← Investment Climate Podcast
Investment Climate Podcast
On why the "Plant-Based Meat" thesis failed & pivoting a $50M fund to Defense Tech - Champel Capital
00:45:51
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- [00:00]
A
Sustainability is not for the planet. I'm all. Just to be clear, I'm all for impact. I'm for esg, I'm for sustainability. I'm all for these things, but it's for us, it's not for the planet. I don't care. The planet. Planet is here for me, not me, for the planet. We want the planet to be here for us, for our kids and for all generations to come. And therefore we have to manage it, to manage it, the planet, the environment, in a nice and sustainable and positive way. But yeah, this is not for Mother Earth. It's for us. Hello, Alex. Hello, everybody. My name is Amir Vaitman. I'm the managing partner GP of Champell Capital, which is an Israeli venture capital fund. We have raised already two funds, over $50 million raising our third fund and our first and second funds had a significant part in food tech and Agritech. We invested in roughly six in six, not roughly in six companies in the space twin Food tech, three in Agritech and another one which is, you know, it's industrial. It's mostly a product that's in the industrial sphere, but it's really helping packaging and doing, improving the pro. The industrial processes in the food packaging industry. Not only, but mostly in the food packaging industry. So it's also very linked to this. And so it's a pleasure for me to have a conversation with you, Alex, today.
- [01:22]
B
Amazing. Well, I'll tell you, this covers this. This conversation could be very exciting for me because first of all, anyone who follows Amir's post on LinkedIn, he's extremely sharp, he speaks his mind, he's very vocal, which makes him somebody that, you know that our podcast is going to get canceled for. So this is, I'm excited to have this conversation and see where it takes us.
- [01:40]
A
Great.
- [01:41]
B
Amir, just tell us the companies you took positions on that very well known, at least some of them. Maybe you could just share with us who's in the portfolio. For those who don't know.
- [01:49]
A
Right. So in the food tech industry, we have two very prominent companies in our portfolio. One is Raymilk, which, which also recently made a lot of waves because finally the product got to the market. It's really a cow free milk, but it's real milk. It's, you know, from a chemical or biological point of view, it's, it's, it just doesn't come from cows, which is amazing. And the product is great. I will, afterwards, in a, in a minute I'll have forgotten to do it, but maybe I'll I'll take a bottle and I'll show it to, to your, to you viewers. And it, it's great. I can see that. My wife is here. She's going to bring me the bottle. Amazing. I don't even have to, to, to stand up.
- [02:26]
B
Perfect.
- [02:26]
A
Why you have wife. So here it is. Thank you.
- [02:32]
B
Yep. Incredible. They have a transformative product that's in the shelves already in the market. That's remote.
- [02:38]
A
That's remote. Then we have Aleph Farms, which is meatless meat. Again, concept is the same. It's a different technology, of course, but the idea is to have real milk. I'm sorry, meat just doesn't come from a cow that has been slaughtered. It's a engineered meat, but it's real milk as opposed to all the meat, you know, companies such as Beyond Meat, which essentially were simply, you know, grass, they were vegetable, they were, they came from, from, they were vegetarian, they came from vegetables one way or another. And they were reprocessed to look, to look sound, taste more or less like meat. More successful. Lexus successful. By the end of the day, it's the technology were not, you know, there was no breakthrough. There was essentially doing what people have been doing for decades, just a bit better, which is, which is okay, but it's not, there's no great, you know, great news there or something, you know, amazing. So this, this is the reason why, by the way, why we didn't invest in all of these other pretend meat companies, but we did invest in Francisco Allephons is a real technological breakthrough. This is meat again. This is not some sort of a milk meat alternative. This is real meat. And that makes a whole lot of difference. Of course the regulatory environment and the complexity of the product makes it more complicated to bring into the market. But we're confident that it will happen sooner rather than later. After also, you know, a good few years, that's on the food deck.
- [04:07]
B
And maybe I will, maybe we'll just double click on a few things there for, for our listeners. So, and I think this is going to be the really interesting conversation piece which is what were the kind of assumptions that drove you to make those investments. And I think also it's very important to highlight the current fund that you guys are, are, are raising and deploying from is not, not taking agri food tech investments. Right. Your, your thesis has evolved. I'm really curious about what was the thought process in those decisions then and what has, what has an investor. Maybe your perception of the markets has evolved as well. So take us through that thought process.
