Noam Kaiser: Investing in Israel

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Noam Kaiser is a principal at Gemini Israel Ventures. He writes about venture capital, Israel, and atheism.

“That’s the thing about VC. When you come along for the first time they tell you that you are going to have to spend fifty percent evaluating deal flow and you have to spend the other fifty percent helping portfolio companies. What they don’t tell you is that you actually have to spend one hundred percent of your time evaluating deal flow and one hundred percent of your time supporting your portfolio companies.”

Gemini Ventures sometimes invests before the company even has a prototype. Contrary to what I expected, something like 20% of the companies Noam’s fund invests in only have a team and a Powerpoint.

“Sometimes you should engage the market with a minimal operational product rather than a minimum viable product. When you go out to market initially, you do not have a sellable product. Until you engage with the market, you don’t really know what they need.”

But Gemini is extremely selective. “We see 500 startups per year and we invest in maybe 4 or 5.”

As in my recent interview with Patrick Mathieson, Noam was expressive in how much he liked his job, as a result of the type of people he is able to interact with. “You spend the day with brave, courageous people. I love entrepreneurs.”

Noam once ran one of Gemini’s portfolio companies. I asked if the amount of sleepless nights he had as a CEO was proportional to the amount he has as a VC. “No, not by a long shot. Being a CEO–especially the CEO of a startup–is probably the loneliest position in the world. You live from one financial crisis to the next.”

VentureApp is a product Noam developed in response to seeing venture capitalists lacking software tailored to their needs.

“Venture capitalists still use Excel spreadsheets to manage deal flow. So on half a year of sleepless nights, I developed a system for dealflow management called VentureApp, and took it out on the road for nearly two years, then offloaded it to a financial services firm.”

There is no direct path to becoming a venture capitalist. The prototypical route involves starting a company, but Noam found his way to VC by being an “in-house entrepreneur” at a large company.

“My first job after graduation was a job in the Israeli satellite communications company. I purchased shows and movies from Warner Brothers, FOX…after a year of that job, I figured out that there was something that we in Israel were missing: webisodes. This brought about a small budget, and eventually it turned into the largest video content portal in Israel. After running that for another year, I started getting approached by many VCs.”

“I tried to be an in-house entrepreneur, which is something that I recommend wholeheartedly. I think this would be the most reasonable for people who get out of school but don’t have an idea for a business to start. You need to learn how to be an employee before you learn to run an organization.”

We discussed why Israel has been so successful in high-tech. As Alon Amit noted, military experience is an asset.

“One of the things you learn in the military is that you are trained to improvise. You are trained to look at a barrier or a problem, and see more than a single course of action. As a very young entrepreneur you are trained to start thinking about problems. So when you encounter a problem you are already prepared with a solution.”

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