PODCAST: Lee Moser — $50M Is Just The Beginning For AnD Ventures

Phillip Stein & Associates > Blog > Episode 111: $50M Is Just the Beginning for AnD Ventures

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Israel-based AnD Ventures just launched with a seed fund of $50 Million! In this episode, Philip chats with their Managing Partner, Lee Moser, about the world of Venture Capital funds and High-tech in Israel. Tune in and enjoy!

Philip Stein Podcast with Lee Moser [Transcript]

Lee Moser- managing partner of AnD Ventures, a former partner at iAngels and former chief of staff of the Israeli ambassador in Washington D.C, MBA graduate from Northwestern University.

Stein: you are the managing partner of AnD Ventures, which, from your website, is “redefining value investing”. Can you explain how your mission distinguishes you from other venture capital funds?

Lee: We define ourselves as a company-builder-based fund. My founder and I were in the industry for many years before establishing the fund, and we saw that there were gaps for early-stage founders when founding their companies. We found that they need great help with really building the company over the course of the first year-year and a half. Looking at the Israeli startups, about 50% are failing for execution. We want to be there when they start building their company until they have hit growth and help them build it. We aim to come in as a partner of the company, we’re not just investing or just taking a seat at the board, we are actively helping the founders establish their companies and when we invest we architect the needs with the entrepreneurs of the company, mainly focusing on the tech, that the base will be strong, the product validation which means not only having a great product but assessing whether there are customers for it, who are the customers right from the beginning. What is really important, not just for Israelis but in general to grow is the execution itself, the traction. So we work very hard with the entrepreneurs, helping them bring customers for about the first year or two. That’s where we think is the secret, helping from within.

Stein: sounds like a winning approach. What came first- did you first build your exceptional network of advisors and then establish the fund or did you establish the fund and then build this network of worldwide experts?

Lee: Great question. The network that we brought into the fund is a network that we have been collecting for the past 15–20 years, so it was always there. I have a great network, and as you mentioned I was the Chief of staff in Washington D.C, then I worked a little in Blackrock, then I was a partner in iAngels, and my co-managing partner was at google for 6 years and led their acceleration program around the world and before that he was at Microsoft. But then there is always the question: so we have a great network, what do we do with this network? How do we bring them to the table? At AnD, I believe we created a platform that enables people to be a part of what we do and also benefit from it. So I would say when we decided to establish the fund, we brought our network in, so it was really all entangled together- how do we establish a fund that is different, how do we bring the network that would want to work with us into the fund so that was really parallel.

Stein: I personally have been working with high-tech entrepreneurs for probably nearly 25 years, almost all of them ultimately want to exit. Do you have a methodology to enable them to accelerate the path to an exit? Is that part of your program?

Lee: yes. So AnD stands for Accelerate and Disrupt, and again it comes back to execution. Looking at the Israeli ecosystem, which is not so young anymore, right? We’ve been doing it for the past 30 years, so the ecosystem has matured, but I think the gap between Israeli startups and Silicon Valley-based startups is still the execution itself and the sell. So I think that the part of the exit, the growth is, again, bringing the validation, bringing the customers-not just the Israeli ones but the international ones- the North-American customers- sooner rather than later. Many times you see companies raising more funds in Israel, staying in Israel, and they want to improve their tech and their product and be perfect before going into the US market, while we think this is the wrong attitude. We think they should be in that market as fast as possible and work on the design with an American corporate/company. So I would say the fastest, not sure if I want to use this word particularly, but the fastest way to exit is by being international sooner than what we see today for early-stage companies. This is something we work on very hard with the companies, with the very ambitious goal that a year from the investment they are going to be at x10 of the revenue. So if they had no revenues, within a year we want to see revenues. And if there are initial revenues when we invest, we want to see x10 growth within a year.

Stein: that’s great. So you mentioned 30 years of the high-tech industry in Israel, I’ve probably been involved for the past 25 years of that, how has the world of Israeli high tech changed since you’ve been working in this area?

Lee: Wow, I think it changed a lot. Maybe the world has matured, so looking back at that 30 years ago when the government actually accelerated companies, we can say we evolved from the start-up nation to the exit-nation, evolving from where everyone started companies and sold them to corporates quite fast, to the growing nation. Today, first of all, you see between second-fifth time entrepreneurs who build companies, some of them fail and some of them are successful, but coming back and building companies again with much more experience. So they secure funding that is much easier for them to receive after executing companies, also you can see entrepreneurs who don’t want to sell so quickly. They see their friends and what goes on in the ecosystem and only in the last year, Unicorn status in Israel has doubled from 25 to 50 Unicorns, so they look at that and think to themselves that they don’t want to sell so quickly. Instead of selling at 30M/100M/150M they are thinking they can really build a company and a corporate here in Israel and I think this is the main change here. Entrepreneurs don’t want to do the short cycles anymore, they are looking at the bigger companies. Obviously, there is only a 5% chance they will be able to execute that but I think it has really matured.