- [04:42]
A
Right. So first of all, I don't think that thesis has evolved. The market has evolved, let's be precise. We believe in food, tech and agritech fundamentally exactly the same as we did five years ago, six years ago. We believe that the change that we were talking about at the time is needed. But what has happened is that investors have found that it's taking longer than what you want. And especially because we live in a world where essentially capital is looking for the best opportunities, the best irr, the best roi, which is legitimate, it's normal, that's what it has to be. So when you have AI and all this stuff which is making a tremendous buzz, everybody wants to, or cyber security, everybody goes there and tends to. Or defense and security, which is the next fund we're raising. So everybody goes to these fields. Right? And there are also good reasons for that. But the point is it's not that the rest of mankind and humanity and all the other industries are disappearing. If you ask me, I think that there probably was a bubble six, seven years ago. But the BAS case I think was correct and is correct and will probably come back because the food processors, the ag processors need to be more robust, more agile and they need to be better and we need to feed the growing world. We have 8 billion people today. The world is going to carry on growing up to, I don't, we don't know exactly nine, nine and a half billion people probably in the next decades. And most of the people who still live, you know, outside of the big cities are moving to the big cities in Asia. People are changing their diets and they're becoming, adopting a more western diet everywhere. By the way, it's interesting because people have got a lot to say about how the western diet is bad and it has problems. But one thing you can see for instance, is that the average height of Japanese and Chinese and, and, and Asians in general has grown up significantly over the past generation when for generations before that it hadn't. And in all, in all those places where they still haven't adopted the western diet and the of the people is still low, people haven't grown. So, so what does it mean? So maybe again, you know, people can be very, you know, negative about, about the western diet, but eating actually proteins and meats and milk and all of this stuff is actually very healthy for you, contrary to what people say. So which is also one of the other reasons why we never went for the pretend, you know, plant based meat, et cetera, because it's not really healthier than meat. It's a legend, it's a myth. Of course if you do lab grown meat like, like Aleph Farms, then you're actually eating meat, real meat if you want so, so, so the, the hot. So actually you're getting the positive sides of the meat and most of the negative sides are actually taken out. So you get the best product. So we believe that eventually it will succeed. It may take time, it may be another company, you never know these things, you know, but eventually we'll get there because this is the right thing to do. Both in the dairy side and the meaty side, we profoundly believe in these technologies and we hope there's going to be more companies. Of course, not only our companies, but that the, but companies focusing on the real thing, on real products, real breakthrough technology, bring real meat, real dairy products with, you know, without causing the animal harm and without having to farm their animals. We think the world is going to go there and if we going to have this conversation say 20 years from now, I think the world will be very different. Now, 20 years since seem 20 years seems a very long time. And it is a long time in the life of a human being and in the life certainly in life of the investments. But it's very, very short in historical term and even in the life of a human being who now typically is going to live 80, 90 years. Okay, it's significant chunk, but it's not even, you know, it's maybe less than a quarter. So what I'm saying is that the world is going there. I think the go to the market and the amazing reception that Rimmel got in Israel commercially is a big good example of this. And we believe that I'd say 15 years from now, certainly in the western world, dairy products with milk coming from cows 15, 20 years from now is going to be mostly a niche product. I think that eventually and it's not going to take, you know, a hundred years, this is over 10, 20 years from now passively, we believe that the entire dairy market will be replaced by products like real milk. I think in the, in the, in the meat side it's more complicated. It's not gonna happen to the same extent, but it will happen to a certain extent as well. And again it's gonna take some time. But that's fine, that's fine.
- [09:19]
B
So far listeners, I just wanna break down what I'm hearing which is number one is Amir is a vc. Now they're looking at step change technology. So you know, you could do maybe a more Sophisticated form of exclusion. Right. Or you know, this technology has been around for 20, 30, 40 years. Or you want to do a step change, which is cell culture or it's a form of fermentation. These are same, same taste, same experience. Right. But produced in a very radically different way. So that's one thing that I'm hearing. Number two is you definitely see that the trends towards population growth, towards adopting a more protein rich diet are only going to increase and therefore feeding that like from a thesis standpoint just makes sense. You should have. Novel solutions are just better from an ethical but also from a unit economic standpoint. Right. Just it's a given, it's going to get there.
- [10:06]
A
The ethics is important. I could give you the whole theology of this. I mean it's very interesting stuff. Ralph Cook, Rabbi Cook, wrote a book about it, what a hundred years ago in English. How would you translate it? The Vision for Veganism and Peace. So it's a, it's a beautiful idea and we believe in it. But I think that the way to reach there is through technology. And I think this is what we've been doing by the way. This was, this was one of the ideas that we had when we invested because we see if you want where the world is going both ethically, morally and and economically, by the end of the day, if it doesn't make economic sense, it's not going to happen at all. So you need it to make economic sense because people go on the, the moral premium that the people willing to pay is very low, if at all. And at the beginning it's not only a premium, it's the opposite. People are kind of scared. To be able to make people change, you need to give them an economic advantage. It means that it hasn't. Prosperity is not enough. You need to be cheaper. And then once you're cheap enough, then the shift will happen pretty fast.
