Peak Ventures | שאלות ותשובות


Peak Ventures | קו כחול
Our goal at peak is to open the door to venture capital investing to the general public. We offer a unique investment model, the first of its kind in the world, where our strategy is to invest alongside the largest and most powerful venture capital funds in Israel and to realize those investments between consecutive funding rounds, aiming to earn a return in the short-to-medium term, about 24 months on average. To reduce the risk, each investment is divided among several startups.
Venture capital funds (VCs) are the main source of funding for startups both in the early stages of raising capital and in the later stages of their lifecycle. In practice, this is a private investment fund that raises capital from investors and invests it in startups – an investment considered high-risk. Without VC funds, the tech industry probably would not have developed, or at least not grown very rapidly. VC funds operate in a variety of fields in the technology sector such as Fintech, Adtech, Cyber, IoT, etc. In return for their investment the funds receive a stake in the startups, in the belief that these young companies will continue to grow and add value, which will be reflected in the rise in the stake’s value. The contribution of VC funds to startups is not only funding, but also guidance and joint decision-making. Representatives of the funds often join the companies’ board of directors, are active in making substantive decisions and help lead the startup forward. VC funds can also help entrepreneurs find quality employees, advise them on how to develop from a business perspective, provide personal and professional knowledge and experience, and help find additional investors for the startup’s next funding rounds.

Pre-Seed: The earliest stage in raising money for a startup is called the Pre-Seed, even before the initial capital fundraising. This is the first stage in the startup’s lifecycle, when there’s a concrete idea without the development of an actual product or service; the employees are typically the entrepreneurs themselves, and the economic feasibility is still in the process of development and planning.

The capital raised at this stage is small (usually up to $ 1 million) and in most cases comes from the founders, their family members or their personal business acquaintances, and sometimes also from accelerators or crowdfunding. It’s important to remember that at this stage, the startup doesn’t have too many expenses, and the money raised is for initial expenses and business development, such as patent registration, legal costs, and basic marketing expenses.

Seed: This stage is a very high risk for investors. Although the idea is taking shape, and there’s a business plan and a product or service in development, few employees have been recruited yet, and the business model just hints at the feasibility of initial revenue. These are the first real steps of the startup in the business world. The capital at this stage will come mainly from venture capital funds or private investors (angels). The average amount raised at this stage is about $3-6 million, in return for which investors receive significant stakes in the company. As we’ve said, the greater the risk, the greater the opportunity.

Round A: This is the first significant funding round. At this stage there’s already a pilot or beta version of the product, sales have begun, and the company is growing rapidly. Now there’s a need for real capital, which most often comes from VC funds. The large amounts raised are used to upgrade all parts of the company, e.g., for developing or increasing the marketing division.

At this stage, the average amount raised is $15-20 million. Most of the investments at this stage come from VC funds, which expect significant progress toward a proof of concept (POC). At this point, too, they exchange their funds for a considerable stake in the company.

Round B: This stage is only reached once the startup shows investors that it has met its targets, like sufficient paying customers and significant revenues. This is an advanced funding round in which VC funds and investors reinvest to express high confidence in the entrepreneurs. At the end of this round, the company needs to demonstrate a high rate of growth.

The raised capital starts at a few million dollars and may reach tens of millions of dollars. Apart from traditional VC funds, at this stage one also sees the corporate funds of large companies looking for innovative technologies or footholds in other markets.

Round C: This is a round that testifies to the maturity of the company and its product, when the startup is no longer considered a venture but a real tech company. Now the company needs to raise capital to continue development, expand services, boost revenue and grow its presence in this market and others. Just like in the previous round, the purpose of the funding is to inject a lot of cash in order to grow rapidly.

IPO or Exit: This is the stage after the funding rounds, in which the company allocates shares for the general public and begins trading on the stock market, or else is sold to a larger company. Of the thousands of ventures launched each year, only a few dozen companies make it to the IPO. Case in point, 55 high-tech companies joined the TASE in 2021 and 22 Israeli companies joined Wall Street last year.

A startup raises capital from investors and VC funds in the course of several rounds of financing, up to the long-awaited IPO. This can take between 7 and 10 years. peak’s model lets you invest in startups without waiting for the IPO. The exit (i.e., the realization of holdings) is carried out between funding rounds, with an average of 24 months between rounds.

* The decision to realize an investment belongs solely to the VC fund, and there’s no guarantee or obligation that the investor will be able to realize his investment.

The selected startups undergo due diligence by the market’s leading venture capital funds. Due diligence is a study designed to assess the level of risk in a particular transaction and, in the case of VC funds, to thoroughly examine the chances of a startup succeeding and yielding a return on investment. Due diligence includes historical, legal, business, accounting, financial and marketing analysis as well as any other field relevant to potential investors. Due diligence will include, for example, an analysis of the product or service that a company is developing, analysis of the need they want to meet, examination of the advantages of the startup versus its competitors, examination of the stages of development, legal examination of the patent, etc. In the end, everything is distilled into one conclusion – whether or not it is worth investing in a startup.
Only companies invested in by the VC funds are in peak’s investment portfolio. In addition, we at peak have an internal investment committee that conducts further investigation on the part of the company’s team, which includes experts in finance.

The startups can’t be selected. The companies are chosen by peak’s investment committee, which is responsible for dividing the investment among several startups alongside the venture capital funds. The diversification among the companies reduces risk (but does not eliminate it completely).

From the moment you become an investor, you’ll receive updates on each movement of money – what amount was invested in each startup and to which venture capital fund it went. Every six months, you’ll receive a concise report on your money’s performance.

This is a high-risk investment, so just like in real estate, stocks or anything else, here too there’s a risk of losing one’s investment. We take proactive measures to ensure that investors who join us are aware of this and are investing available money. The model has a number of unique mechanisms and displays innovative thinking in order to reduce risk, with the understanding that the money belongs to the general public.

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