Private equity firm Insight Raises Billions from Israel’s Monday.com and WalkMe IPOs

Monday.com celebrates its IPO on the Nasdaq on June 10, 2021.

Source: Nasdaq

In April, Insight Partners’ Jeff Horing flew to Israel to have breakfast with the chief technology officers. It was also an opportunity to visit his firm’s first international office, which had opened less than two years earlier.

Now the CEOs of two of those companies visit him in New York. In fact, the bell is coming to ring on the Nasdaq, as Israel’s high-growth companies line up to hit public markets.

Last week, collaborative software as a service (SaaS) provider Monday.com held its initial public offering and closed on Friday with a market capitalization of $ 8.2 billion. This week, Israeli software company WalkMe, whose technology is designed to simplify business software and applications, will go public with a valuation of up to $ 2.6 billion.

Insight is the largest investor in both. The firm owns a 43% stake in Monday.com and controls 32% of WalkMe. Their combined ownership in the two companies has a current value of about $ 3.9 billion.

“For a long time, Israel has been the center of the start-up, abuzz with activity,” Horing wrote in an email, in response to written questions. “But these startups are successfully scaling at a faster rate.”

Money is flooding Israeli technology. The country’s startups raised $ 5.37 billion in the first quarter, more than double the amount from the previous year and 89% above the fourth quarter, which was a record period, according to a report by IVC and the law firm. Meitar.

Herzliya-based game developer Playtika went public in January and has a market capitalization of $ 10.6 billion, making it the fourth most valuable publicly traded tech company in Israel, according to FactSet. Monday.com ranks fifth and WalkMe is set to break into the top 10.

For Insight, the launch of an Israeli operation in late 2019 marked the first opening of the firm’s office outside the US since its founding in 1995. But Insight had been investing in and around Tel Aviv for more than Two decades.

Horing said the firm made its first deal in Israel in 2000. He singled out Enigma, a developer of software for manufacturers, and Shunra, a network virtualization company that was acquired by Hewlett-Packard, as two initial investments.

“I have always loved visiting Israel and have many memories of small market restaurants eating amazing food, discussing for hours about different SaaS technologies and strategies,” Horing said. “My team and I spent countless hours flying back and forth to Israel, often spending entire weeks meeting entrepreneurs and working alongside our portfolio companies.”

Prior to Monday.com, Insight’s primary investment had been in website builder software company Wix, which went public in 2013. Insight co-led a $ 40 million round in 2011 and had a 12% stake in the time of the IPO.

Since then, Wix’s share price has multiplied by 17, giving the company a market capitalization of $ 15 billion, second only to Check Point Software among Israeli tech companies.

“Wix was a critical investment for Insight in Israel,” Horing said. Wix co-founder Avishai Abrahami is also on the Monday.com board. Along with Abrahami and Nir Zohar, Wix’s chief operating officer, “we have co-invested in many Israeli deals over the years,” Horing said.

Acquire the portfolio of an Israeli company

The most obvious detail in the Monday.com limit table is the size of Insight’s share.

Typically, when a company-backed company goes public with a valuation of billions of dollars, the leading company would have no more than 30% of the shares outstanding, often much less.

Insight took a unique approach to reach 43%. In February 2019, seven months before opening its Tel Aviv office, Insight bought most of a portfolio of funds held by an Israeli company called Genesis Partners, whose partners were leaving for other companies.

Within that fund, which closed in 2009, Genesis had invested in Monday.com’s seed and Series A funding rounds. Insight first arrived as part of the $ 25 million Series B in 2017.

After acquiring the contents of the Genesis fund, Insight was able to merge the holdings of the two firms, building a stake that is now worth $ 3.1 billion. Genesis was also an early investor in two other Insight-backed companies: online music learning company JoyTunes and business intelligence company Sisense.

Monday.com co-founder and co-CEO Roy Mann told CNBC that Insight was taking advantage of a huge change that was happening in Israeli technology.

“They had a very strong conviction in Israel and the Israeli ecosystem,” Mann said in an interview after the IPO. “The entire industry matured to a level where entrepreneurs want to build great companies and want to maintain them for a long time. Insight was early on to acknowledge that and really go back and forth to a lot of amazing Israeli companies. “

Horing joined co-founders Mann and Eran Zinman in ringing the Nasdaq opening bell on Thursday. The company also had 250 employees hailing from US cities.

Horing will have a chance to do it again this week for the WalkMe IPO. In 2017, Insight led a $ 75 million investment in WalkMe. By continuing over the course of two more funding rounds, Insight accumulated a 32% stake worth $ 750 million at the higher end of the WalkMe IPO range.

Horing said Insight now has 80 “operational experts” in Israel working with portfolio companies and has expanded into Tel Aviv to take over the space occupied by JFrog, which went public on Nasdaq last year.

As for what Horing finds most exciting coming from Israel these days, he said there is no shortage of opportunities to put money to work.

“Israel is firing on all cylinders,” he said. “Of course, cyber is a strong sector, but it is much broader for a broad group of SaaS, infrastructure, fintech, games and ad technology.”

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