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New Investments, Fresh Capital, Recent Exits, Mark Momentum for Benhamou Global Ventures PALO ALTO, CA –(Marketwired – June 28, 2017) – Benhamou Global Ventures (BGV), an early-stage venture capital firm with deep Silicon Valley roots and an exclusive focus on enterprise information technology opportunities in global markets, announced the final close of their third fund with $80 million of investable capital. Investors in the third fund include both existing LPs as well as new international and institutional LPs including several US, European, Israeli and Chinese investors. Extending the strategy of fund BGV II, BGV III will focus on enterprise IT sectors including cyber security, cloud-based infrastructure services and applications, web scale infrastructure, advanced analytics and artificial intelligence as well as industrial Internet of Things (IOT). The firm will continue its cross-border investment strategy, identifying and investing in promising companies originated in Israel, Europe and Asia and helping them build a presence in Silicon Valley. BGV has made 5 investments from the BGV III fund recently: Bayshore Networks, an emerging leader in Industrial IOT cyber security was completed in March 2017 and was syndicated with Trident Capital. The company secures and protects critical Industrial IOT assets. Secret Double Octopus (SDO) is an Israeli cyber security company whose breakthrough technology enables a password-free environment with trust channels established via a mobile phone app. That investment was completed in April 2017 and was syndicated with JVP, Iris Capital, and Liberty Media Ventures. Sherpa Digital Media, an emerging leader in Augmented Reality for the enterprise, was completed in June 2017 and was syndicated with Rally Ventures. The company securely manages, measures and automates video content and reaches customers, prospects and employees across all devices and locations. 6d bytes, an emerging leader in robotics, machine vision and AI, was completed in June 2017 and was syndicated with Partech and leading angel investors such as Plug and Play. The company is transforming the way the food and beverage industry approaches the preparation and serving of healthy foods. Drishti, a computer vision spin-off of SRI (Stanford Research Institute, Menlo Park) joined the BGV portfolio in June 2017 and was syndicated with Andreessen Horowitz (a16z). It provides a highly innovative solution to improve the efficiency of human operators in manufacturing assembly lines. “We are grateful to enjoy the support of exceptional repeat and new investors in fund III to implement our investment strategy,” said Eric Benhamou, founder and general partner of Benhamou Global Ventures. “The sales of Grid Dynamics (acquired by TeamSun) and of Zentri (acquired by Silicon Labs) in Q1 2017 are a further evidence of the success of the BGV model.” The partners of BGV III are Eric Benhamou, Anik Bose, Eric Buatois, Yashwanth Hemaraj, Marina Levinson, Amir Nayyerhabibi, Janice Roberts based in BGV’s Palo Alto office, and Barak Ben Avinoam (based in BGV’s Tel Aviv office in Israel). About Benhamou Global Ventures BGV is an early-stage venture capital firm with deep Silicon Valley roots, with an exclusive focus on enterprise technology opportunities in global markets. BGV currently has 25 active companies in its portfolio. The BGV team of 8 investment professionals has successfully built and implemented a cross-border venture-investing model with companies from Israel, Europe and Asia. Eric Benhamou, former chairman and CEO of 3Com, Palm and co-founder of Bridge Communications, founded the firm in 2004. Comprised of an experienced partnership team of global operating executives and investors, BGV is often the first and most active institutional investor in a company and has a powerful network of technical advisors, executives and functional experts who actively engage with its portfolio companies. The company has offices in Palo Alto, California and Tel Aviv, Israel. For more information, visit www.benhamouglobalventures.com.
Source: http://www.marketwired.com/press-release/bgv-closes-third-fund-makes-new-investments-2224138.htm
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Eric Benhamou, the venture investor who ran 3Com and Palm before they were sold to Hewlett-Packard, is eyeing opportunities in China and the end of the “unicorn bubble” as he closes his third investment fund at Palo Alto-based Benhamou Global Ventures.

This TechFlash Q&A came shortly after a Menlo Park e-commerce company he was involved in, Grid Dynamics, was sold to China-based Teamsum. It has been edited for length and clarity.

