Total employees: 19
Name of fund: Concord II
Concord Venture Management, Ltd. is regarded as one of the leading and most successful Israeli venture capital
funds. Its reputation was firmly established by its phenomenal results which placed its first fund, Nitzanim, among
the best performers in the United States. The Israel High-Tech and Investment Report met with Matti Karp,
managing partner of the group of funds, and heard about the investment policies and approaches to investments
which were responsible for the group's impeccable reputation.
"The Nitzanim Fund was established in 1993, and its first investment was carried out in February 1994. The fund
was one of the last Yozma Funds (funds which were covered by a government guarantee to investors). Its
investments included Galileo Technologies, ESC Medical, RAD Vision, XTL and Accord Networks. We believed
that we had applied a unique strategy, as we had the smallest number of investments of any of the Yozma Funds.
We tried to receive a substantial portion of the equity of each company and we invested in a very early stage. We
were very active in the management and at the board level of those companies. I was a chairman of many of
these companies, and I sat on the executive committees of other companies," related Mr. Karp.
Nitzanim had a high "hit rate." Of the thirteen portfolio companies, six or seven exited by way of public offerings.
Only one failed. One is "lingering," and the balance are doing well. Nitzanim returned 129% per year over each of
six years. The original fund included $12 million of private investment money, and $8 million was provided by the
government. This was the original structure of the Yozma funds. Nitzanim has already distributed about $170
million and the fund still holds good unrealized assets.
"If you look at the second generation of funds started after 1996, one sees a trend among other funds to follow
Nitzanim's original strategy. The new funds try to keep the number of investee companies low and also follow our
style of participating in the management of these companies.
What differentiated Concord from the others was that the fund tried to get into the companies at a very early
stage and used common sense, instead of pre-disposed attitudes as to how things should be. This also allowed
us to get the best positions and the best valuations in the invested companies. We insisted that once the
company started to be successful, we maintained our position and percentage of ownership and did not allow
ourselves to be diluted. Somehow we managed to reach the exit point with a high percentage of ownership; when
ESC Medical went public we owned a full 16% of the company. We also were able to bring in over-seas investors
such as AVX, brought by Marshal Butler," Mr. Karp explained.
Yes, Mr. Karp expects that the number of Israeli venture capital companies may be reduced from the current figure
of about 70. He is aware that, unlike his group of investors, there are venture capital funds whose investors are
not living up to their commitments, which creates difficulties for any fund's ability to maintain support for
additional funding for its portfolio companies.
Basically an optimistic individual, Karp is looking forward to the second half of 2002, by which time the
conditions in which venture capital funds operate will improve. Hopefully capital markets will once again become
more amenable in providing profitable exits for the private equity community of investors.
Location: Herzliya-Pituach, in the heart of Israel's high tech center, 20 minutes from Tel Aviv. There are six
partners, the best known being Matty Karp.
Concord specializes in private equity management.
Capital under management: U.S. $260 million
Number of portfolio companies: 43
Name of fund: Concord I.
Specializes in information technology and healthcare.
Established: 1997
Main investors: J.P. Morgan, Bank Leumi pension funds, Discount Bank pension funds, China Development
Industrial Bank, Compaq and Kardan Technology.
Size of fund: $75 million, fully invested.
Portfolio companies: 23
Largest investment: $7 million.
Generally invests in seed and start-up capital.
Specializes in data and telecommunication, medical technologies and biotech and software applications.
Established: 2000
Main investors: Verizon, HarbourVest, J.P. Morgan, Qwest, Goldman-Sachs, Leumi investment, and provident
funds of Israeli banks.
Size of fund: $180 million and, as of 2001, $70 million still available for investment.
Portfolio companies: 20
Largest investment: $15 million
Concord generally invests in early stages and provides seed capital.