British-Israeli venture capital firm 83North closed its seventh $400 million fund to invest in early-stage and growth-stage startups. Due to global economic uncertainty and unlike previous funds, 83North has decided to merge its start-up and growth investments into the same fund.
Last year, 83North closed two funds totaling $550 million and the venture capital firm now manages $2.2 billion.
Despite the difficulty of attracting investors to new venture capital funds these days, due to rising interest rates, which makes investing in risky instruments less viable and due to the geopolitical uncertainty, the fund has been successful in raising capital from limited investors who have invested in the past.
A series of releases
A series of exits over the past 18 months are estimated to have brought the fund some of the highest returns in the venture capital industry. Due to inflation fears last year, the fund preferred to sell its stakes in companies with IPOs, including ironSource, Payoneer and Marqeta. Although the fund was not a partner in, say, the giant ironSource merger, valued at $11 billion last year, it has spared itself the sharp decline in public company values over the past 18 last months.
The fund also benefited from mergers and acquisitions between private companies and tech giants. 83North was a leading partner in the sale of delivery app Wolt to US rival DoorDash for $8.2 billion, and the sale of Israeli cybersecurity Siemplify to Google for $500 million in January, and was the only outside investor in Gigi Levy’s Israeli mobile game company Beach. Gigi Levy’s Bum, which was sold late last year for $275 million to French company Voodoo.
However, not all was rosy in the fund: data storage and backup company Zerto, which was previously considered one of the most promising startups in its portfolio, was sold to HP for 374 million dollars – a small amount compared to the capital invested in it, about 180 million dollars.
Most of 83North’s partners are Israeli, but the investment policy is global
As far as is known, the fund’s limited investors have not changed. The foundation refuses to release their identity, but in the past the name of the Princeton University endowment fund has been released as a prominent investor. Other limited investors include Blackrock, Germany’s SAP and Cross Creek, according to research firm PitchBook.
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83North is a somewhat atypical fund in the Israeli venture capital landscape: most of its partners are Israeli, but its investment policy is global – the company invests in startups in Israel, Europe, the United Kingdom and in the USA. Fintech company Marqeta, for example, one of the fund’s largest portfolio companies involved in an IPO last year, is located in California and has no ties to Israel.
The fund also has a structure of limited partners: it has no more than four partners who do most of the work alone, without an advisory team: the Israelis Arnon Dinur, Gil Goren and Yoram Snir and the British partner Laurel Bowden .
Published by Globes, Israel business news – en.globes.co.il – on October 2, 2022.
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