- [11:14]
B
Yeah. So the question I have is, you know, obviously you are an investor usually as a VC fund, you typically hold cash, you know, it's about 10 year, maybe 10 plus 2. Right. So there's a certain time point, especially if you go into series A or you know, seed, there's maybe a short timeline. Can you guide us through some of the assumptions that were made by investors that came in in 20, 2120 about timelines and was a timeline. What if you looked back at it now, what would you have told yourself about timelines? Like learning what you learn now. And again, VC is about taking risk. Right. It's about step change technologies. I think you Are those individuals actually are the definition of VC rather than private equity, which is. Private equity is a very different role than a vc. Right. But knowing now the timelines, what was maybe missed or what was the, some of the assumptions that were formed and how does that impact you today as an investor?
- [12:09]
A
Well, I think people didn't realize how difficult and how long it takes, how difficult it is and how long it will take, especially in ag. You know, people thought that because the market is, hasn't progressed that there's still this huge market which is going to advance and digitalize and it's going to happen. But it's just taking much, much longer than expected for it to happen.
- [12:32]
B
Oh no, don't worry. We have a team that edits afterwards.
- [12:34]
A
Don't worry.
- [12:35]
B
We have a team that edits afterwards.
- [12:37]
A
Okay, I'm sorry. Okay, there's no noise now. So, so let me come back. What was the question?
- [12:44]
B
Yeah, so you can go back. What was missed? What assumptions?
- [12:47]
A
Well, what was missed? So what, what was missed is that people thought that the changes were going to happen faster. Now I still believe that everything that we thought at the time was correct. I don't think we're gonna, we have been proven wrong. I think that what we missed is that in that respect is that is the timeline there. Because agriculture is a very conservative market, it's difficult to digitalize it. At the end of the day, the, the end clients are farmers. It's not always easy to convince them to make changes. It's not an easy market if you want. But at the end of the day, nobody can avoid forever change. It is not possible. So, and again, 10 years in historical term is the blink of an eye. But of course another five or ten years difference in terms of investment is all the difference. So I think that's what happens and that's why money has fled the market. You know, the investments have not disappeared, but they have collapsed, you know, completely. They are now, let's say 15% of what they were. Of what they were. I don't know, 20, 20, 2021, maybe 2022, something like that. So. And of course, because there's much less money chasing the deals, so you have fewer deals and it's much more difficult to get these funded. But again, I think the best companies will make it and I think we will see a lot of companies which are still going to make it. It's going to be much fewer than maybe we anticipated. But I think some of the best companies with the best products are still going to make it. And I think it will still be possible to create value, although from our perspective, not as much as maybe we would have wanted to and not as fast. But it doesn't mean it's going to disappear. I think I would say that investors need to be much more disciplined in terms of, of pricing mostly and in terms of having capacity to keep the company afloat because time to break even, I would say is long. The growth rates are not always what you want them to be. And still I think, you know, we've got companies and we can see it's, it's advancing. It's not that, you know, everything went bust. No, I think especially I can think about, you know, in the ag space, can think about one company of ours which is doing fairly well actually not as fast and not as big as we wanted it to be four years ago, but it's advancing nicely and we can see there are perspectives and I believe that in the next, you know, five years, by the end of our timeline for our, that we had four years ago, say five, six years, I think that we probably going to do actually not bad at all because, because we were right in terms of the technology, because we were right in terms of the need. I think that eventually we will be doing okay again. It's maybe not going to be a huge success like we wanted it to be but on the other hand, because specifically the company I'm thinking about is managed very well, very conservatively. So we haven't been diluted. We have, you know what I mean? So it's being managed properly and therefore we, we kind of believe that we're going to actually be giving a reasonable amount of X's, the returns are going to be okay.
- [15:44]
B
And I'm going to translate it that when we talk about the industry is kind of slower to change what I'm maybe adding as my kind of perusia, my explanation and a little addition word here is that it's very hard to get later stage deals done. Meaning like because the technology at least was, things may have changed, evolved but with like a step change technology like Remilk or other farms, those require, at least initially they required some very significant investments. From a capex standpoint you're, you're developing quite a novel infrastructure there and that requires appetite. Right. It's almost like AI requires data centers and nobody's like oh, I can't believe, like we shouldn't build any data centers. No, I think everybody understands that if you want to scale technology to where it needs to be, it needs to be infrastructure Play even for software. What, what's the most effective infrastructure? Is it space, is it in water, is it on land? Okay, but nobody's doubting there's a capex investment that needs to happen for that. Right? So technology. The difference here is, and actually I'd love to get your take is why is there such a demand and openness to capex for let's say data centers? And there's so little, there's so much pushback against putting out of the infrastructure that's necessary for, let's say that that's fundamental tech step shift in food.
