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| Home - Venture Profile - Jul 04 Issue |
Venture Profile: Rami Kalish, Pitango Venture Capital
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Angel Mehta: What are some of the differences between the dynamics of venture capital and early stage investing in Israel, vs. Silicon Valley?
Rami Kalish: They are very similar, however, there are some basic differences. One is that we’re forced to think globally from day one. We do not have a local market. In many cases the first market is not the U.S…it may be Europe or Asia Pacific. Therefore, you will see that Israeli startups are exposed to the different international markets sooner than U.S. or European companies. A U.S. company can be very successful just focusing on the local market. A German company could be very successful doing business only in Germany for the first five years or so. We have no choice but to go international. I think it is going to be one of our advantages, long-term, because today everyone realizes that you need to have a global strategy.
Another difference is that, in general, the cost of operating in Israel is lower than in the U.S., and therefore the cost to build a product will usually be lower. The amount of money invested until you have the product ready will be lower and therefore, in most cases, the valuations will be lower.
But in general, Angel, I think there are probably more similarities than differences. If you put a black box around an Israel start-up or just the process of Venture Capital in Israel, and put a black box around a similar startup or venture capital process in the U.S., you will see that they operate on fundamentally the same principles.
Angel Mehta: Do you have or do you participate in deal flow from Silicon Valley?
Rami Kalish: Not really. Our business model and charter from our investors is to do Israeli-related deals, so we need the deal to have an Israeli Nexus. I want to differentiate between, let’s say, the legal structure of the company and where the deal is coming from. Many of our companies are officially based in the U.S. because we thought it makes more sense to register them as a Delaware Corporation. So from that perspective, yes, we invest in U.S. companies.
But from a deal flow point of view, our deals come from Israel and from our Israeli network outside of Israel, mainly in the U.S. There are many Israeli entrepreneurs residing in the Valley or on the East Coast who have graduated from great schools in the U.S., and have held different positions in some of the large U.S. companies. In fact, we have a Silicon Valley office in San Mateo and we source deals from our Israeli network over there.
Angel Mehta: How do you find the talent pool of Business Managers…is it easy to attract the right CEO?
Rami Kalish: It’s not as developed as the U.S. because we are lagging ten years behind…
Angel Mehta: It’s a young industry….
Rami Kalish: …yes, it’s a younger industry. You know, in the same way that I spent seven years outside of Israel, all of the nine partners in Pitango have lived outside of Israel, studied outside of Israel, or worked outside of Israel for many years. This is typical to other firms and/or high-tech companies that are based here. So the new generation of managers in Israel is really a generation that grew, studied, worked outside of Israel and in the last ten years. Definitely the management pool in the U.S. is significantly larger, and we also have U.S. or European managers in our companies, but the local talent pool is improving. Eventually, we’ll catch up – it’s only a matter of time.
Rami Kalish is the Managing General Partner and Co-Founder of Pitango. Rami has extensive experience in Venture Capital and international management in the high-tech environment. He has been active in the field of Venture Capital since 1992, and has served as Managing General Partner since that time. Prior to founding Pitango (originally under the name Polaris), Rami garnered rich managerial experience at high-technology firms in the U.S., Europe and Israel. He previously held sales and marketing positions at IBM and senior executive roles at Orbotech (NASDAQ:ORBK), a leading manufacturer of capital equipment for the PCB and semiconductor industries. He can be reached for feedback at rami.k@pitango.com
Angel Mehta is Managing Director at Sterling-Hoffman, a retained executive search firm focused on VP Sales, VP Marketing, and CEO searches for enterprise software companies. He can be reached for feedback at: amehta@sterlinghoffman.net
 
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