Crossing borders: From VC to Entrepreneur
CTech spoke to three founders who had their beginnings in venture capital before starting their own companies
Venture capital and entrepreneurship are two areas that remain prominent in Israel’s Startup Nation. One takes slow, tactile thinking often assessing the risks and rewards of each action, the other is a move-fast-and-break-things mentality that is often described as jumping off a cliff to pursue a passion project.
CTech spoke to three founders - Ziv Paz, Co-Founder and COO of Melio, Shahar Fogel, CEO of Rookout, and Ori Yankelev, Co-Founder and CRO of OwnBackUp - who shared their story of how they dropped everything to take on a billion-dollar gamble and won.
What are the main SIMILARITIES between investment and entrepreneurship?
Despite the differences, there remain similarities between the roles of venture capital and executive entrepreneurship. For Melio’s Paz, both sides “must be fully dedicated and invested in every step of the journey. Investors and entrepreneurs will both tell you that people are the essence of their business. Whether you are an investor or entrepreneur - your success rests largely on whom you choose to work with, and how you invest in them.”“In both roles, it’s essential to be able to understand situations quickly while still making informed decisions,” added Rookout’s Fogel. “To do so, you must deep dive into the many challenges and domains which are a part of the decision-making process but aren’t always part of one’s domain knowledge… There is always more data and information to be had that could impact investment decisions and operational day-to-day decisions, but in both worlds - there is never enough data and time is of the essence.”
OwnBackup’s Yankelev: “As an entrepreneur, you have to think like an investor. You should not start a company or join a startup that you would not personally invest in if you were sitting on the other side of the table. You should do your best to take feelings out of it and think about that decision as objectively as possible. Also as an entrepreneur you have to make a lot of small decisions every day about how to invest your time.”How does the jump feel going from investing to inventing? “As an investor, you see many remarkable leaders and you see how they manage and confront both opportunities and adversity,” said Paz. “You also gain a valuable perspective, seeing the larger market landscape, developments and directions. These experiences helped shape my vision for the company I wanted to help build and they continue to inform many aspects of Melio's journey.” Fogel called the jump “very satisfying, yet super stressful,” and Yankelev added how “it feels great, but it can also be an emotional roller coaster. The wins and losses along the journey are a lot more personal.” What three words best describe the world of INVESTMENT? Paz: “Vision, People, and Execution!” Fogel: “Team, TAM, and Traction! Yankelev: “Interesting, Academic, and Relationships!” What three words best describe the world of ENTREPRENEURSHIP? Paz: “I would also say Vision, People, and Execution!” Fogel: “Team, Product, and Clients!” Yankelev: “Hustle, Uncertainty, Confidence!” How did your history in investment impact your fundraising strategy?
“One important element is that Melio proactively aligned our fundraising, capital, and growth strategies from the outset,” Paz explained. “Second, in fundraising, Melio’s philosophy is that we were looking for more than capital, we were looking for investors who could offer their experiences, connections, and mentorship to help Melio grow. We were looking for true partnerships.”
Fogel: “In my time working in investment, I saw companies which grew very fast and also those who struggled more. However, the main insight I gained from my experience is the understanding that you should raise funds when you can and not necessarily wait for when you need it. You never know how and when the VC and capital market dynamics will change.”“First off the network,” added Yankelev. “I started with people that I knew from my experience working at a VC firm. Second, it helps to know what investors look for so that you can work that type of information into the pitch deck and talk track.” What is the relationship like between investor and entrepreneur? For Paz, the best way to describe the relationship is like a partnership. “This partnership shares the mutual interest and goal of building something meaningful and successful. The entrepreneurial journey is built over many moments - large and small. At Melio, we feel tremendously grateful to our investors for their partnership AND friendship, which have been critical in building and growing the company every step of the way.” For Fogel, the most important element of the relationship between investors and entrepreneurs is trust. “As a CEO, you have to make sure that the investors (and specifically the board) are always informed, aligned to the state and strategy of the company, will help you to drive the company forward as you envision, and will be there to support you when needed. The ability to collaborate with your investors is a force multiplier for a company, as investors are very helpful in the earlier stages of the company (in many aspects). They’ve seen many companies, teams, and operational challenges.” For Yankelev, it depends on the stage of the company and the personas involved. “What many entrepreneurs don’t realize the first time they raise money is that raising money is like getting married. There are many different types of relationships between married couples, and the same is true between investors and entrepreneurs… Entrepreneurs should solicit advice from investors and consider it carefully, but at the end of the day running the company is the entrepreneur’s job, and only theirs, and they usually have a lot more skin in the game than investors do.”
What advice would you give to young entrepreneurs?“Believe in yourself, your vision, and your mission,” Paz concludes. “Stay humble in every decision that you make, but eventually, trust your gut. Though there are many playbooks for some decisions, ultimately you are the author of your own unique playbook. This is a big part of why investors choose to invest in your venture, your co-founders, and yourself.” Fogel concludes that entrepreneurs should “choose the right investors with not just your company, but also yourself in mind. Personal connections and healthy relationships with your investors are usually more beneficial for the long-term success of the company than optimizing deal terms in early stages.” Yankelev has two pieces of advice for those thinking of starting a company or crossing the border as he did with OwnBackup. “First: Your people are your company. Hire great people. Hire people who are very smart, hardworking and nice, so that other very smart hard-working people will want to work with them as well. Second: Starting a company is one of the most challenging, demanding, and time-consuming things you can do. If you have a family, or a partner you should discuss it with them and make sure that they understand what you are signing up for, because they are signing up for the same thing in many ways,” he concluded.