VC firm Insight gets billions from Israel’s Monday.com and WalkMe IPOs

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Monday.com celebrates its IPO at the Nasdaq, June 10, 2021.

Source: Nasdaq

In April, Insight Partners’ Jeff Horing hopped on a flight to Israel for a breakfast with tech CEOs. It was also an opportunity to pay a visit to his firm’s first international office, which had opened less than two years before.

Now, CEOs from two of those companies are visiting him in New York. They’re actually coming to ring the bell on the Nasdaq, as Israel’s high-growth companies line up to hit the public markets.

Last week, collaboration software-as-a-service (SaaS) vendor Monday.com held its IPO and closed on Friday with a market cap of $8.2 billion. This week, fellow Israeli software company WalkMe, whose technology is designed to simplify enterprise software and applications, is scheduled to go public with a valuation of up to $2.6 billion

Insight is the biggest investor in both. The firm owns a 43% stake in Monday.com and controls 32% of WalkMe. Its combined ownership in the two companies is currently worth about $3.9 billion.

“For a long time, Israel has been the start-up hub, a hive of activity,” Horing wrote in an email, in response to written questions. “But these start-ups are scaling successfully at a more rapid pace.”

Money is flooding into Israeli tech. The country’s start-ups raised $5.37 billion in the first quarter, more than double the amount a year earlier and 89% above the fourth quarter, which was a record period, according to a report from IVC and law firm Meitar.

Game developer Playtika, based in Herzliya, went public in January and has a market cap of $10.6 billion, making it the fourth most-valuable publicly traded tech company in Israel, according to FactSet. Monday.com ranks fifth and WalkMe is poised to crack the top 10.

For Insight, the launch of an Israeli operation in late 2019 marked the firm’s first office opening outside the U.S. since its founding in 1995. But Insight had been investing in and around Tel Aviv for over two decades.

Horing said the firm did its first deal in Israel in 2000. He highlighted Enigma, a developer of software to manufacturers, and Shunra, a network virtualization company that was acquired by Hewlett-Packard, as two early investments.

“I’ve always loved visiting Israel and have many memories at tiny market restaurants eating incredible food,¬†arguing for hours over different technologies and SaaS strategies,” Horing said. “My team and I spent countless hours flying back and forth to Israel, often spending weeks at a time getting to know entrepreneurs and working alongside our portfolio companies.”

Prior to Monday.com, Insight’s marquee investment had been in website creation software company Wix, which went public in 2013. Insight co-led a $40 million round in 2011 and had a 12% stake at the time of the IPO.

Wix’s stock price has since multiplied 17-fold, giving the company a $15 billion market cap, second only to Check Point Software among Israeli tech companies.

“Wix was a foundational investment for Insight in Israel,” Horing said. Wix co-founder Avishai Abrahami is also on Monday.com’s board. Along with Abrahami and Nir Zohar, Wix’s operating chief, “we’ve co-invested in many Israeli deals over the years,” Horing said.

Acquiring an Israeli firm’s portfolio

The most glaring detail on Monday.com’s cap table is the size of Insight’s stake.

Typically when a venture-backed company goes public with a multibillion-dollar valuation, the top firm would hold no more than 30% of the outstanding shares, often much less.

Insight took a unique approach to get to 43%. In February 2019, seven months before opening its Tel Aviv office, Insight purchased the majority of a fund portfolio held by an Israeli firm called Genesis Partners, whose partners were leaving for other ventures.

Within that fund, which closed in 2009, Genesis had invested in Monday.com’s seed and Series A financing rounds. Insight first came in as part of the $25 million Series B in 2017.

After acquiring the contents of the Genesis fund, Insight was able to merge the two firms’ holdings, building a stake that’s now worth $3.1 billion. Genesis was also an early investor in two other Insight-backed companies: online music learning company JoyTunes and business intelligence company Sisense.

Monday.com co-founder and co-CEO Roy Mann told CNBC that Insight was tapping into a big change happening in Israeli tech.

“They had a very strong conviction in Israel and the Israeli ecosystem,” Mann said in an interview after the IPO. “The whole industry matured to a level where entrepreneurs want to build big companies and want to hold them for a long time. Insight was early on to recognize that and really go and back a lot of amazing Israeli companies.”

Horing joined co-founders Mann and Eran Zinman in ringing the Nasdaq’s opening bell on Thursday. The company also had 250 employees come in from cities across the U.S.

Horing will have the opportunity to do it again this week for the WalkMe IPO. In 2017, Insight led a $75 million investment in WalkMe. By following on over the course of two more financing rounds, Insight built up a 32% stake that’s worth $750 million at the top end of WalkMe’s IPO range.

Horing said Insight now has 80 “operating experts” in Israel working with portfolio companies and has expanded in Tel Aviv to take over the space formerly occupied by JFrog, which went public on the Nasdaq last year.

As for what Horing finds most exciting coming out of Israel these days, he said there’s no shortage of opportunities to put money to work.

“Israel is firing on all cylinders,” he said. “Of course cyber is a strong sector but it is much broader to a wide group of SaaS, infrastructure, fintech, gaming, and ad tech.”

WATCH: JFrog CEO on the company’s public debut and outlook



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