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Feb. 8, 2008
An Israeli with capital ideas
Ex-pat connects Israeli startup companies with U.S. funders.
BAILA LAZARUS
Financing a new company can be hard at the best of times, but when you're a technology company in Israel, looking for money half way around the world, the challenge may be insurmountable.
It's that challenge that Yaron Bazaz has taken on, trying to find venture capital for Israeli tech startup companies.
Bazaz is the president and CEO of Western Headquarters Ltd., which focuses on raising capital and creating networks of resources for tech startups, and giving private investors, venture capital funds and private equity firms contact with screened investment opportunities that match their interests. He also authors an online blog, in which he interviews key players in investment, venture capital firms, entrepreneurs and other areas of the tech world.
Originally from Israel, Bazaz has worked in business development, marketing and sales in the IT world and had his own company that dealt with information security.
"All that time, I was involved in new ventures with a strong connection to venture capital and the creation of startups," said Bazaz, "and I decided to focus on that while moving to Vancouver – to focus on raising money for Israeli companies and local companies."
Israel is well known for startups and venture capital, Bazaz said, with approximately 1,000 technology ventures and 60 active venture capital funds.
"Many Israeli startups would like to reach out for North American capital," he said. "For them, it's vital to find strategic partners in the United States or Canada, so it's one of the reasons companies reach me to help match them with North American resources."
But he faced a difficult challenge – Canadian venture capital firms are very local in their mandate, so it's hard to get a foot in the door, according to Bazaz.
"They are financed by institutional organizations that limit their investment to companies in Canada, so the ability to do the connections with Canadian VCs are limited," Bazaz explained. "Most other Canadian VCs are limited and investment focus to Canada."
As well, compared to American venture capitalists, Bazaz believes that Canadian VCs are more risk averse. That means that both in Israel and Western Canada, entrepreneurship is facing the same problem – the centre of venture capitalism is not here.
"They're all trying to reach out to the main market, which is in the United States," said Bazaz.
Not one to be discouraged, Bazaz is actually creating a new partnership to address the issue, by matching American managers with local startups.
"In Israel, there are now three generations of tech companies that have managed to build up a thin layer of management with international experience ... with the know-how of how to build companies that will be world leaders in five to seven years," he explained. "But here, in Western Canada, although we have vital activities of entrepreneurship and world-class universities, the problem is that there is not enough management talent and experience to lead companies to better positions, so we see many companies with 50 and fewer people that never make it or, in the end, have an acquisition of a few million dollars.
"One of the ideas I'm playing with lately is to establish with other partners a VC that will address this problem."
The idea would be to focus on two legs: Internet communication technology (ICT) – web, new media, wireless applications; and commodity-oriented technology (COT) – related to energy, mining, water, forestry, agriculture – taking advantage of British Columbia's strong resources sector.
In both streams, however, it is the management that really needs to be addressed.
"It's the management that is everything," said Bazaz. "In real estate, location is everything. With tech companies, it's management. With bad management, even the best technology will never hit the market. But with great management, even a not-so-good technology or business plan can be altered along the way to be great and they will find a way to establish the right partnership and create the right market planning. It's all about management and the ability and passion to deliver."
Bazaz, who has a BA in psychology from Ben-Gurion University in Israel and an MBA from the Edinburgh Business School, came to Vancouver from Israel two years ago for a change of pace.
"I wanted a change in atmosphere and wanted a place that's the [opposite] of Israel – peaceful, quiet and relaxed. It was very important to have the outdoor activities and the unlimited ability to just take the car and do whatever you want – a trip to the Yukon in one week and San Francisco in the other."
Baila Lazarus is a freelance writer, photographer and illustrator living in Vancouver. Her work can be seen at www.orchiddesigns.net.
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