“One investor told us: you look like nice girls, you should go do something else”

This article first appeared on March 28, 2021 and is being republished as part of CTech's Top 10 stories of 2021.

The meeting with Mor Assia and Shelly Hod-Moyal was bookended by two scenes that don’t typically take place in a venture capital firm’s meeting rooms. It began as Assia (39) just finished pumping breastmilk for her newborn and fifth child, born three weeks ago, and ended when Hod-Moyal’s babysitter brings her toddler and fourth child to the office right before they take off to go swimming.

Assia and Hod-Moyal jointly manage nine children from the ages of zero to ten, two husbands who are also CEOs -- Yoni Assia is the co-founder and CEO of eToro, while Kfir Moyal is the former founder of Matomy Media Group Ltd. and today serves as the CEO of BIScience. If they weren’t overseeing $300 million at the iAngels firm they founded in 2014, they might seem like the perfect housewives who came out of a JCrew catalog, but they couldn’t be further from that.

Last week, iAngels completed a historic exit, when eToro announced its merger with a special-acquisition company (SPAC) for $10.4 billion and for a few days was the largest Israeli initial public offering (IPO) in Wall Street history. The record was short-lived, however, when a few days later ironSource announced its own merger with a SPAC at an $11 billion valuation.

Assia and Hod-Moyal don’t really have any reason to be upset. Two days after eToro’s announcement, it was Arbe’s turn to merge with a SPAC at a much more modest, but still impressive valuation of $723 million. Arbe specializes in developing components for autonomous vehicles, and the fact that it is still unprofitable explains its relatively “low” valuation. iAngels is one of its largest shareholders with 15%. iAngels led the first investment in the company, following the seed round a few years ago, and yielded a dreamy return of over 200 times the original investment. “Arbe was one of the firm’s most significant investments, we then led the post-seed round and since then have made sure to participate in subsequent rounds, and I also sit on the company’s board of directors. Many SPACs courted Arbe and we tried to listen and see who would fit best,” Assia said in a special interview with Calcalist, after the firm registered two subsequent successful exits, the likes of which few funds can even boast completing one of.

According to estimates, the fund invested in eToro between 2015 and 2018 when the company’s valuation was a far cry from $1 billion so that despite their relatively small holding, the exit yielded more than tenfold returns.

The Israeli high-tech power couple

As a result of the mergers with SPACs, iAngels’ annual returns leaped from 25% to 48% today. But they think it’s only the beginning. According to market estimates, one of the firm’s other portfolio companies is about to announce its merger with a SPAC at a $2 billion valuation in the coming days, and two others plan on joining the trend over the next few weeks.

Hod-Moyal and Assia have a much smaller slice of eToro’s holdings compared to their shares of Arbe, but the figure comes with a very big asterisk on the side. Aside from the impressive returns that eToro’s sale made for the firm, for Assia it’s more of a family event as someone who was right there when her husband Yoni founded the company together with his brother Ronen (who has since relinquished his active position at the company), and their family friend Dudu Ring. “Yoni and I have known each other since we were 20. Three different people who didn’t know each other tried to set us up, and the person who did succeed in doing so was my cousin who served with Yoni in the military,” Assia said, when describing the Israeli high tech power couple.

As often happens with the local techie crowd, their ties go way back. Assia’s cousin served with her husband in the elite technological unit of the Israeli Intelligence, Unit 81, while she served in the 8200 Unit. But the fact is that the Assia couple isn’t the first in the illustrious tech dynasty, which began years prior. Mor Assia’s father, Danny Kerat, was on the founding team of Amdocs founders as one of its first employees. In his last position, her father served as president of billing operations, one of the company’s main divisions.

Her father-in-law’s side is even more famous. The brothers’ father is David Assia, who was the founder of the software company Magic, and serves today as the chairman of iAngels, invests in the firm, and is involved with its activity. Yoni Assia’s aunts are well-known too: the first died in 2013 and was the well-known designer Daniella Lehavi, while the second is Dalia Feld, the CEO and owner of the People & Computers Group. But the empire was built by their grandfather, Yehuda Assia who founded the First International Bank of Israel and died in 2016 at the age of 100. “When my husband was chosen to represent Israel and meet Warren Buffet at an event, he gifted him three first-edition books from his grandfather’s library, something that really touched Buffett,” Assia recalls that she was not allowed to join her husband at the notable meal, for which businessmen pay over a million dollars to attend.

Whose path was more difficult - was it yours at the firm or your husband’s at eToro right up until the exit?

“We split up the world between us,” Assia jokes, “he deals with everything that is publicly traded and I deal with the private sector. Our jobs aren’t divided because we live in the same house, but you can’t really compare, it’s not apples to apples. To build a $10 billion company demands mental strength from a person, but also from their spouse.”