- [16:58]
A
Well, it's a question of belief. People believe that. The question is you need to be able to show the money right to the investor. So people say, okay, you're going to build this whole food company, but how much am I going to be able actually to sell? And what's going to be my gross margin and my net margin? How much money is it going to, you know, what's the ROI at the end of the day and how long is it going to take? So whereas people believe that in the data centers, the, the ROI is going to be massive and relatively fast, short, short time. People believe that the ROI on food is going to be much longer, it's going to take much longer and it's going to be less significant and therefore the money is going where people invest is very tautological what I just said. Now, now the question that, that you should ask is why is it the case that people believe that the ROI on food is going to be low? And it's because a lot of these products have not proven themselves. Again, look at the example that, you know, that kind of killed the market for the alternative. Meat is of course beyond meat. Beyond meat went to, I don't remember which crazy capitalization on the stock market. Like the market cap was what, I don't remember how much? 15, $15 billion, something like that. What is it now, 100 million maybe or something? It's very, it's virtually bankrupt. Right. So it went, it lost, I don't know, 99% of its market cap from the top. It's dead. Right. So why. Because there are, because the unit economics is negative essentially. And the more you sell, then the more money you lose. And it can't, it doesn't seem to be going the right direction. At least it didn't for, for a long time. And the whole thing is saying, okay, fine, why do we need, what, what do we need this thing for? People are not willing to pay their end client. The End customer, at the end of the day not willing to pay enough to make this a valuable product. So there's no value as investors should not be subsidizing consumers. Right. We should be just giving the investment which helps getting the product to the stage that it is actually going to provide value to the consumer, which is not the case and therefore boom. And because the whole hype was around mostly beyond meat and a few other competitors, they haven't proven themselves this have quite relatively few sales and even that, you know, either negative unique economics or not. Nothing interesting in any case. So people write the wrote off the whole industry because that's how it goes, right? You have to remember that investors tend to be stupid. In other words, it's like a hurt. Either everybody goes to the same stuff or nobody goes. That's herd mentality. That's how human beings function. So, so and the capacity to make the distinction between, as I said, something where we didn't go there to start with because we saw this happening already in 2020, even before that we, I looked at it and I said, you know, it's like Tivol 2.0. What? You know what? Tivol Israeli viewers for sure know what Stivol Tivol is a, is a plant based product that gave, that used to already exist in 1980s, essentially giving some sort of a. How do you call it? Schnitzel or whatever.
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B
Yeah, schnitzel. It's like a meat alternative. That's what it is, right?
- [20:03]
A
Yeah, but you had it in 1980s. So what's the difference between Tivol and whatever and the beyond myths of today? Nothing really. It's a bit better today, of course, but it's not. People don't like that, you know, so. So this we saw live and therefore we never made the mistake on investing in these companies. And if you look the companies where we invested, these are not these companies, they're breakthrough technological breakthrough companies where we have a completely different project. So we believe that the sort of companies, these are real deep tech companies, right? RealMilk, Alepharms and others in the AG company. Clarifresh, Tritoscope, Seedex, these are very, very different in terms of the depth of the technology and the change that they're bringing to market. It's very different, Very, very different. And this was our thesis, right? So we understand that when you have a breakthrough technology, adoption rate may be slower. There are significant risks which you don't have so much when you have a copycat product because you know that the Market is there already. But that's our thesis and our thesis is, is, is going to be proven by, by whether we can have at least one of these investments doing very, very well, giving outsized returns. But we believe that having these sort of technologies which are very, very, very much off the charts at the end of the day, if you pick up one of the right ones, then the entire fund really is going to be a success.
- [21:25]
B
Yeah. And just go back to infrastructure play. The way I hear it is data centers support software margins and a fermentation plant supports ag.
- [21:35]
A
Oh, of course, yes, but yes, still the. It's true the data, but the data. But it's true and not true. Let's put this way. Yes, if you put it the way you put it, then yes, it's true. First of all, the infrastructure investments in the data centers are very, very heavy and they are continuous because it's not only the brick and mortar, it's afterwards the energy costs. So you can't just dismiss these costs which are ongoing costs, not only one off, it's ongoing cost as if they don't exist. They are significant. So yes, it's software, but it's software based on a lot of energy and in a world where the energy is relatively expensive, it's a huge issue.
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B
Yeah.
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A
So you can't just dismiss it out of hand. This is not, you know, some sort of an app.
- [22:19]
B
First of all, it goes back to it's, it's the belief, is there? Well, the belief on the food side still hasn't been proven out.
- [22:27]
A
Right, exactly. But, but exactly. But that doesn't mean. But for instance, for instance on the foods part. Right. So you know, part of, of what we want to do for instance is, is, is a B2B project where we don't, I mean we want to have remake. At the end of the day, we want to have two, two parts of the company. You know, we want to have one part which is going to be this.
- [22:47]
B
Yep.
- [22:48]
A
Direct consumer and where yes, there are more costs. But then, but then you know, where. Let's say in this bit, in this, in this case it's in partnership with gatt. So in any case a lot of the costs are borne by the partner who you know, in terms of the investments, they know how to do this sort of stuff. But another part of the of business eventually is to have a B2B protein based business where you only send sell the protein to the lactose protein to the client. This is just for you to understand. This business is like well over a Hundred billion, I don't know, 150 billion markets a year or something crazy like that. So, you know, if you capture just a very small fraction of the, of the market and it's a high, relatively high margin market and you don't have to do. And it's a B2B market. And yeah, so yes, it's not software, but it's not if you want as tough as it sounds. So I'm not saying there are no challenges. There are plenty of challenges and it could fail. But the vision is there and I think, I personally think we're going to have a great success successive actually.