In addition to being on the board at Grid Dynamics and investing through his firm, Benhamou is on the board at Cypress Semiconductor, Silicon Valley Bank and Finjan Holdings.

You’ve been involved — both operationally and as an investor — for four decades. You’ve seen the ups and downs of the cycles that we’ve gone through for several decades. Lately, the description that I keep hearing is that in the last three to five quarters, the startup world has seen a return to normal. Would you agree?

Yes, I would. But with the caveat our firm has never really deviated from the normal. There was a short period of time in which valuations seemed to become unreasonable.

Most of that phenomenon tended to pertain to consumer-facing businesses and it was labeled appropriately as “unicorn hunting.” We never played in that environment. We focus on the different parts of the markets where we never really deviated much from normal. As an example, our average valuation today for Series A companies today is basically the same as it was three years ago.

So you have been staying the course and watching the unicorn hunters go by?

That’s right. Some of them crashed and burned and others have continued. That’s OK. It’s a different sector of the industry that we focus on. We believe that the trend that we’re riding has long legs.The digitalization of industry that we’re witnessing right now is still in the first couple of innings and it’s affecting all the sectors of the industry. So we’re not as exposed to fad or to consumer tastes, one way or the other.

Basically we’re focused on technologies which help enterprises be more productive and more customer-centric and more resilient.

You were involved with Grid Dynamics, a Menlo Park e-commerce company that was recently bought by a Chinese company. Tell us more about them.

Grid did extremely well in terms of its business trajectory. It had major U.S. customers — large enterprise customers mostly — in the retail and financial sector, particularly over the last few months. That attracted the attention of many suitors.

I was on their board and I was very actively engaged with the management team, Leonard and Victoria Livschitz, who are cofounders. I worked very closely with them, particularly in the process leading up to the sale to Teamsum.

Eventually we decided that, rather than being opportunistic, we should follow a structured process with an adviser. I helped Leonard work through this process and we eventually narrowed down the groups of qualified suitors to a very small number.

Teamsum became the most attractive one for a number of reasons. One is that they happened to be one of our investors in Fund III. We had a preexisting relationship with them and we knew that it would be an extremely good fit strategically. There was basically a foundation of trust since we knew each other. So that actually went quite well.

It looked like they hadn’t raised all that much money over the years. Is that right?

Yes. Grid Dynamics is an engineering services company as opposed to a product company. So it is less capital intensive than some other investments we make. There was only one other firm that was invested in them, called DTV.

Grid did not go through multiple rounds of financing because their base of customers provided sufficient cash flow to help the company finance itself. There was no need to go through growth investments. That was fine because we’re able to maintain our position through that.

What do you think of the concerns that are being raised about China becoming so prominent a player in U.S. technology company M&A and investments?

China has a very strong economy and they weigh in a lot more in the global scene than they did just a decade ago. So it’s inevitable that we’re going to have more and more M&A transactions that are cross-border. There may be some M&A transactions that are more sensitive than others and require a close look by regulatory authorities like the Committee on Foreign Investment in the United States CFIUA. But in the case of a company like Grid Dynamics that does not really sell a product, it sells services, the concern would not be really well-focused.

Keep in mind that Grid, while being a U.S. company, has about 600 engineers in Eastern Europe. That is a great source of its service talents — excellent engineers with great math backgrounds. So there was really not much that was worthy of a deep consideration or concerns when it comes to U.S. assets. That is actually why it went quite smoothly.

Are any of the investments that you’ve made in some of the more sensitive areas? I know you’re on the board at Cypress Semiconductor and that is one of the areas people have been looking at. Another that it seems everybody is involved these days is artificial intelligence — or at least they say they are. Where do you think the line should be drawn?

Well, it is really up to government officials to spell out the policy on what rises to the level of a significant concern and what doesn’t. I can tell you that the M&A momentum flows in both directions. So, for example, at the same time as we were negotiating the sale of Grid to Teamsum, we were also negotiating a Series C investment into one of our portfolio companies by some Chinese investors and some U.S. investors. It’s a Palo Alto company called IndentityMind Global and the expectation is that it will expand into China. It is a cybersecurity company that focuses on fraud detection on electronic transactions.

