Amit, Pollak, Matalon & Co: Working with founders to build Startup Nation

“If we see a strong capable team, we would want to work with them,” explained the tech experts of Israeli law firm Amit, Pollak, Matalon & Co. “Even if they'll make mistakes, choose to focus on the wrong product/market, or make detours along the way, the backbone of the founders' team is the most important factor for us.”

Amit, Pollak, Matalon & Co. (APM) is one of the top Israeli law firms participating in CTech’s Most Important Gateways to Israeli Tech series. The heads of the firm's tech department answered a series of questions asked by CTech about their involvement in the Israeli ecosystem and spoke about working with startups on some of the biggest deals seen from Israel’s booming tech sector.

Ian Rostowsky and Yoav Etzyon

Name of firm: Amit, Pollak, Matalon & Co. (APM)

Tech sectors of expertise: Investments, Startups, Fund Formation, Merger & Acquisition, Intellectual Property, Healthcare, Privacy and Data Protection, Cybersecurity, Technology and Regulation and Fintech.

Number of lawyers in the tech and VC departments: 45

Heads of department: Yoav Etzyon and Ian Rostowsky

Notable clients:

• Startups- Aleph Farms, Akeyless, FORE Biotherapeutics, 270 Surgical, Illumigyn, Redefine Meat, TetaVi, Zipo Aps, Namogoo.
• Growth companies – Nanox, Formula Systems, Pango, Viber, Splitit, Playtech, Aquarius Engines, Liquidity, SimilarWeb, Lusha.
• VC and Angels – aMoon, StageOne Ventures, Vintage funds, Glilot Capital Partners, Moneta, F2 Venture Capital, Firstime, Lion Birds.

Notable deals in 2020-2022:

• IPO Nanox ($200M),
• aMoon Fund ($1,100M),
• Glilot Fund ($220M)
• Investment/loan Liquidity ($500M),
• Saferide/Traffilog merger ($500M),
• IPO Splitit
• Investment in Redefine Meat ($150M)
• StageOne Fund ($300M),
• Check Point/Avanan acquisition ($300M),
• Investment Aleph Farms ($120M),
• ObserveIT acquisition ($250m).

Following the SPAC and IPO boom in 2021 - What trends are you expecting for the upcoming short and medium-term?

Due to the cooling down of the capital markets, we expect more M&A transactions that will achieve liquidation for investors and founders, we expect that companies will continue to achieve growth via capital coming from the private markets and thus the continuation of large scale financing rounds, we expect that the IPO/SPACs that will succeed are the ones done by more mature companies with large-scale revenues and thus with high valuations.

Will we continue to see funding rounds at the fantastic valuations we saw last year? Why?

We believe that such rounds will continue, but in smaller numbers. Startups will continue to aim to achieve growth via capital coming from the private market and thus will require big-ticket investment amounts.

What is the most important process Israeli high-tech has experienced over the past two years and where does it leave the industry?

I believe that the transformation from small startups to growth companies is without a doubt the most important process in the high-tech industry in recent years. In the past, many startups were sold before reaching any important sale milestones and thus did not reach scale, marketing, and sale. Today, quite a few Israeli startups report hundreds of millions in revenues which lead to the growth in the number of unicorns and more mature companies. This has a tremendous effect on the size and scale of investment rounds, big IPOs, bigger companies with substantial needs in the employment market, and more and generally a larger effect on the Israeli economy.

What is the most important thing an entrepreneur should focus on when selecting a law firm?

Entrepreneurs need to look at law firms that aim to be partners with startups and not just service providers. Such law firms should have on one hand the breadth of services and expertise to work with the startup along its entire life span, and on the other hand, be willing to assist in tough times, understand the business in which the startups work, and give good advice when needed.

Basic mistakes made by entrepreneurs.

Choosing the wrong founders team, raising funds from improper sources, and not focusing on the market and clients' needs.

What are the most important parameters for a law firm when deciding to represent an entrepreneur in a deal, and what would be a reason to turn down an entrepreneur?

We first choose the people. If we see a strong capable team, we would want to work with them. Even if they'll make mistakes, choose to focus on the wrong product/market, or make detours along the way, the backbone of the founders' team is the most important factor for us.

What are the most crucial stages of a deal?

The most important part of the deal is reaching an agreement on the basic letter of intent or term sheet. These documents contain the most important parameters for the deal, and the process requires both commercial understanding and the right chemistry between the future partners. The next important stage is technological, commercial, legal, and financial due diligence. The results of such a stage will determine if the investor/buyer would complete and close the transaction. After that, an important stage is the negotiation of the transaction documents, which if successful, will lead to the signing of the transaction documents. The last stage is the satisfaction of the closing conditions that will lead if successful to the closing of the transaction.