[Israel Business Series] How Israel Startups Can Thrive Through Venture Funds With Yoav Sebba

Yoav Sebba is the Managing Director of XT Hi-Tech, the venture arm of XT Group that provides capital, advice, and support to future category leaders in Israel. Before XT Hi-Tech, he was a Partner in Yozma Venture Capital, in which XT Holdings was a founding partner. In addition, Yoav is active on the board of directors of ZIM Integrated Shipping Services, Sofwave, Beyeonics, Cymbio, Epitomee, NeuReality, BlueThrone, Healthy.io, and Phytech. He holds a BS in engineering and industrial management from the Technion Institute of Technology and an MBA from Haifa University.  

Here’s a glimpse of what you’ll learn:

• [03:23] Yoav Sebba talks about XT Hi-Tech and its risk tolerance as a venture capital business
• [08:04] How XT High-Tech picks companies to invest in?
• [19:25] The value of talking with a company’s customers before investing in it  
• [24:40] The stage a company has to be in for XT High-Tech to invest in it
• [38:33] Yoav explains how they know if a company will succeed or fail 
• [45:20] XT High-Tech investment journey with Sofwave 
• [52:48] How XT High-Tech evaluate startups that don’t have customers yet
• [55:42] Yoav discusses how they built the XT High-Tech team

In this episode…

No matter where you’re located, running a startup is a challenge. So, as an entrepreneur in Israel, where can you get the support you need to run and scale your business? 

Many entrepreneurs have great ideas and big dreams that don’t get implemented or start and fail because they don’t have the necessary resources. Yoav Sebba recommends partnering with venture funds available in your area. They are experts who can offer capital, advice, and support on your growth journey. He shares XT Hi-Tech’s journey of backing unique technology companies emerging from Israel.

Listen to this episode of the Inspired Insider Podcast with Dr. Jeremy Weisz as he welcomes Yoav Sebba, Managing Director of XT Hi-Tech. Yoav talks about XT Hi-Tech, its criteria for investing in a company, examples of successful investments, and how they know if a company will succeed or fail.

Resources mentioned in this episode:

• XT Hi-Tech
• Yoav Sebba on LinkedIn

Special Mention(s):

• Noa Eshed on LinkedIn
• Ilana Shabtay on LinkedIn
• Cymbio
• Spaces
• Phytech
• Epitomee
• Shimon Eckhouse on LinkedIn
• Dan Hashimshony on LinkedIn
• Sofwave

Podcast(s) Mentioned: 

• Real Life Superpowers 
• InsideAuto Podcast 

Related episode(s):

• “[Israel Business Series] Real Life Superpowers Every Entrepreneur Should Have With Ronen Menipaz, CEO and Founder of M51 Entrepreneur Labs” on Inspired Insider 
• “[Israel Business Series] How to 4x Your Leads for your Car Dealership with Aharon Horwitz of AutoLeadStar” on Inspired Insider 
• “[Israel Business Series] It’s Easier after 100 Million Users: Creating Record Breaking Software Products with Yossi Vardi” on Inspired Insider
•   “[One Question] Driving Sales and Innovation with Mor Lavi Co-Founder of Cymbio” on Inspired Insider

Episode Transcript

 Intro  0:01 

You are listening to Inspired Insider with your host, Dr. Jeremy Weisz.

Jeremy Weisz  0:22 

Dr. Jeremy Weisz here founder of inspiredinsider.com where I talk with inspirational entrepreneurs and leaders today’s no different Yoav Sebba of XT Hi-Tech and before I formally introduce who you Yoav, I always like to point out other episodes, people should check out the podcast and since this is part of the top Israeli business leader series, there’s some past episodes you should check out Ronen CEO and founder of M51 Entrepreneur Labs he co-hosts the Real Life Superpowers podcast with Noa Eshed who big thank you to Noa for introducing today’s guest. Thanks, Noa, really appreciate it. I had the founder of Footpath Aharon Horwitz. They have a great podcast led by Ilana Shabtay called InsideAuto Podcast. I’ve had Yossi Vardi on and Luis Navone of Mobileye. And he talks about the journey of Mobileye getting acquired by Intel for $15.3 billion. Kind of a crazy story. I’m sure you’ve heard it many times Yoav, and Mor Lavi, co-founder of Cymbio, who actually had on many years ago, and XT Hi-Tech actually invested in Cymbio. So check that one out, and many, many more, and inspiredinsider.com. And this episode is brought to you by Rise25. At Rise25 we help businesses give to and connect to their dream 100 relationships. And how do we do that we actually help you run your podcast, we are a company does accountability strategy and full execution and production of a podcast. Essentially, we’re an easy button. So the number one thing in my life Yoav is relationships. I’m always looking at ways to give to my best relationships, I found no better way to do that than the profile of the people and companies I most admire and share with the world what they’re working on. So if you’ve thought about podcasting, you should if you have questions, go to rise25.com. I also want to give a big thank you to Spaces right now is telling Yoav that I’m in Scottsdale Arizona, I’m not typically here, I needed a great place to work with fast Wi-Fi and in-house services. And I reached out to them and they have an amazing space here private offices, co-working spaces, meeting rooms, they have 482 locations around the globe, a big shout out to Erica for being so accommodating spacesworks.com You can learn more. And without further ado, I’m excited to introduce Yoav Sebba, he’s managing director of XT Hi-Tech, which is the venture capital arm of the Global Industrial XT Group. They’ve invested to date in more than 80 startups. 30 of the startups were acquired or went public, and 15 plus of them are on their way. Yoav is an active investor has experienced three bubbles three downturns. And I love some of your sayings Yoav when I was reading and researching you, it’s like you try and only make new mistakes. Okay, so we may talk about what are some of the old mistakes that you’re not going to make again. And you also believe that one good dollar from a customer is better than $100 from an investor. So we’ll talk more about that. But thanks for joining me.

