"Military service in Israel is the best incubator in the world"

Some 500 startups a year pass through the hands of Alon Lifshitz, director general of Blumberg Capital, but only 10 manage to get large rounds of investment

In English, brief and focused on the market. This is what an elevator pitch from an entrepreneur looking for funding for a startup should be like. If, moreover, the business model matches the parameters that investors are looking for, the startup can even raise 12 million dollars, the sort of figure dealt with by Blumberg Capital, the venture capital firm founded and headed by a Jewish businessman in 1991, with HQs in San Francisco, Tel Aviv and New York.

"You have to explain how you can serve a global need and you have to want to be the best," argues Alon Lifshitz, director general of the Blumberg Capital fund. Lifshitz lives between the United States and Tel Aviv, where he spends 90% of his time. "Some 500 startups are set up in Israel each year, devoted primarily to information technology and health, and which last year attracted a total of 4 billion dollars of investment," he says during his speech at ACCIÓ's 21st Investment Forum, held this morning in Barcelona.

Blumberg Capital has invested in a large number of startups. What are the rules of investment?
In the first place we focus on the team, then on knowledge of the market and whether it answers a global need. I prefer to invest in startups of a medium profile with large teams, rather than in large companies with medium-sized teams. Success is not guaranteed, but with good teams you can overcome any challenge.

You see about 500 business plans a year and invest in 10 to 15, of which 7 or 8 are in Israel.
Our investment portfolio in Israel is a success; we make few mistakes. In percentage terms we have fewer failures than in Silicon Valley.

Why do you focus on companies that are just starting out?

Because we like to take risks and because our venture capital firm's DNA is achieving good profitability and for that you need to invest early, when startups are in the initial stage.

At Blumberg Capital you are used to investing large amounts: 2 million, 10 million... In Spain, above 200,000 euros is seen as "dead valley".
Our average investment ticket is 3.3 million dollars, especially when investing for the first time, but we can invest as much as 12 million dollars. The size of investments in Spain or Europe has to change, because one the reasons why a company does not make it is due to a lack of funding. If you believe in a startup and its team, you have to give it the money it needs so that it can realise its ambitions. To increase investment tickets, Barcelona has to attract global investors and companies and make sure entrepreneurs think globally, not only about the local sphere.

It is obvious that Silicon Valley has a special ecosystem in terms of innovation and entrepreneurship. Why is it so different from the rest of the world?
Silicon Valley is incredible, one of the differences between Silicon Valley and other places is the amount of money, with large investment tickets. It is full of venture capital. Another characteristic is that the firms born in the United States do not have to make an effort to think globally, because their local sphere is already global. Also, the evaluations of startups are much higher. For example, in comparison with Israel, the main difference is these evaluations.

Are startups undervalued outside Silicon Valley?
I don't know whether they are undervalued or whether they are correctly valued and that what happens is that in Silicon Valley they are overvalued. What I do know is in many places in Europe the evaluations are extremely low and that is a problem.

When talking about technological innovation, the second ecosystem is Israel. What are its characteristics?
In the first place there is the character of entrepreneurs: for us failing is not a problem, we think big and we have great responsibilities at quite an early age. The military service is like the best incubator in the world. There is also an immigrant culture, especially Russian immigration. We also have an ecosystem full of accelerators, conferences and events, co-working spaces, research centres and government support. Every university in Israel has an entrepreneur programme.

Is Barcelona capable of attracting international talent?
There is talent here, but what Barcelona needs to do is attract more VCs. The mentality has to change: thinking globally, events in English and not only the local languages, and going beyond Spain: that is the recipe.
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