As to the question of how one deals with the ethical, business, and personal aspects of investing in companies that are founded and managed by a spouse, and how to make objective decisions, Hod-Moyal said: “When you invest in a company, you do a lot of due diligence, its like a dating process that you do with the founders for two or three months, but in the end, your decision to invest is based on very little information.” Hod-Moyal, whose partner Kfir founded online advertising company Matomy and is still only dreaming of an exit, added: “If you already know someone and believe in them, then it’s smart to invest in them because you have a relative advantage. And if that person is upfront with you and works hard - those are the most important qualities when investing in a startup, and one that you don’t discover until entering an investment deal and joint journey.”

In an amusing twist of fate, Yoni and Kfir knew each other long before Shelly Hod met her future husband, and the relationship between them is more friendship, than business-based. “We take vacations overseas together, Shelly and I go out a lot now, and just last weekend we celebrated Kfir’s birthday together with one of her sons,” Assia said. Over the course of the interview, they hold hands excitedly and touch each other, an unfamiliar dynamic in the commonly masculine VC boardrooms

Aren’t you afraid that people will say you’re successful simply because of your connections? That without your family ties, iAngels wouldn’t get the chance to invest in eToro?

“We erected high walls that keep everything separate, and very professional,” Assia said. “Everything went through a very organized process both on my husband’s side at eToro and also at iAngels. Everything was fully disclosed to our investors.”

“Aside from that, we’re used to the fact that people talk and gossip,” Hod-Moyal added. “When we started the firm, everyone told us we were crazy. Back then, there were barely any women in the industry, and there were definitely no female-led investment firms. It was a boys’ club. I remember that we sat with one of the most successful angel investors in Israel and he told us: ‘You look like nice girls, you should go do something else. Why would anyone give you money or make a deal with you?’ There were others, back in 2014, who spoke the same way people are today, that the tech bubble is about to burst and there wouldn’t be any more money for investments. It’s always the same story, but in the meantime, the bubble still hasn’t burst and people continue to give us money.”

“We didn’t know what we didn’t know”

Assia and Hod-Moyal met in New York in 2008 at a networking event that was organized for Israeli graduate school students. Assia, who had completed her bachelor’s degree in computer science at the Technion and was pursuing an MBA at Columbia University, came along with her husband who was taking his first steps at eToro. “I remember Mor talking, and I was so impressed with her achievements that right after meeting her, I went up to her and asked to be friends,” Hod-Moyal smiled and said. Hod-Moyal had herself completed an internship at the UBS Investment Bank, worked at the Avenue Capital Group hedge fund, and specialized in debt issues at financial institutions. The field was pretty quiet until that fateful September when Lehman Brothers collapsed and upended the entire financial sector.

A little over a decade ago, they all returned to Israel, with Assia starting a position at Amdocs and Hod-Moyal working at Goldman Sachs’ Israeli branch. Both wanted to found something together to couple Assia’s technological experience with Hod-Moyal’s financial expertise. The inspiration actually came from eToro. Why not examine what experienced angel investors were interested in and follow suit? eToro distinguishes itself from other trading platforms by offering a social component, enabling its users to mimic the investment portfolios of successful investors. “If we could go back then with what we now know, we probably wouldn’t have done it,” Assia said. “We weren’t yet 30, and we didn’t even know what we didn’t know, but we were very determined and ambitious. Every day we would meet and think about what we would do that day.”

“We entered the field of investment banking very naively,” Hod-Moyal added. “We were sure that we would start a website, make a Facebook campaign, and that many people would rush to contact to hear about our investments with big angel investors.”

And what happened in reality?

“We approached the angels and told them for every $100,000 you invest, we’ll put down another $100,000. It seemed to us like a super-attractive offer.”

Why did they even agree to meet with you? It seemed as if your first business model was to leverage your family ties and the connections you made in New York.

“It took a long time. Many people, most even, said ‘no’ to us,” Hod-Moyal says, “we flew all over the world, we went from door to door for every $10,000. In the first round we raised $350,000.”

Why did angel investors, such as Gigi Levi Weiss, who is one of the most successful in Israel and has invested in early stage startups like MyHeritage and SimilarWeb, even agree to meet with you?

“It’s true that he met with us, but he also knows my husband Yoni. Gigi meets many people, he doesn’t care about connections,” Assia said.

iAngels’ first business model was similar in essence to the of John Medved’s OurCrowd, which is to not raise funds from financial institutions, but rather to allow a wider group of people to invest in technology, and organizes each investment around a type of newly formed fund. Only eligible customers, those who possess liquidated capital over NIS 8 million ($2.4 million) can invest. The minimum investment in iAngels was $10,000, but now the average is $60,000, and the fund has 20,000 customers.

The twist that differentiated them from what was available in the market back then, was the ability to mimic and match angel investors. But as the business grew, iAngels became a more standard venture capital fund. “Some of the founders whose companies we invested in and made exits became our clients, and now invest themselves. For others we are akin to a family office that manages their technology exposure,” Assia clarified.

