Evergreen Canada Israel Investments is about to complete the initial financing phase for a fourth venture capital fund, TheMarker.com has learned. Evergreen also announced today that it is buying half the startups portfolio run by Tel Aviv-traded company Technoplus Ventures.
The new fund, apparently to be called Evergreen IV, is the eighth to be founded by Jacob Burak and Ofer Neeman's Evergreen group. The VC group is securing $120 million for it, at this stage.
The fund's success in securing commitments for Evergreen IV is surprising, given the freeze on fund-raising announced last week by Concord Ventures partner Matty Karp.
Karp said Concord had decided against raising capital for a new fund, because Israel's geopolitical situation was deterring foreign investors.
Evergreen's success shows that whatever difficulties certain funds are encountering in loosing investor purse-strings, are not industry-wide. Also, it has only been a year since Evergreen finished raising $170 million for Evergreen III. Altogether Evergreen has more than half a billion dollars under management, invested in 80 startups.
Another Israeli fund, Jerusalem Venture Partners, announced two months ago that it had secured $350 million in commitments for a new fund. JVP said that most of the money had been secured after the intifada resumed in September 2000.
It is true that major American financing firms have substantially scaled back venture investing and exposure to hi-tech. The plunging value of stocks on Wall Street inflated the proportionate portion of their venture capital exposure, which tends to contravene their policy.
Evergreen buying half TechnoPlus' startups portfolio for $12m
Aside from raising money for its new fund, the Evergreen group is also busy managing secondary funds that specialize in acquiring startup portfolios from other funds, or from investors seeking liquidity. Its biggest secondary fund, Harvest II, secured $75 million by mid-year 2001 for this type of investment.
Evergreen is expected to announce the deal tomorrow.
In deals of this kind, the buyer rarely gets to pick and choose investments from the acquired portfolio. It usually gets "good" startups together with the lemons, according to to their ratio in the seller's portfolio.
Tel Aviv-traded TechnoPlus is selling simply because it needs the cash. It is not in a position to continue supporting in its portfolio companies and probably feels it cannot raise additional capital at this stage.