In recent months, there has been growing panic over predictions that the U.S. economy is heading for a recession.
We are already in a bear market, and startup investors, it seems, are changing their positions and strategies with the prediction of dark times ahead.
The capital may still be there, but investors are wary due to the apparent volatility.
Some, however, feel confident enough to head in the opposite direction. Even though recessions have followed most bear markets in most cases, this has not always been the case; even if this is what the near future has in store for us, history shows that we have always been able to recover.
This assumption led Greenfield Partners to announce today a close of $350m in new investment funds.
The NY-TLV-based VC fund’s new capital is intended to invest in 15 startups at early growth stages and support its existing portfolio companies in later and long-term stages. The new funds raised bring the fund’s total assets to over $500m, and it seems they are ready to spend them.
“The technology market, both private and public, is continually evolving, and it is difficult to predict at this time where and when things will stabilize,” says Managing Partner Shay Grinfeld. “Several significant factors contribute to this – increased inflation, rising interest rates, supply chain disruptions, and the war in Ukraine. We know the market will be affected by how these factors play out in the coming months. Although the waters may be choppy in the near term, we remain fundamentally bullish on the secular tailwinds driving technology innovation towards significant growth in the years to come.”
One of the fundamental principles of the fund’s strategy involves its preference towards Israeli startups. Grinfeld, a long-time operator, entrepreneur, and investor, believes that his optimism is grounded in years of experience and a unique approach. “Our prediction of growth is especially evident in Israel, which has demonstrated resiliency and innovativeness time and again. We continue to put emphasis on identifying technologies that can create disruption in large markets and have strong fundamentals, healthy unit economics, and efficient cash burn.”
The fund’s team performs deep analyses of KPIs and processes and works closely with management teams to significantly improve growth and efficiency.
Yuda Doron, Managing Partner at Greenfield, adds: “We see where our portfolio companies need to be a few years down the road, and so we work closely with them on building their sales organizations, recruiting executives, opening international offices, improving KPIs, and developing scalable internal processes; this sets them up for long-term success. We have been active in the Israeli technology ecosystem for many years and believe in it, especially today.”
The fund primarily invests in exceptional early-growth stage Israeli technology companies that have demonstrated strong product-market-fit, derisked technology, and attractive unit economics. “Throughout this period, we will continue to search for these attractive opportunities while keeping an eye out for transformations in the market and adapting ourselves accordingly,” Grinfeld exclaims.
Among its investments are unicorn companies like VAST Data, BigPanda, Guardicore, and others. The fund heavily focuses on enterprise software and invests in fintech with a preference for early growth stage companies.
Grinfeld insists that in order to grow at times like this, a company must scale internationally, a process that investors need to monitor closely. “It is one of the key focus areas for companies at the early growth stage. During these times of market volatility,” he adds, “we are also working closely with portfolio companies that need to raise funds in the near term to ensure optimal cash management and a sufficient runway in the long-term, so they can come out stronger from this current situation.”
While many investors are standing by and waiting to see how markets and potential exit valuations evolve over the coming weeks and months, Greenfield believes this is the time to do the opposite: “Considering the long-term implications of the recent shift in market multiples, we believe an opportunity exists to explore new investment opportunities at more attractive valuations than were possible in recent years. We continue to actively invest throughout this period and are placing great emphasis on identifying situations that fit our core investment thesis of selecting market-leading companies with attractive and healthy unit economics.”
“In this period of market volatility,” he concludes, “we are grateful for our ability to continue to support entrepreneurs and promote innovation through our new funds.”