“Last year, we conducted eight new investments and another 20 repeat investments, of those 17 were up rounds,” Assia added. Aside from the two big exits over the past week, the duo registered 15 exits on 100 portfolio companies with handsome positive returns, the most prominent of which was the secondary deal of cyber company BioCatch last April at a $1 billion valuation. Clear Genetics, which was sold for $50 million after a single funding round, was also one of their first investments. “The average lifespan of an investment at our fund is particularly short - less than three years - and following the eToro and Arbe deals we’ll be able to return all the money we raised, with a lot more to spare,” Hod-Moyal said.

“Nowadays we can’t just mimic angels because we are investing $2 million in rounds, and not long ago we even issued someone a $10 million check. In these situations, we are already competing with angel investors,” Hod-Moyal explains. “That’s why we became a standard fund, and now lead rounds. Today, the concept of angels is less relevant because there are no longer rounds where companies raise $100,000 at a $1 million valuation. Today, companies’ seed rounds start at $3 million.”

So why don’t you change the name of the fund?

“The name still rings true even if the meaning is slightly different,” Hod-Moyal said. “Since investment rounds have grown to a degree that even those with $200,000-$300,000 find it difficult to participate, we enable even those who aren’t billionaires to be angel investors.”

What do you think is going on in the world of tech investments? It seems like it’s going crazy.

“I don’t think it will end,” Hod-Moyal said, “of course the Nasdaq could correct and fall by 20%-25%, but we haven’t reached the peak yet. The coronavirus (Covid-19) pandemic is receding, there is economic recovery, there is a new U.S. president who is going to pour $1.9 trillion into the U.S. economy and another few trillion around the world, and interest rates aren't expected to rise before 2024, so there’s no better place to put that money than in technology. Today, investors are monetizing growth. And what the coronavirus showed is that software companies are much more secure and can be grown faster than other sectors.”

“The pandemic will be a force for organizations and drive them toward efficiently implementing technologies, while on the other hand companies who supply them with the technologies are being pushed to create products at a much faster pace that can be easily sold and installed. Everything is now touch-free and that’s wonderful news for Israeli software companies in particular,” Assia added. “For the first time, we have companies, and not just eToro, who generate $100 million in revenues, sometimes even more. That’s something that never existed before.”

Companies are growing, and rapidly, but what about profit?

“Profitability is a decision,” Assia determines, “when building a company with a 98% gross profit margin, every additional customer who joins improves the outlook.” Hod-Moyal adds: “Today people raise money mainly to invest in marketing, and there are other ways aside from net profit to analyze the health of a company’s business model.”

There are companies that are doubling their valuations in mere months, what justifies such sharp jumps?

“Valuation is always derived from revenue multipliers. We have companies who jumped from zero to $20 million in terms of revenues, and that justifies their valuation’s jump,” Hod-Moyal said. “When we started our fund eight years ago, we spoke mainly about making million-dollar exits, it was a dreamlike goal. Today, our dreams are different. A company valued at $3-$5 million is stunning, but it’s no longer a dream.”

“Despite everything that is taking place around us, you shouldn’t surmise that it’s easy,” notes Assia, “anyone who builds a billion-dollar company has an infinite amount of work and I’ve seen it from up close over the years. But, we do have founders who tell us that a $200 million exit is not worth getting up in the morning for and that the number needs to be tenfold. It’s also interesting to see that the more experienced entrepreneurs are actually more humble in terms of valuations. They also better appreciate the money they get from investors.”

“You don’t need to move to the U.S. to succeed”

The ones who are pumping the frenzy even more are the SPACs, those empty investment companies who raised close to $100 billion since the beginning of the year, and a similar amount last year, and must identify companies with desirable technologies, and reel them in before the two-year deadline expires.

“SPACs would always come to life when the market was hot, but now the magnitude is completely different,” Hod-Moyal says.

And how does that work behind the scenes?

“Good companies receive several SPAC merger offers, that’s what’s happened to most of our portfolio companies,” says Assia. “We encourage them to field several offers, but valuation isn’t the only parameter. It matters who raised the SPAC, the number of SPACs they have conducted before, and several other important factors.”

A lot of money is flowing into Israel as a result of the sale of secondary shares. In the case of eToro, the founders, employees, and veteran shareholders made $300 million. In the case of IronSource it will be an unprecedented $1.5 billion. As to the question of how to close the socioeconomic gaps between two distinct economies that are developing, Assia and Hod-Moyal have an answer. “When I was a child, when one didn’t know what they wanted to study in college, they’d pick law. Today, it’s computers. It’s a guaranteed career anywhere you go. That’s why I think that more people need to pursue it to ensure their future. I really want my children to enter the field,” Assia said. Hod-Moyal stressed her own line of work “I think that financial planning and investments are more important, and I’d also like to raise my children to be investors.”

But whether they’ll be investors or computer majors, the joint dream of Assia and Hod-Moyal, aside from making many more successful exits, is pretty straight forward. “Our big dream is to become one large family. By having more children that are of similar age, we’re constantly increasing our chances,” they joke.

And they want to do it all from Israel. “Especially now, after my husband raised $800 million for eToro while in his pajamas at home, we realized that we don’t need to relocate to the U.S. to be successful,” Assia concludes.