More proof today that the pool of Israel entrepreneurs shows no sign of a let-up. Data from IVC shows that in the first quarter of this year, 46 seed companies raised a total of $54 million. ($1.2 million, on average). That’s more new businesses raising more money than the previous quarter when 44 newbies attracted $41 million.
Impressive. But what’s behind it?
Is it that the sirens’ call of entrepreneurship is proving irresistible? Or is it a sign that seed money — smart or not — simply needs to find a home. As Mucker Capital Managing Partner William Hsu wrote on ReCode earlier this spring: “Five years ago, the average seed fund was about $35 million; today, that number is closer to $100 million. The need to deploy more capital and the reality that traditional Series A firms have moved upmarket from the traction perspective for Series B-like companies has translated into seed funds happily deploying capital.”
That global perspective seems to be ringing true here in Israel, as the IVC-KMPG report also revealed that funding of early stage companies — one up on the startup food chain — dropped 14% in the first three months of 2015. And that, folks, is how the eco-system works.
The big money isn’t made by investing in companies already on the path to success (e.g. Baidu’s pouring money into Taboola), but by making riskier, counter-intuitive bets that no one other than your rich Uncle Max will make.