- [23:52]
B
And what can you guess? Give our listeners just a little venture math for a second so we get a sense of what's a great success for a fund. Right. Because I think a lot of our listeners are trying to just understand, okay, what kind of return should I be projecting? And also when I'm looking at how much dilution I can afford to give that return where I need to get this. So when you're going with a thesis to when raising a fund, what's a typical return that you're expecting to be
- [24:19]
A
given in a VC on the entire fund over the whole life of the fund, we are targeting a 5x return.
- [24:27]
B
And what would that look like on an annual basis if you would take the 5x on, on a, on the fund, what would that just look like? From a sense if I just put into AN S&P 500, I don't know, 30%. Around 25, 30.
- [24:39]
A
It depends on the size of the. How long is going to be the fund? It can be anywhere between 25 and 35%.
- [24:45]
B
And now that takes me into the next question, which is something again caught my eye, why I reached out initially is that you wrote this great post about like the fundraising process and I tell founders, like we should have a lot of grace for VCs now. You talk shit a lot to buy VCs as founders. You know, it's like, oh, this guy, he never got back to me. I sent him five emails and due diligence. He disappeared. On the other hand, you guys are founders yourselves, right? You have a startup yourself, right? We have a startup, you have a startup. I speak with founders raising every day and they're all telling me this same thing. It's harder than ever to find investors who are actually deploying and getting access to those leads takes time. Founders just don't have every month fundraising is a month burning Runway. This is why we created ftw, a community of founders Actively fundraising the world's most accurate agri food tech investor database. Plus connecting you directly to ideal target investors and a community of support and accountability. Guaranteed results or your money back. Apply today at www.joinftw.com-hub 100%.
- [25:58]
A
This is a complete startup. We are founders and we are having every day. We find it very difficult. It's a never ending race to raise more capital, more capital and help our companies raise capital. And then our fund needs to raise capital. I mean, it's a never ending chase after money. It's, it's not easy. But on the other hand, when you have successes, it's great. It's really, you know, you're happy and then it's even better when you actually can return a lot of money to your investors. That's great. The feeling that you have beyond what you make yourself, which is great as well, of course, but, but, but the feeling of somebody trusted you with his money and then this trust was proven to be just justified. That's an amazing, amazing feel.
- [26:41]
B
What makes it so amazing?
- [26:42]
A
It's a feeling of accomplishment. It's a feeling that you did, you did the right thing and that then your clients, your LP did the right thing, your partner did the thing. You know, it's, it's, it's a question of trust at this end. At the end of the day, you don't, I mean at the end of the day, of course you cannot promise anything to your clients. It's vis, it's venture capital. It's a dangerous stuff, right? You, you can, and occasionally you lose money, including 100% of the capital. So people who invest in this, in this business must understand that this is a very, very, very dangerous business. This, Right. But, but when you succeed and, and, and, and your, and your partners are happy because they made money, that, that's rich.
- [27:20]
B
Well, I'm gonna start asking questions, probably can't guarantee we're gonna get any answers, but I want to like peel back the curtain a little bit, right, which is what does a fundraising process look like for you? Like take us through it. Like you just right now, in the middle of raising a new fund, right, you have two funds that you've deployed 50 million under management. You're going out and raising a third fund. It has a new thesis, which maybe touched the touch about the thesis, but more. But what does a preparation look like? And I think fundamentally question I'm trying to understand is how do you raise a new fund when you still haven't exited the funds you've already Deployed how? First of all.
- [27:57]
A
Yeah, so first of all, to, to, to, to answer your, your question very clearly, honestly and bluntly, it is very difficult because the problem of this, of this business is that it takes a long time. It really does take a long time. It's not something that that takes, you know, a couple of years. Most of the time you're going to have, it's really a ten year horizon and therefore you need to have a great success in the middle. So we did well on our first fund which allowed us to raise our second fund. The second fund is relatively new still. We have a couple of companies doing very well, but we still haven't had a, you know, a huge success, although we're probably on the way there. But it will take another couple of years because that's, that's the nature of things. And therefore now it's not easy to raise capital now 100%. How do we do about it? Yes, we have our list of people we know, people who are, we are targeting the people we know. Of course, you know, we reach out the people whom we are targeting. We're trying to get a hot warm intro because it's always easier and sometimes you can't, you know, you just kind of cold call them or call DM them or whatever it is. But, and then you make your pitch and you, and you, and you try to convince people that you, they have, you know, you have value for them. You know, so far we, we were, we're quite, you know, now that's extremely successful. There are people who've been raising, you know, billions or hundreds of millions. We're not there yet, but yeah, we are reasonably successful because I think that we have a really, really good value proposition. So this is not just, I don't want to, you know, I know your, your viewers are mostly in the ag and food space. So I don't want to mix with other other topics but very briefly. So our next fund is going to be about defense and security.
