Contrary Capital invests in companies coming out of university campusesRead more...
Meet Julie Meyer, CEO of VIP, and Tal Elyashiv, co-founder and managing partner of SPiCE VC
Venture capital used to be a cottage industry, with very few investing in tomorrow's products and services. Oh, how times have changed!
While there are more startups than ever, there's also more money chasing them. In this series, we look at the new (or relatively new) VCs in the early stages: seed and Series A.
But just who are these funds and venture capitalists that run them? What kinds of investments do they like making, and how do they see themselves in the VC landscape?
We're highlighting key members of the community to find out.
Tal Elyashiv is co-founder and managing partner of SPiCE VC and Julie Meyer is CEO of VIVA Investment Partners. Last month, VIVA, a Swiss private equity firm, announced that it had an equity position in the management company and the fund of SPiCE, a venture capital fund in the digital securities ecosystem.
Elyashiv is a senior executive with over 20 years of experience leading product delivery and business in multiple industries. He is the founder and board member of Securitize.
Prior to these roles, he was the founder, owner, and board member of Exactor, a company that provides online vendors a comprehensive solution for secure, reliable and accurate sales tax compliance efforts, including tax calculation, record keeping and tax processing.
Julie Meyer is the creator of the Ecosystem Economics Digital Playbook. She has worked with organisations, such as ToiletBoard, Vestergaard, INSEAD, EntrepreneurCountry and Follow The Entrepreneur Investor Summit, and the portfolio companies of her fund to build a world of sustainable economics and impact. Her book, Welcome to EntrepreneurCountry, was an award-winning new business book published by Little Brown.
She was instrumental in the early stages of lastminute.com, WGSN, Espotting, Skype, Zopa, SpinVox and Monitise. She and her team have sold businesses to Google, EMI and private equity.
VatorNews: What is your investment philosophy or methodology?
Julie Meyer: VIVA Investment Partner (VIP) enables emerging fund entrepreneurs to scale their investment firms. We accomplish this through establishing a fundraising strategy to scale and attract capital, as well as positioning the fund to be a key catalyst for the ecosystem in which it operates. VIP announced its intent to build the Digital Securities ecosystem in partnership with SPiCE VC, the first fully tokenized venture capital fund which has achieved a first close and invested $15 million.
Tal targets companies which are enabling the new digital securities infrastructure to emerge effectively. The SPiCE portfolio companies’ business models will transform industries – both enabling existing players and disrupting others – but building the future of the digital securities ecosystem. VIP’s equity stake in the General Partner of SPiCE secures a long-term horizon for our partnership.
Tal Elyashiv: SPiCE’s objective is to provide its investors exposure to the massive growth of the Blockchain/tokenization industry. We focus on the relevant verticals of this industry, with specific focus on leaders in the industry that are building key ecosystem components & services. Rather than investing in the “gold mines”, we invest in the “picks and shovels providers” of the tokenization industry. We are also very proactive in identifying strategic partners and relevant ecosystem players and components to create future portfolio synergies.
VN: What are your categories of interest?
TE: SPiCE VC invests in companies building the blockchain/tokenization ecosystem. The SPiCE portfolio is diversified across different industries from property to capital markets, and will continue to extend through all of the industries where tokenization can provide liquidity for illiquid assets. My experience, from semiconductors to banking, to gaming, and from corporate CIO positions to start-up entrepreneur in China, the US and Europe, give me an advantage in understanding how new industries emerge, gauging timeframes for adoption, and assessing the critical success factors. I believe companies who take a bold leadership position stand to benefit the most from the massive growth of this industry.
VN: What's the big macro trend you're betting on?
JM: Blockchain/tokenization is “democratizing” the asset class by enabling participation in opportunities that have previously been only accessible to large institutional investors, but now is becoming a key mainstream enabling technology in verticals like capital markets, banking, payments & money, fundraising, etc.
TE: All of the aforementioned verticals are huge, with hundreds of trillions of dollars at stake globally.
VN: What is the size of your current fund and how many investments do you typically make in a year?
TE: SPiCE VC’s target fund size is $200 million, with around 12 to 15 new and follow-on investments a year.
JM: SPiCE is one of three funds on the VIVA Investment Partners Platform.
VN: What stage/series do you invest in and how much is that in dollar amount for you?
TE: SPICE invests in Pre-Series A, and Series A rounds with investment amounts of $2 million to $5 million for the initial investments and adequate reserves for follow-ons.
VN: What kind of traction does a startup need for you to invest? Do you have any specific numbers?
TE: SPICE looks at a large number of parameters, some of which are tailored to the stage, product, business model, state of the industry and the competitive landscape of the startup. Some are quantitative and some are qualitative. I believe that having pre-defined numbers for required traction is an oversimplification of the process and a cop-out. The numbers that demonstrate the right traction, health and growth potential for a startup must be tailor-made for that specific startup. If I can’t understand the startup business model, product/service, and the industry well enough to do that then I don’t have any business in investing in that company.
VN: What other signals do you look for? Team, product, macro market?
