At Israel’s ClalTech, author Shinar pens broad tech-investing strategy

https://www.pehub.com/vc-journal/at-israels-claltech-author-shinar-pens-broad-tech-investing-strategy/

 

ClalTech CEO Daniel Shinar, a technology scout in Israel for the executive Len Blavatnik, has taken an unconventional path to venture investing.

While Israeli tech leaders emerge from the army’s programming units, Shinar was groomed as an intelligence analyst during the second Palestinian uprising.

That experience inspired him to pen the thriller “Red Skies,” which in 2018 became an Israeli bestseller, after a year of vetting by Israel’s Mossad and military censor.

Building a view

Shinar, 37, who managed to finish the book in parallel with his work at ClalTech, insists the jump from counterterrorism to tech was not that big.

“As an intelligence officer you’re trying to gather all sources of information and build a view. And here you’re trying to build information from sources of information and build a view,” he said. “The sources are different and the subject matter is different, but the intellectual process is similar.”

ClalTech is a division of Clal Industries, an Israeli conglomerate that Blavatnik’s investment group, Access Industries, purchased in 2012.

Access owns more than $20 billion of companies ranging from petrochemicals to media to real estate and including more than $2 billion of technology ventures.

In five years, ClalTech has invested nearly $100 million in Israeli ventures like Zerto, a maker of disaster-recovery software, Iron Source, an app-monetization company, and Vayyar, a maker of sensors that see through walls.

At the end of March, McDonald’s acquired ClalTech portfolio company Dynamic Yield for $300 million. Two other portfolio companies, LightCyber and Zooz, were previously acquired, by Palo Alto Networks and PayU respectively.

Now, ClalTech is planning a new tranche of investments in Israeli technology startups, Shinar said.

The firm is largely sector agnostic but is doing more in software and internet platforms, both B2B and B2C, he said.

Founded by Blavatnik in 1986, Access has tech investments including Alibaba, Yelp and Snap. Media holdings include Warner Music Group.

Mature ventures

ClalTech usually looks to participate in growth rounds of more mature ventures, injecting from $2 million into the tens of millions of dollars. The firm has led funding rounds and joined capital raisings other investors initiated.

“We can invest as much as we want, as long as we convince our investment committee,’’ Shinar said. “And as long as Len is supportive.”

Starting in 2007, Shinar served as a senior assistant to the CEO at Clal Industries and was a board member at various subsidiaries. Around the time Blavatnik closed the deal for ClalTech in 2012, he became VP for strategy and business development. From 2005 to 2007, Shinar was an analyst at Israeli tech investor Elron, researching investments in media and telecom.

ClalTech’s chairman is Avi Fischer, who is also chairman and CEO of Clal Industries. In addition to Shinar, the investment team includes Vice President Tomer Babaiand Analyst Alon Eitan.

Now, traveling between Access companies in Europe and Israel, Shinar sees European tech ecosystems closing the gap with Startup Nation. Israel is becoming more challenging to operate in because surging venture funding and proliferating multinationals boost demand for, and the cost of, local talent, Shinar said.

Nonetheless, Israel still holds an advantage over Europe for its proficiency in research-intensive deep-tech development and for the sheer density of ventures in the Tel Aviv area.

In a field crowded with foreign and local venture funds, ClalTech is the rare investor linked to a sprawling conglomerate with traditional businesses well beyond Israel’s tech economy.

Shinar insists, however, that ClalTech companies benefit from the link to Access’s multi-industry reach and know-how.

Keeping the day job

ClalTech is also the rare investor led by a bestselling author. Though Shinar has no plans to quit his day job, having a cyberespionage novel to his name makes for an easy icebreaker with companies.

“Some people run marathons. Some bake. I write,” he said. “Because it’s rich with military-intelligence stories, the startup people are the types that would read it. Sometimes they ask me to talk about the book.”

Shinar says that in counterintelligence and investing, the pace of change can quickly render scenarios and businesses irrelevant. So one can never become complacent.

“I’m always worried: What are we missing. What don’t we know?” he says. “That’s a super-cool question that you have to ask yourself as an investor every day because you not only look for a company, you have to go far beyond the mountain of what you know.”

Backed by Blavatnik’s Access, ClalTech has the staying power and ample patience to support ventures through to an IPO, if that’s the owners’ vision.

“We are less stressed about exits. We are able to have flexibility to stay with companies for the long term,” he said. “We want to be a source of capital for companies that want to be leaders. More and more, entrepreneurs want to go for the home run.”

Update: The article has been updated to add information about the leadership and team at ClalTech.