Stein: You’ve mentioned the ecosystem and the maturity of that ecosystem, and we have certainly seen it on my side of the ecosystem, accounting, legal, it’s really evolved in the last 25 years in terms of the experience here. At one time you had to go to New York or to Palo Alto for accounting or legal advice and I don’t think that is the case anymore. There’s experience here and knowledge, so it’s an interesting confluence of that maturity both in the ecosystem of the companies and the entrepreneurs themselves and both in the support services.

Lee: I agree

Stein: have you begun to see any impact of the Abraham accords on the companies you work with?

Lee: The short answer is no and the long answer is that I think it is a work in process. We are almost a year into the Abraham accords and at the beginning there was a lot of hype a lot of Israelis flew to Dubai, Abu Dabi, Bahrein and a lot of Israelis thought that it was going to be a fast engagement- it wasn’t, we still need to build this relationship, there is trust but trust needs to be built. The money isn’t flowing into Israel and Israeli companies are not moving fast to Dubai or to Abu Dabi, which I think in a few years will be the case. I think now there is still some hesitance from Israeli companies to really execute in the area, as it is a huge area it can be an amazing revenue stream and partnership. It is just not there yet. It won’t take too long to build trust especially between countries that were, by the way, in diplomatic relationships for a very long time, mainly in tech and security but it’s been very slow.

Stein: I think that is an excellent answer. So let’s talk a little about you, you worked as a Chief of Staff to Ambassador Michael Oren during the Obama administration what was that like? And how did you pivot to the private High-Tech sector from that experience?

Lee: Wow, so that was a very intense experience, very intense 4 years, 24/7 work, very interesting. It was the Obama administration, the Congress, the state department, the Senate, a lot of media. Obviously, there was tension between the Obama and Netanyahu administrations, we managed to do a lot of things and I think that from looking at those 4 years for example, in the context of Israel’s current situation, the Iron Dome was one of the main projects that we did. Lobbying in congress, getting the funds for it, and there was also a lot of good that happened there, yet it was very challenging. And I think there is still impact of this period but personally, it was one of the peaks of my career. The center of everything really.

Stein: Interesting, I actually visited ambassador Oren during that period so we may have passed each other in the hall.

Lee: Yes, we probably met

(both laughing)

Stein: So again, from that public experience, you were very deep in the public sector, you obviously pivoted. How did that come about?

Lee: It started there actually. I loved my job, again, I think it is second to none to be in the center of everything in D.C, looking at Israel-US relations and politics in general but a lot of the conversations about Israel are usually the conflicts and things that are harder to explain. Every time we reached tech (in conversation), the ecosystem, the entrepreneurship in Israel, and the great minds that are here, the conversation was immediately positive. I think that back then that was the first seed that made me realize that that is what I want to do- I want to work with founders and innovation. I think the change will have later come from many things but one is how we innovate and how we create amazing things that really impact the world, and that’s where I decided I want to go into the tech ecosystem. When I returned (to Israel) and started working at iAngels I fell in love with venture capital and investments and with the ability to invest and not only grow the investments, which, again, is second to none- investing in High Tech in Israel, but also work with really great people and learn something new every day about new technologies.

Stein: I love working with these people, I think it’s one of the most interesting things I could have imagined when I opened my practice, that I would be involved with so many interesting people, I certainly can appreciate that. So you are being attracted to the Israeli tech scene and it seems that Israel is being a magnet now for large international investment groups, do you think it’s getting more competitive to find companies that you can invest in, at a reasonable valuation?

Lee: I think it depends on the stage. When you see Blackstone now came into Israel, and more and more funds are coming here, huge funds, it’s hard. There is more competition and valuation that is higher. But, looking at the early stage there is still a gap now actually.

Stein: Interesting.

Lee: So fewer funds have the appetite to invest super early and to really grow the companies as everyone is looking for traction and customers and the A,B,C rounds. So I think that the stage we are at holds great opportunity, and that’s the reason we are in early stage and do company building. We believe that with that expertise we can help companies reach growth and compete for institutional money.

Stein: Very interesting. My last question. I believe Corona is in the “rearview mirror”, but can you share how you managed through the last year in light of Coronavirus, and I assume your travel plans were severely impacted.

Lee: We started AnD early March 2020, two weeks before everything closed. We thought that we had a great idea for a fund, we had a seeder for the fund, the pandemic started and we had to really put our entrepreneur hats on and start the whole thing from the ground up. The first month was very hard, but then we adapted. We innovated, we adapted the Zoom, and we understood that obviously, it’s important to fly and meet the people, especially investors, but we managed to raise the fund during the pandemic year even though it started with great uncertainty.

Stein: If people want to contact you how could they reach out?

Lee: https://www.and-ventures.com lee@and-ventures.com

Source: https://www.pstein.com/blog/episode-11150-m-is-just-the-beginning-for-and-ventures/

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AnD Ventures is an early-stage VC investing in extraordinary people & frontier technologies.