“Capital-intensive businesses, such as hardware-based solutions and companies that need a lot of working capital to grow, will find it difficult and expensive to support their growth,” said Moshe Friedman, head of Amdocs Ventures. “The pivot away from Russia and China in the technology sector is also hard to predict. Companies with IP, manufacturing or customer focus in those geographies will be penalized.”
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Moshe Friedman.
(Photo: Amdocs Ventures)
Friedman talks about the companies that could suffer this year, which is why the current global conflicts are likely to have a tough time. However, the relationship between the countries has improved in recent years.
He added, “The opening of the Arab world through the Abraham Accords may be the only important development of our generation.” “It creates new markets for raising capital and for our portfolio companies.”
Name of funds/funds: Amdocs Ventures
Total Amount: 50 million dollars
Partners: Moshe Friedman
Select Popular/Portfolio Companies: Identiq, Team8, NeuralMagic, Juganu, Flow Security
Friedman joins CityTech to share insights on the latest trends expected in 2023 and beyond.
If 2020 is an outbreak year and 2021 is a record year, how would you describe 2022 in the VC sector?
In the year 2022 is a uniquely defined “cost of capital” resurgence. Capital is no longer free and insecure, and companies have had to adjust their plans accordingly.
Who are the big winners of 2022 and why?
Companies with quality and predictable revenue and earnings. Amdocs, for example, outperformed the S&P by 30% in 2022. We grew in valuations and market valuations. Same goes for beginners.
In our view, the big winners will be companies with real, deep and unique technology that has built trust in their target market. Not companies with a slightly better way of doing what everyone wants, but companies with deep technology that has the potential to redefine their chosen market. These companies have the luxury of not having to enter the market today to stay competitive, so they can ride out the storm.
Who are the Biggest Losers of 2022 and Why?
Capital-intensive businesses that require hardware-based solutions and significant working capital (such as inventory) to grow will find it harder and more expensive to fund their growth. The pole away from Russia and China in the technology sector is also hard to predict. Companies with IP, manufacturing or customer focus in those geographies will be penalized.
What do you expect from the VC sector in 2023?
In the year I expect far fewer new VC funds in 2023, but established funds that have already returned capital to investors will be able to raise new capital.
VC funds that haven’t put capital back into LPs are slow to allocate their remaining capital because they don’t know when (or if) they’ll be able to raise more…
Corporate VCs are in a great position because we don’t have LPs to manage – we’re full speed ahead. Prices are more reasonable and technology is as important as our growth.
What international processes will affect the Israeli market (positively and negatively)?
The opening of the Arab world through the Abraham Accords is probably one of the most important developments of our generation. It creates new markets to raise capital and sell to our portfolio companies.
How should different companies (large, medium, early stage) prepare for the coming year?
When capital is free, companies build their budgets and hire more than they hire to accelerate growth. That has changed.
Every smart business is self-sustaining and reimagining growth with capital and earnings on hand.
What will happen to the dozens of unicorns born last year?
I agree with Bessemer on this point: we should not focus on how much an investor is willing to pay for a company’s stock. We need to focus on revenue. Companies that sell will continue to sell. Companies based on dreams have a hard time convincing investors to pay for their shares.
Which high-tech sectors should we be watching in the coming year – and why?
We invest in companies that solve problems that are creating solutions today. Therefore, we pay a lot of attention to SaaS management, data security and the deployment of the edge of AI – all issues that are emerging in large enterprises today.
HR: Will the layoffs, the ones that have happened in the past and the ones to come, help in any way to fix the problems faced by companies in the last 2-3 years?
Israel is globally recognized for our entrepreneurial spirit, risk-taking, hard work and strong technical talent – so capital will continue to be available to teams building something special.
Unless our universities produce enough qualified engineers to meet that demand, working conditions will remain “above the market”.
Lynx.MD, Community.com and Flow Security – Amdocs Ventures’ famous portfolio companies
Lynx.MD
Data Use and Federated Learning: Provides a secure, private, and decentralized data network that connects clinical data producers (such as doctors and hospitals) with data users (such as pharmaceutical companies) to accelerate research and development.
Founders: Omer Dror (CEO) and Ofir Farchi (CTO)
Founded Year: 2018
Number of employees: 30
Explanation behind the investment:
The need for secure private and controlled data sharing and data learning is clear, cuts across verticals, and promises to unlock significant value in healthcare and the enterprise.
Community.com
Brand Engagement: Use SMS (and soon WhatsApp and Apple iMessage) to deliver personalized B2C communication that’s engaging, smart and beautiful.
Founders: Matthew Peltier
Founded Year: 2018
Number of employees: 100
Explanation behind the investment:
A robust modern and scalable technology stack with a management team with a deep understanding of brand engagement. A seamless, delightful customer experience after purchase. Enable a world that engages, connects and builds brand loyalty after social media, all personally and all at scale.
flow security
Data Security: Detects, organizes, and secures cloud-based data flows. The company operates without agents, can identify, map and secure data at rest and in motion, encrypted and unencrypted, system-wide, sitting in the k8s container on the kernel workstation.
Founders: Jonathan Rosin, Rome Ashkenazi
Founded Year: 2020
Number of employees: 25 The rationale behind the investment: Data security has huge potential for cloud migration and will be a major concern in the cloud in 2-5 years. The underlying technology of EBPF is a very new way to manage distributed hybrid systems.
