"Early stage investments are becoming interesting once again”

"The midst of crises are the best times for entrepreneurs and investors to invest in companies." This is how YiIzhar Shay, chairman of Peak Ventures and the former Minister of Science and Technology, opened his remarks on venture capital investments in an era of global crisis as part of Calcalist and Discount Bank’s Unicorns Forum.

Shay returned to an article published 23 years ago in the Wall Street Journal in which they wondered about the concept of profitability, the same year in which Qualcomm rose 2619% in 12 months and 12 Wall Street companies rose by over 1,000%. The Nasdaq rose by 400% in 1995-2000. In 2002 it sank by 78% and erased the entire five-year increase. Cisco also sank by 80% in one year. The public lost about $5 trillion in 2002.

Izhar Shay.

"I was the CEO of a start-up company that fought for its life during the crisis of 2001-2002 after the 9/11 attacks, the same crisis also intensified investment activity. Every crisis and every challenge is also an opportunity and it’s our job to look for opportunities, to look at the global crisis and examine what opportunities are awaiting."

As a reminder that there are opportunities out there, Shay pointed out leading global companies that have emerged in the midst of crises, including Facebook, Tesla, Waze, Pinterest and others.

"Today we are in the midst of a global economic crisis that is affecting us all. The crisis is not only in markets, but it is affecting other processes. We are all afraid of rising inflation rates, the danger of recession, global trade issues etc.”

One of the opportunities that is increasingly penetrating the consciousness of investors, according to Shay, is a return to early stage investments. "We've seen wonderful years of investing in later stages, investing in a company worth a billion dollars and after three months it's worth exactly double. These things will probably decline and that's fine. On the other hand, investing in early stages has become attractive again. An example of that is the Peak Ventures fund, which I am proud to be its chairman.

"Peak was established on a model of making investments accessible to the general public in Israel. The general public are people like you and me who want access to Waze or other companies that are being established these days. The fund has developed an investment model and has spread the risk by giving the general public in Israel an opportunity to invest in Israeli high-tech companies.

"This crisis is indeed a fantastic opportunity to acquire good companies. Entrepreneurs in Israel are doing the most important thing and that is contributing to the Israeli high-tech sector and the Israeli economy. It takes great courage these days to invest in companies. This is an opportunity to build real companies based on smart financial models."

Shay concluded by highlighting the need to expand high-tech circles to the periphery and noted that "there are amazing people in Beit She'an, Kfar Qassem and everywhere else and we want to expand the circles of the wonderful high-tech sector to the periphery and to the entire State of Israel."