Alan Feld: Israel's tech sector barometer

AuthorAssaf Gilead
Published date29 January 2023
Publication titleGlobes (Rishon LeZion, Israel)
Feld (61), founder of the investment firm Vintage Investment Partners, is among the oldest and shrewdest investors in the tech industry. Feld possesses knowledge and influence that apparently no one else in the local sector has. The network of funds he has founded connects the institutional bodies in Israel and abroad with a selection of top foreign funds that include Andreessen-Horowitz, Bessemer Venture Partners, General Catalyst Partners, and Accel, and Israeli funds such as Glilot Capital Partners, TLV Partners and 83North. Through Vintage, hundreds of millions of dollars are invested in huge companies such as, Wolt, Klarna, and SentinelOne

But Vintage is not just about investing. It also assists funds, their partners and the investors backing them, in what is known in the industry as secondary activity (purchasing existing shares in exchange for cash). These days, this activity has become critical when many investors are in search of cash. Together with partners like Abe Finkelstein, Amit Frankel, Hamutal Meridor, Asaf Horesh and, more recently, Keren Terner - the former director general of the Ministries of Transport and Finance - Feld has close to $4 billion under management in 30 direct investment funds, funds of funds, and secondary funds.

Vintage's dominant position was reduced somewhat in recent years, due to tech overhyping, when institutional investors began investing directly in companies instead of paying double subscription fees for a fund of funds, and Israeli funds - that until then had needed Vintage as investment assurance - managed to raise capital by themselves. Other Israeli funds, like Israel Secondary Fund (ISF), also pursued investment in foreign funds, but Vintage, nonetheless, maintained its position on the Israeli tech landscape as a prominent, well-connected fund.

November forecasts coming true now

Vintage has a force multiplier that is unparalleled in its sector: it knows at any given moment where each partner stands, their mistakes, successes and failures. In this way, Feld has positioned himself as a barometer of Israel's tech industry.

At the recent tech leaders meeting in Tel Aviv in November, Feld was very firm in his prediction: the number of unicorns will decrease, the volume of investments in Israel will shrink, and hedge funds will flee the giant companies. All of the trends indicated by Feld almost three months ago have, in recent weeks, come true.

Tried to warn of an industry crisis in 2021

Feld was never been a self-appointed tech industry spokesperson, and almost never made public criticisms. But at the end of 2021, as his industry colleagues were putting more and more unicorns in their portfolios, and competing over huge deals, he'd had enough. He opened a blog account on Medium and posted an article entitled "The Disappearance of Risk…?".

"Essentially, there is no risk premium for illiquidity… risk is ignored in setting the return," he wrote. "This cannot continue for long… there is a thing called gravity… and gravity in markets can be ugly in times when risk goes up in a hot air balloon."

These frank statements garnered Feld no praise and were, in fact, condemned by many, but proved prophetic. Four months later, following several weeks of declines on the capital market, interest rate hikes, and the war in Eastern Europe, the private market also reacted. In April, layoffs began at privately-held high-tech companies that then spread to public companies, and technology giants, and developed into an industry-wide crisis with layoffs of more than 150,000 tech workers around the world.

Feld, it turns out, did the opposite of most of his colleagues. In September 2021, Vintage raised a large secondary fund. But instead of investing in it, Feld and his partners froze activity and temporarily halted collecting management fees for a period of time - something that, as far as is known, had never happened before in Israel...

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