- [29:43]
B
Why?
- [29:44]
A
Because we see the, where the world is and we see where the money is going to, coming out of Israel. Of course we have a comparative advantage in investing in these fields for tragic reasons because it's, it's unfortunate because Israel has been at war pretty much always, especially over the past two and a half years since 7th of October, because not only Israel has been at war, but because the whole world now is rearming and is, you know, after the invasion of Ukraine by Russia over four years ago now the overtone window has been moving. People have changed, right if five years ago, less than four, until 2022, you know, investing in defense and security. Ooh. It's very. It's not esg, it's really bad, it's immoral and blah, blah, blah. Then people realized, actually defending yourself against bad guys. Not at all. Not esg. It's not immoral, it's to the contrary. It's very esg, it's very moral and it's a necessity because if you don't do that, you die and there's no ESG if you're dead. Right.
- [30:37]
B
So I'll let Tamir, without disclosing too much, I'll say when I, in the agri food tech world is a very strong component of sustainability and esg. And my position has always been, again, I'm maybe quite vocal about this, that the planet will be fine, don't worry. One way or another the planet will be okay. It's us humans, like the rock doesn't have a feeling towards.
- [30:59]
A
Exactly. Sustainability is not going to be in trouble.
- [31:04]
B
Right.
- [31:06]
A
I'm all, just to be clear, I'm all for impact, I'm for esg, I'm for sustainability, I'm all for these things, but for us, it's not for the planet. I don't care. The planet. Planet is here for me, not me for the planet. See what I mean?
- [31:18]
B
I kicked out from a few conferences.
- [31:20]
A
I don't care about these, these naughty jobs. That's the reality, right? The reality is that. And the reality is they agree with me. They just don't want to admit it to themselves. But who cares about the park? The park. I want to have a nice park and a nice environment. I want the earth to be clean and tidy and neat and I want everything to be sustainable and beautiful and I don't want the world to become dirty and polluted or I want all, you know, I don't want these things, but it's for me because I want to have a good life. I don't care about the Earth per itself. I'm not, you know, some sort of a pagan, you know, a worshipper of, you know, of pagan.
- [32:00]
B
Yeah.
- [32:00]
A
Ancient times or modern times, by the way, who kind of worships to Mother Earth. I don't care about Mother Earth. Mother Earth for me, for us as human beings to make our lives better. And because our lives is better when we live in a good environment, in a clean environment, in a non polluted environment and when the resources of the planet are managed in a sustainable, sustainable way so that not only us, but our kids and our grandchildren and all generation coming after us can enjoy from the planet that we are enjoying from. We don't want to be selfish and say, you know, Louis xiv, the cat, the French king said, apremoi le deluge, right after me. How do you say that in English? After me. The amabul, the deluge. Right. The world can collapse.
- [32:43]
B
That's not how we function, not the thought process either one of us. You have family, I have kids. That's not the way.
- [32:49]
A
Exactly. We have kids, we have. We want the planet to be here for us, for our kids and for all generations to come. And therefore we have to manage it, to manage it, the, the planet, the environment, in a nice and sustainable and positive way. That's the outlook we want to bring. But yeah, this is not for Mother Earth, it's for us.
- [33:07]
B
Yeah, 100%. And taking us though to the fundraise that you're going through right now, which is you, can you give us the insight? How do you high net worth individuals think? Because I feel like there's, you know, there's individuals, you've interacted with those individuals for, you know, in your professional life for decades, right. You've been in high, high net worth management. You understand the thought process. Right? And for, for many founders, they either come in from a technical standpoint or commercial stand, but they don't come from that world, they don't interact with that world. Right. You know, like any insights into the, what drives people like that? Like, and how do you use that drive for as encourage LPs? Like for example, I know that your fund is extremely zionistic in nature. It also has a position in investment.
- [33:55]
A
Well, it's not true. I have to say, I'm very Zionist, Nick, in nature. This is not true of our fund. Our fund is not zionistic. We don't do politics. This is business. Right. So what we want to do is we have one, one mandate is to give back money, as much money as possible, as fast as possible to our investors. Okay, let's say as much as possible, fast, whatever, yes or no, depending on the circumstances. But we have to give back as much money as possible to our investors. And of course, yes, we're not going to cheat, lie, deceit, all these things. Yeah, but we don't want to do them. But, but, but our mandate is we have to be, you know, you know, we have to be honest and we have to be faithful to what our, which is to make as much money as possible. Now if I fail, I fail, but that's what we Want to. Do you know what I mean? So, and I don't want and I'm not going to mix ideology, I'm not going to mix including Zionism or Judaism, all these things which are tremendously believe in but it is irrelevant. So why do we invest in Israel? It's not at all because of Zionism. We invest in Israel because first of all our team is in Israel and because we believe in the Israeli ecosystem because it has proven itself to be worth it. Israel is the number one destination of VC money per capita in the world more than the States is also in terms of that's money in and money out. It is the number one country in the world of unicorns per capita. And this is not Zionism, this is not ideology, this is pure statistics. This is how it goes. So if you count money going in as opposed to money going out, this is the place Israel to put your money in end not because you are Jewish, not because you are Zionistic, not because of anything else then you want to make money. That's where it ends, that's where it starts and that's where it ends. And yes, on top of it investing in Israel is good for the country, it's good for whatever, but that's fine. But that's on top of it, right? It's not why we're investing.