We’re dealing not only with companies like Teamsum who are expanding their operations into the U.S. but also with the exact opposite — U.S. companies going into China. We have been developing important relationships in China to help secure partnerships for our U.S. portfolio companies as they expand there.

People talk about great opportunity in China but they also talk about a lot of copycat type of businesses that show up there, sometimes before they can even get there. How do you weigh the opportunity versus the risk in deciding when is the right time to go there and what founders should be thinking about?

The opportunity is now. That’s because China has an economy that is vastly expanding. From an IT perspective, it is not saddled with earlier generations of products and infrastructures. They have an opportunity to basically skip a generation or two and really advance.

We focus on enterprise IT exclusively. There are a number of large enterprise companies there who need to buy IT products and services. And they need that today. They may not find suitable Chinese manufacturers for these products and services and therefore they will turn elsewhere. We want to make sure that we’re there for these opportunities.

Give me an update on your funds. When we last spoke, you had raised just part of the money that you intended to and you were also talking of perhaps doing a growth fund. Any news on either of those fronts?

Our Fund III is at the very tail end of its fundraising process. In fact, we’re no longer soliciting interest from any limited partners. We’re just finishing the legal negotiation with the last batch of LPs who wanted to come in. We expect to complete this in a matter of a few weeks. Fund III is basically done. We fully expect to continue to raise some capital and be active in the market for a slightly different orientation for the next fund.

Both Fund II and Fund III were early-stage oriented. We would expect our next fund to have a broader scope and be suitable for larger opportunities and for more mature opportunities. You could call this growth, but sometimes growth is a bit of misnomer because it covers too broad of a spectrum of opportunities. It may be easier to think in terms of an equity series.

Typically, Fund II and III would invest in seed and Series A and B. Beyond that, the investment opportunity would typically be considered out of scope. We want to have a fund that enable us to continue to plow capital into really strong companies as they get to the next stage. And fund IV will meet that requirement.

That’s the current thinking. We’re not actively marketing fund IV right now. This is just the current thoughts of the partners on this, but we will be in active marketing mode on it as soon as Fund III reaches final closing in the next two to four weeks.

Source: http://www.bizjournals.com/sanjose/news/2017/04/17/ex-palm-3com-ceo-on-venture-return-to-normal-china.html

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Grid Dynamics, backed by the former CEO of 3com and Palm, was acquired on Friday by Teamsun, China’s leading IT service provider.

The terms of the deal were not disclosed. Grid Dynamics had raised only $1.8 million since its founding in 2006, growing the business without needing more.


Palo Alto-based Benhamou Global Ventures, led by former 3com and Palm CEO Eric Benhamou, was the only investor disclosed. Financial details of the acquisition were not announced.

Grid Dynamics is now wholly owned by Teamsun subsidiary Automated Systems Holdings Limited. Grid Dynamics will continue to operate independently under its own name.

CEO Leonard Livschitz heads up the Menlo Park-based Grid Dynamics, which provides e-commerce technology to customers in the retail, finance, media and technology sectors.

“This acquisition is a tremendous milestone” Livschitz said in a press release. “As a part of the ASL/Teamsun family, we gain access to new markets — such as China, Hong Kong and other Asia Pacific countries, as well as Europe.”

Livschitz also hopes to pursue emerging opportunities, such as connected cars and IoT in the manufacturing and automotive sectors.

ASL is a Hong Kong-based IT service and leader in system integration, hardware, software and support services. ASL is a subsidiary of Beijing-based Teamsun, which maintains more than 5,000 employees and more than 20 IT service holding subsidiaries in various verticals.

“Customers trust Grid Dynamics to develop their digital future,” ASL CEO Leon Wang said in a press release. “We are excited to join forces to go after more customers in more regions and industries.”

