Walden Israel closes fund below target

The firm’s third fund, $30m short of its target, will invest in Israeli companies operating in the communications and IT sectors, in particular enterprise software.

Walden Israel, an early stage venture capital fund, has closed its third fund at $90m, below the $120m target set for the fund when it launched in 2000. Walden Israel Ventures III will invest in around 15 Israeli companies operating in the IT and communications sectors.

Eyal Kaplan, a partner at Walden Israel, said tough market conditions had effected fundraising, but that support from Israel’s institutional investors enabled the $90m to be raised. These institutions included the country’s largest banks Bank Hapoalim and Leumi, Gemulot pension Funds and Bank Mizrachi.

“Many of the institutional investors participating in this fund had invested in Walden’s previous fund, Walden Israel Ventures II, and know us well. Some have even increased their dollar commitment in the new fund,” he said.

He added that the recent tax waivers for foreign investors in Israel’s venture capital industry helped push the fund to its completion with investors coming on board for the first time despite tough market conditions.

The new investors include private equity group TIAA-CREF, fund of funds firm HarbourVest, Verizon Asset Management, Goldman Sachs, Allianz, and NTT Data.

Walden Israel Ventures III has already invested in ColorChip, a company developing components for communications equipment. Kaplan said one of the reasons Walden Israel had invested in the firm was that its CEO Shimon Eckhouse was one of Israel’s golden entrepreneurs, having taken the revenues of ESC Medical, his former company, from nothing to hundreds of millions within a relatively short period of time.

Kaplan added that at least three further investments would be made by the end of the first quarter 2002, with six planned by year-end.

Walden Israel, founded in 1994, manages around $200m. It is affiliated with the Walden International and Walden VC Groups, which manage more than $2.5bn worldwide. Walden Israel’s first two funds raised £33m and $60m each. From the second fund, seven of the 14 companies in the portfolio have raised more than $190m to date.