- [35:45]
B
And would you say that's so I think that gives us insights. You say the LPs that you're talking to, the motivation is. Look, we think this is a best pathway for you to get returns in your investment. Right. The fundamental drive is not going to be philanthropic or investing in Israel because of a religious affiliation or an ethical affiliation. It's that there's a, there is a case for why this is just great economics. Right. And that's what you lead with. Who? Your LPs.
- [36:12]
A
Yeah. Of course if you're Jewish it's easier because people have got a sentimental link, you know, to Israel, to Zionistic, all kind of non Jewish Zionists. Fine, it's great. But at the end of the day you have to prove to your LPs that their money is not going to be charity money because charity money, they don't need me. Right. This is going to be good investment investing in companies where we believe we are going to make money. Sometimes we are right and sometimes we are wrong overall hope we're going to be right enough of the time and that it's going to be worth it for, for, for RLP's and we believe we're on, on the Way to do that.
- [36:48]
B
Yeah. So I, I want to ask you kind of very not personal question, but how you deal with this because I know I struggle with this. And I've also, I've recently spoken with, with an individual that was a very high up executive in a company they did that he, he started. So that's a. He did. Well, fine, but he was in his 50s and he's starting a startup and he's looking for venture capital. And I said, look, I'm just curious, why don't you just call three or four of your friends, you have a tracker, just go and ask them for the cash. Right? There's not a lot of money. A million dollars should not be so hard for you. Right. People says like, well, I'm really uncomfortable because I might lose the money. Asking people for money that I might lose makes me feel really uncomfortable asking for people.
- [37:32]
A
It should not be in the business of raising capital.
- [37:34]
B
Yeah. So take me through that. Like, how do you feel comfortable asking for money?
- [37:39]
A
I feel very comfortable telling my LPs. Listen guys, this is venture capital money. You may lose all of it, 100% of it, I don't think. It's certainly not in a fund. In a single investment is possible in a fund. It's unlikely, but it's not impossible, right? I'm telling them. So you're not. If you have, you know, all your net worth is say $1 million, then please do not invest with me half a million dollars. Right. Unless you're making a million dollars a year and whatever. But you know, you need to have some sort of logic. Right? But yeah, if you're a high net worth individual, if you're talking to family offices, these guys, you know, are managing hundreds of millions, billions, tens of billions. So they're allocating a certain part of the entire amount that they're, that they're managing to us, whether it's 1 million, 5 million, 10 million, 50, whatever it is. And it's okay. We have one client who invested a lot of money with us and the guy is a billionaire and he, and he's okay, you know what I mean? He's very okay with that. So he knows there's risks, but he's okay with it because first of all, he can afford it. And even if it goes to south say, okay, it's not going to make a difference to his life. And he believes in the thesis. So you know, he trusts us and that's great. And that's what. So everyone at his level, people can allocate some of Their net worth. You know, people who've got money and while making money should allocate some of what they're doing to I would say higher risk asset classes. I'm not saying 50% of the money that they're out there, they're having. But if you have $10 million, why can't you dedicate say $1 million to higher risk? And especially if you are not only have a net worth but also making money so you save every year, I don't know, a few hundred thousand dollars or more. What's wrong to invest million dollar over a period of two years? Because you know, we don't call all the money on day one, right? So over a period of a few years to invest $200,000, a million dollars in higher risk doesn't have to be with us. But I'm saying in general it makes sense. And also, you know, people want to do something where there's a purpose when they're not only, you know, purely their financial returns, but they want to one way the excitement be part of a story. You know, if you're talking about Food Tech and Agritech, people believe that this can change the world, right? Make the world more sustainable, more efficient. And, and it's, and you know, if you make money with it about it, it's great. But then it's not only that you're making money, you're making money with the purpose. So it's even better, right? So this talks to people and you have to sell a story that people are going to identify with. For instance, a few years ago, a lot of people identified with Food Tech and Agritech. Much more difficult now, but it's still possible. And people who believe in this story, well, it's going to be easier for them to, you know, that's it.
- [40:20]
B
Do you have a fear of not giving people their money back and looking at.
- [40:24]
A
Of course I have a fear.