TE: The team is the most important factor in any venture capital deal. Rene, Tal, Carlos, and Julie do not compromise on that. They look for additional factors including product, product-market fit, competitive landscape, fit within the existing ecosystem and future direction. They also take into account the startup’s business model, financial forecasts and their credibility, go-to market strategy, time-to-market, resiliency of the business model to the potential rapid changes in the industry, fit to their investment strategy, potential synergies with other portfolio companies, exit viability, and others.
VN: What do you think about valuations these days? What's a typical Seed pre-money valuation and Series A?
TE: Valuations tend to be high, sometimes too high, especially in the industries SPICE focuses on. However, over the last few months (SPICE has been fairly active investing also during the COVID-19 period) they have seen some more rational valuations. Trying to maximize the valuations of early stage companies is often hindering future success.
VN: There are many venture funds out there today, how do you differentiate yourself to limited partners?
TE: SPICE differentiates itself in multiple ways. Number one, we have a leadership position as one of the few VC funds that focuses on the tokenization ecosystem and a prime choice for LPs who are interested in the massive growth of this ecosystem.
Number two, our performance for the first two years of operation is remarkable with a 65% appreciation of the fund’s NAV.
Number three, we are considered to be visionaries and early founders of the digital securities ecosystem, a major vertical in the tokenization industry. This allows us great access to deals and deep understanding of the ecosystem.
Number four, we securitized the LP interests in the fund and also make them available as digital securities, which are traded on regulated digital securities marketplaces. This provides more liquidity options for LPs who are interested in liquidity.
VN: Venture is a two-way street, where investors also have to pitch themselves. How do you differentiate your fund to entrepreneurs?
TE: SPICE focuses on the tokenization industry. We understand it well; we come from the industry, and all of our portfolio companies are part of the Blockchain/tokenization ecosystem. That means that we have a true understanding of all facets of the ecosystem, share the vision of the entrepreneurs we invest in, and can help them leverage the cumulative knowledge in their portfolio. We enable greater access in the industry, and leverage synergies with our strategic partners and other portfolio companies.
SPiCE’s partners have been senior corporate executives, successful serial entrepreneurs, and early stage investors themselves. They understand, from proven experience, what it takes to succeed as a startup, and as an entrepreneur and how an investor can truly add value to a startup.
VN: What are some of the investments you’ve made that you're super excited about? Why did you want to invest in those companies?
TE: Securitize, the leading player in issuance and lifetime compliance management of digital securities. Securitize is already regarded as one of the unicorns of the ecosystem. Beyond the amazing growth over the last couple of years (which is obviously reflected in value), we are excited because the firm is leading the charge in the development of the digital securities ecosystem.
INX, which is building a fully-regulated digital asset and security token trading platform, targeted mainly at institutional investors. INX is currently in the early stages of an IPO, and is the first fully regulated IPO (SEC) worldwide that is based on a digital security. We invested in INX because of the bold vision, their strong, proven and capable team, and their sound business model.
Ripio, which offers a range of financial services for South America’s emerging markets using blockchain technology. It is very timely to benefit from the increased lack of confidence in the stability of local governments, economy, and currencies.
BlockDaemon, which offers a platform that facilitates Blockchain deployment and empowers businesses, enterprises and developers to quickly deploy and iterate innovative Blockchain applications. We are excited about our investment in BlockDeamon as we already see a major shift of large banks, institutional players, and financial institutions interested in utilizing blockchain technologies, and BlockDaemon is providing a much needed solution for these large players.
JM: DRIVE Software Solutions, a leading fleet management firm whose ODO Dashboard integrates in an App Exchange model all of the services to provide the full data on what happens in vehicle.
VN: What are some lessons you learned?
TE: The importance of thoroughly understanding business models and go-to market strategies, as well as analyzing the potential impact of market shifts (some of which can be predicted) on the validity of the models and predictions. Together with the ability of the business to shift and adapt accordingly. Also, understanding necessary industry and ecosystem conditions and timing for proper product-market fit in a rapidly evolving industry can’t be underestimated.
JM: Something we always knew but got reinforced: an incredible team is a critical factor for success. There is no substitute for that.
VN: What excites you the most about your position as VC?
TE: What excites me the most is our ability to generate remarkable return for our investors by investing in an industry that is experiencing one of the most explosive growth patterns in history. Plus, we have the ability to fund, impact and influence the formation of that massively growing sector. Statistically, every $1m invested in qualified venture capital opportunities creates 30 new jobs. The social impact of this is especially meaningful in the current environment.
VN: Is there anything else that you think I should know about you or the firm or your thoughts about the venture industry in general?
TE: SPiCE is an active VC. We understand and know the industry we invest in well. We continually scan and map the fast-changing ecosystem and mark targets – parts of the ecosystem and type of players that we would like to invest in. We do that based on our vision for the industry, the evolution of the market, our understanding of what is really happening vs. the hype – directly and through our involvement with our portfolio companies. We then look for the companies and deals that fit our targeted areas and our investment criteria. We roll back our sleeves and are actively screening the market rather than just passively waiting for a good investment opportunity to show up in our deal pipeline.
Read more from our "Meet the VC" series
The fund is part of investment firm SDVenturesRead more...
GSR Ventures is focused on investing in artificial intelligence and digital healthcareRead more...