Herzliya-based Glilot Capital Partners, one of the best performing venture funds in the world, is an Israeli venture capital founded by two IDF Intelligence Corps veterans and Technion graduates, with a heavy focus on the cyber sector and the entrepreneurs who emerge from the elite Unit 8200.
The two managing partners, Kobi Samboursky and Arik Kleinstein, founded Glilot Capital in 2011 with the idea to invest in what they call “Israel’s unfair advantage,” mainly the cyber-security, IoT, and Enterprise Software sectors and the human capital which drives them.
“Our ideology is to invest in people with a certain [8200] background. This is a population that has already been sifted through rigorous selection by the Israeli security and defense system, which recruits the best and brightest, the top 1% of every recruitment cycle. These are people who are heavily pre-selected and have gone through a path that prepares them for the start-up world,” Kleinstein told The Jerusalem Post in an interview on Wednesday.
Veterans of Unit 8200, which is responsible for signal intelligence and code decryption, Kleinstein and Samboursky were in the same graduating class of the IDF’s Academic Reserve program (Atuda) and attended the Technion-Israel Institute of Technology in Haifa before joining the unit as officers.
Thus the two men know firsthand about the experiences and trials that 8200 veterans go through that make them good entrepreneurs and a solid investment.
“By the time they become civilians they have gained the best experience one could ask for, not only in terms of practical tech knowledge but also experience in working under pressure, coming up with concepts in a very short time, working on something grand with limited resources and so much more,” Samboursky told the Post on Thursday.
Even the name of the partnership is a salute to 8200, as Glilot Capital takes its name from the Intelligence Corps’s main base, located in Glilot near Herzliya.
“It’s as if Americans called a VC Fort Meade Capital [the US Army base in Maryland where the National Security Agency and the United States Cyber Command are headquartered], some VC names are meant to be symbolic, as in our case. Glilot is the home of several of the best intelligence and technology units in the IDF, it’s where we came from and it is where we find our best entrepreneurs,” Kleinstein told the Post.
Glilot Capital Partners is a seed and early stage venture fund that makes the first investment in some extraordinary enterprises. The company makes it a point to back teams that develop sophisticated technology, particularly in the areas of cybersecurity and enterprise software. The company then helps the startups raise additional millions in second and third investment rounds from the world’s largest institutional investors such as the Blackstone Group.
According to Glilot Capital, the fund creates an environment that makes it possible to generate real, lasting value for both sides of the investment equation. And the representatives of the start-ups under Glilot Capital’s wing certainly agreed.
According to Glilot Capital, it is the first VC fund to invest in Israeli cybersecurity startups.
Glilot’s first fund made a first investment in eight start-ups, four of which have already been acquired by Microsoft, CA Technologies, Marketo and Intuit, respectively.
Today the company manages $125 million across three funds.
The 2016 Preqin Alternative Assets Performance Monitor report – considered to be the most comprehensive review of the VC industry available – ranked Glilot Capital in the top 10 VCs in two categories: third place for Best Performing Venture Capital Fund of 2010-2013 and fifth for Best Performing Private Equity Fund in 2010-2013. Not only was Glilot Capital the only Israel-based VC to be ranked in the Top Ten lists, it has gained these positions for presenting an impressive 92.2% net internal rate of return for its first $30m. fund.
In 2015, Glilot Capital raised its second fund, Glilot II, which adds Internet of Things technology to the focus.
“Our second fund, an $80m. fund is still considered too young for us to be able to know the future returns and performance, but overall it all looks crazy, and things are going stronger and better than we ever imagined,” Samboursky told the Post.
In addition to distributing significant profits to its investors, the company has seeded start-ups that are already proving to be not only valuable but also important.
One such start-up, the cyber intelligence group IntSights, has managed to get its hands on and distribute the most recent list of targets issued by the Islamic State terrorist organization.
“When we founded Glilot Capital we first had an ideal, the question of the model wasn’t decided yet and we were looking through different models for our operation to do what we wanted. Eventually we decided that the VC platform suits us best, the model can be good for what we had in mind but we gave ourselves some freedom,” said Samboursky.
“When we started working on Glilot, we took a look back on more than 15 years of the VC industry, and looked at the past lessons and implemented them in our model,” said Kleinstein.