- [40:26]
B
Like not just the same of the high of giving people money back and showing the success. How do you deal with that fear of my gosh, I'm not gonna give back, I just took $50 million from people which is not a small amount. Now are you dealing with the fear because you say, look, they'll be okay, they took a risk that they knew took a risk. I know, I have a thesis, I believe in that I'm working hard for them. But, but is there still a fear in your heart? And how do you overcome.
- [40:50]
A
100% I'm terrorized. 100% I'm terrorized dot I'm not going to give back the money. You don't realize how fearful I am. I'm very fearful, which forces me. By the way, you should be. Anybody taking money from other people also for your money, but certainly from other people should be extremely fearful of not giving the money back. That's our responsibility to do the best we can to do it. Because if we don't do it, then at least you have to be able to look at yourself in a mirror and, and say, I've did, I've done my best. My conscience is clear that I did not waste my LPs money. It's very, very fearful. It's very scary because if you again, if you miss. It's people's money, it's, it's, you know, it's important for them. It's their lives, it's their savings. You know, you have to be mindful of the fact that they give you in trust capital. It's very, very important. So we're doing our best. I'm not going to say we never make mistakes. Of course we, of course we make mistakes, right. But we're doing our best to be honest and to do the, and, and to be worthy of the trust that has been given to us.
- [41:50]
B
And the last thing, by the way, this is really helpful for me because I ask for money all the time, right? But I, I feel like it's a little easier for me because at this stage I, I'm not the CEO of the company, right. I worker. So it's like, you know, I, all the time I'm asking for support and, and I believe that it's a fair investment, it's the right risk for people to take. But I think the job that you have is extremely stressful, right? So the question I'm curious about is a lot of the individuals are giving you investments become also personal relationships as well. Give me guidelines on that because I've seen that happen as well. You spend time together, you go to dinner, you fly to ski together, you go to experience together, you get to know their family, right? It's a very personal thing because that builds trust. How do you navigate that personal relationship? And the fact that they, you know, they wrote you a check and you owe them money back, you don't owe
- [42:43]
A
them money back, you don't owe anything. Right?
- [42:45]
B
It's not that.
- [42:46]
A
Right. That's not the right word. But yes, with a lot of your clients, you become friends, you know, you spend time together, you speak together, they trust you, you talk to them, you talk to you. Yes. Become Friends.
- [42:56]
B
Do you have like a red line that you worry about crossing or any guidance?
- [43:00]
A
What do you mean? In what, in which feelings?
- [43:02]
B
I don't know. That's the question I'm asking is maybe that's kind of the discomfort of like friends and at the same time they're the ones that are financing your.
- [43:12]
A
My red line is not to lie, is not to. To be in a breach of trust, in other words, my duty. I don't, I don't make decisions in instead of my clients. I don't. I'm trying to be as honest as I can with, with, you know, what's the real situation of the fund, of the companies, as transparent, as honest and, and at the end of the day I'm trying to be not too pushy. I'm telling them, you know, I. We believe this is a good opportunity and we would like you to invest together with us, you know, in this opportunity. And of course my interest is for my LPs to invest as much money as is possible. But I'm trying to, but I'm not going to lie to them and tell them, you know, a version of the reality which is not truthful because it would be in my interest to kind of make, embellish it. I don't like to do that and I feel it's a breach of trust, so I don't do that and it's not good. Maybe it's not the best strategy in terms of sales, but I feel better with myself. So I'm trying to stick to the truth as much as I can and be in a situation where I'm not in a breach of trust and I tell reality as it is, tell my LPs how I see things and if they identify with the way I and we as a team see truth, then they invest with us. If not, no, that's it.
- [44:27]
B
Amir, you've been extremely generous and truthworthy with us. How can our listeners give back to you if they're listening now? Is there something that you can ask from them that you looking for money? Short time.
- [44:38]
A
Send us money. Join our next fund. John. Join our existing SPVs with the most money possible. We believe that we have a few very great opportunities. If you want to listen about them, then you're welcome to reach out to me through LinkedIn, you know, send me a message. I'm sure they can send you a message and you, you will forward, I'm sure and always. Pleasure.
- [44:59]
B
Thank you so much, my friend. Learned a tremendous bit from you.
- [45:01]
A
Thank you, Alex. Be well.
- [45:03]
B
One more thing. Don't close this episode yet. If you got value from this conversation, here's what I need from you. A five star rating. One comment, 20 seconds of your time. That's the deal. A five star rating means more founders find this content. And every time a founder raises, all boats are elevated. Every week, I pick one random comment and send that person a complimentary copy of Investment climate. The book 50 sales playbooks from founders who actually raise money during the fundraising winter. Real strategies, real closes, real numbers, not theory. So if you want a copy, comment below. And if you haven't followed the show yet, do that too. And if there's a guest you want us to bring on the show, just drop us a note or send us an email. We'll read each and every one. Until then, keep on raising.