Source: http://www.bizjournals.com/sanjose/news/2017/04/07/e-commerce-tech-startup-backed-by-3com-palm-ex-ceo.html

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Anik Bose, BGV General partner shares his perspective on the Digital Transformation of Retail. The digital transformation of retail is reinventing how retailers engage their customers, utilize their assets, improve worker productivity and drive supply chain visibility. Not only RFID, BLE and IoT sensors but also video cameras equipped with advanced computer vision algorithms are becoming instrumental in enabling supply chain reinvention while advanced behavioral analytics are changing in-store execution, pricing and marketing functions. While technology innovation is serving as a catalyst for this transformation, the shift in customer behavior is playing an equally strong role, as customers increasingly prefer using multiple touch-points for resolving issues. They often expect an integrated and seamless experience and furthermore, enriching customer experience requires that traditional and digital channels complement each other and be used simultaneously. The customer journey from engagement, product discovery, purchase and post purchase provides a good set of illustrative examples of this digital transformation.
  • Engagement – Mobile devices are becoming central to customer experience and engagement; Social media is changing the ways of creating brand value and loyalty
  • Product Discovery – Digital mediums and interactive displays are providing relevant context-aware messaging leveraging IoT and analytics; Need is being created on the go, at the point of discovery – not restricted to physical or virtual retail channels.
  • Purchase – Omni channel is becoming a mainstream trend supporting the integration of the best of online and brick and mortar retail. Digital wallets and NFC are fast becoming a reality.
  • Post-purchase – Point of service is being reimagined with proactive insights to delight customers. Customer 360 driven engagement and post purchase experiences and actions are coming together to resolve customer issues. Self-service is becoming easier with automation and digital IVR tools.
In order to compete effectively with ecommerce giants, retailers are required to increasingly leverage technologies that enable them to blend the best aspects of in-store and online shopping. One example is to provide real time customer reviews and ratings at kiosks or via mobile apps to help on-site customers make informed purchasing decisions while they can touch and feel the product. Another tactic is leveraging social analytics tools for frictionless commerce by better understanding customer sentiments. All of these tactics require collecting and leveraging consumer data to make real time decisions in-store and online at multiple levels of the organization. This requires both a culture shift as well as embracing cost effective technologies to automate the data collection processes, be it at the store, warehouse and or distribution centers levels. Profitect (www.profitect.com) a BGV portfolio company is a SaaS firm that is transforming in-store workforce productivity through advanced prescriptive analytics to drive improved profit performance. The company’s turnkey solution utilizes customer’s data to deliver store level optimization actions instead of static reports to increase sales and margins. The company’s prescriptive analytics technology utilizes pattern recognition to identify performance improvement decisions and automatically delivers prescribed actions to the appropriate personnel and then tracks and monitors execution across store operations, loss prevention, omni-channel, marketing and merchandising. This closed loop solution often generates 100% ROI within 6 months. Profitect has successful deployments at retailers like ASDA, Ahold, Lowe’s, DSW, Weis and dozens of other key retailers. Gartner’s view on improving in-store worker productivity is highlighted in the next chart. Slide1   Intellivision (http://www.smart-retail.com) another BGV portfolio company applies advanced video analytics across multiple markets with Retail being one of the key customer segments. The company’s product enables retailers to capture and analyze video data around store metrics and customer analytics – this includes customer counts, demographics, store traffic, dwell times, customer service times as well as queue management and metrics (one of the highest accuracy rates). The company provides management dashboards and store reports and works with leading OEM partners like Zebra, 3VR and NLSS amongst others to service the retail market. When it comes to in-store business intelligence, retailers can now literally remove the blindfold that has been holding them back. With the use of real-time affordable visual intelligence, today’s retailers can clearly see the path to understanding daily activity in the store and maximizing the use of every square foot.   New data from network-based video, combined with data from existing sources, presented as actionable data, can drive more targeted decisions about merchandising and promoting products, directing traffic more effectively through the store and maintaining best-in-class customer service at all touch points. Grid Dynamics (www.griddynamics.com) another BGV portfolio company helps enterprises transition to the cloud and to enable them to develop new features, test new ideas and evolve new services to address insatiable appetite of consumers for new digital services. The company has enabled retail customers like Macy’s, Kohl’s, Sephora and American Eagle make this transition. BGV believes that Digital Transformation of retail is a multi-year journey, one that requires a fundamental technology enabled redesign of the underlying processes and business models. Retailers that embrace and invest in technology innovation will be able to thrive in this new world. Those that pursue incremental piecemeal improvements will struggle to survive. Finally we believe that much of the needed technology innovation will come from start-ups not just incumbent retail vendors thereby requiring greater collaboration in the retail eco-system – amongst retailers, suppliers, incumbent vendors, start-ups and system integrators.
