Israeli entrepreneurs to anchor sales and marketing departments in the U.S. to leverage the consumer base, while leaving research and development teams in Israel (VCJ, July, page 37).
The firm’s previous $90 million Genesis Partners I, which closed in October 1997, is completely invested in 27 companies. Investments in that fund averaged $3 million, Shalev said. The firm’s portfolio includes nine companies that held exits – five acquisitions and four initial public offerings – including AudioCodes Ltd., which went public in May 1999, and ClickSoftware Technologies Ltd., which held an offering in June.
Institutional investors, mainly from the U.S., with a minority based in Israel and Europe, comprise about 90% of the firm’s limited partner base, Shalev said. The firm retains a 2.5% management fee and an 80%/20% carried interest split, he said.