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Anik Bose, BGV General Partner shares his perspective on global technology innovation and the implications for early stage cross-border venture investing. Silicon Valley remains the center of the technology universe with an established major technology ecosystem with companies such as Google, Intel, Cisco, Salesforce, Facebook, Oracle and Palo Alto Networks anchored in the area. While the cross-fertilization of ideas and innovation created by such an ecosystem is difficult to replicate, innovation continues to emerge from other parts of the world such as Israel, China, UK, France, Japan, India and Korea. A few key data points:
  • Israel has successfully established itself as “Startup Nation” – Ranked first in the world for innovative capacity by the IMD Global Competitiveness Yearbook 2014 and third for innovation globally out of 148 economies by the WEF Global Competitiveness Yearbook 2014–2015. The region has established an enviable track record of technology innovation in the sectors of cybersecurity, cloud and mobility.
  • China’s tech savvy consumers are propelling advances in Cloud adoption, IoT and autotech and are rapidly emerging as the only region outside Silicon Valley that has the benefits of scale and the aspirations to be a significant player on the global technology landscape. Ecosystem players like Alibaba, Tencent etc are playing a key role in fertilizing technology innovation in the region.
  • UK – London has a higher density of startups than any other city in the world with Fintech deals experiencing a five year compounded annual growth rate of 74%
  • France has the second largest VC ecosystem in Europe (US$1.2 billion in 2013) and has produced strong innovative startups in the areas of Analytics, IoT, Adtech and Drone technologies
  • India has launched several initiatives to promote the growth of the technology sector including Digital India, a $2Bn technology catalyst fund, and an ambitious plan to build 100 smart cities, which will push the innovation paradigm for technology companies.
  • Japan is setting new standards in Robotics with a focus on integration of the artificial intelligence sensors, software and big data.
  • Korea is fortifying its technology economy with promising technologies such as 5G telecommunications, realistic media and content platform devices
I believe that this emergence of global innovation hubs represents a unique opportunity to build strong technology companies – ones that practice the mantra of “Innovate locally, Scale globally.” These companies pick the best talent from the appropriate region to gain competitive advantage and then connect with the Silicon Valley ecosystem/US market to scale the business. Startups are able to find extremely talented engineers with advanced degrees able to help build early products. But in order to reach the global markets, connection to Silicon Valley is absolutely essential to these startups – for scaling growth (organically or via eco system partnerships) and brand recognition.  As LinkedIn co-founder Reid Hoffman writes in his blog – Expertise in scaling up is the visible secret of Silicon Valley (link), connecting with Silicon Valley allows cross-border startups to scale market reach in addition to scaling technology quickly and cost effectively based on the inherent advantage of their non US R&D teams.. BGV has the global company building/scaling experience as well as the experience of assembling global investment syndicates and building distributed management teams across continents and cultures – the competency required to build successful cross-border technology companies. The firm possesses this experience and DNA by design and by strategy and is a competency that is difficult to replicate. We believe that this is an increasingly relevant source of competitive advantage because of the dynamics of global innovation outlined earlier in this blog.. At BGV, we have successfully helped technology companies from China, Israel, Western and Eastern Europe and India scale up. In 2014/15, BGV has invested in Ayehu (R&D in Israel), Profitect (Developed its core analytics algorithms in Israel), Grid Dynamics (R&D in Eastern Europe), Survela (R&D in Spain), Intellivision (R&D in India and Russia) and Identity Mind Global which is growing rapidly in China. All these companies are headquartered in the US but leverage cross-border innovation.  We firmly believe that this trend of global innovation represents a unique opportunity to build new generation of enterprise technology companies. Every BGV partner is an immigrant who has participated in building global technology companies and as a consequence we tend to view early stage cross-border investing as an opportunity not as a risk.
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