Yoav Sebba  3:23 

Thank you very much for having me, Jeremy. It’s okay. And I would like to start with a quote from someone, which I’m sure that a lot of us are very much familiar with, which is Wayne Gretzky. And of course, everybody like questions that they ask, do you remember the famous quote of Wayne Gretzky that ice skate to where the puck is? Then, of course, he didn’t say that, instead of ice skate, whereas the pattern is going to be. And this is the essence of what I’m trying to do for more than 20 years is to try to assess where the path is a this is like this is the essence of public investing. So to know where the puck is going to be. And this is why all the venture capital business is risky business. And my investments are not illiquid. There’s a very high risk. But nevertheless, we here operate quite a profitable business almost 20 years in living mainly leading a rounds in Israeli technological companies. We are in terms of things we are diversified. We invest in our tech companies in fabric companies, and medical companies and e-commerce companies. Main dominator is Tong CEO who would like to make Indian banks in the world.

Jeremy Weisz  5:03 

What’s your risk tolerance? Sometimes people say, the people in some of the riskiest businesses are the least risk averse. What’s your risk tolerance?

Yoav Sebba  5:18 

Very good question. We are a cooperative venture capital fund. So we are apart from a much larger group, which has activities in shipping, energy, chemicals, real estate, around the world, you can see in the vessel behind those, so one of the vessel of our group, and when we bought this vessel, we bought it. And when we know that we will have the financing from the bank to do that, we will know that we have a customer for a lot of years to use it. So you can say that the in terms of our DNA, we are conservative, having said that, in the high-tech business, will say something which is completely different. When they’re being asked by the group here, what would be the exit of next year? How much will you invest next year? So my question to both these questions, I have no idea. So it’s a it’s a risky business, but we invest in a portfolio. And as you mentioned, from at investment, we have more than 25 decades today. And we hope that the funds account portfolio of 20, companies replaced 10 or 15. Without we do provide a considerable x, we do around four or five investments a year, we, of course, invest in our own portfolio, which is currently relatively well funded. But it’s a risky business. And it’s also has to do a lot with luck. I’m talking here from Israel, the founding person of his line was called David Memorial. And he said that in order to be realistic in Israel, you must believe in luck. So, and then, we define luck, and here is another quote from someone else, that’s we define luck is the opportunity, which means readiness. So we try to be ready as much as we can. And we do everything we can in order to reduce risk, we go to explore experienced CEOs, it’s like, each company is coming. It’s like, we’re doing it like a blood test. So just the management, the technology, the fact and the market, the competition, is unfair advantage. We look like maybe hundreds of parameters. And still, we managed to make a semi earlier mistakes do we just by we’re not trying to avoid the mistakes we did in the past. But sometimes we managed to do those as well.

Jeremy Weisz  7:59 

Yoav, what do you look for in companies?

Yoav Sebba  8:04 

First of all, CEO and introspect, and we look for first for companies with which could yield for us, let’s say at least $100 million dollars in terms of connections. So for us, let’s say 100 million dollar, which brings us x, it would need to be at a half a billion, the potential would need to be of course, we have the experience X is also which was significantly lower, or in some of us will go higher. But this is the if the company will not have the potential to provide that risk, let’s say, a 10x multiple, this was something that would be very hard to pass to our committee. And we try to see almost everything that we have in the mountain we have been used to and around the 10,000 startups. I think that we see around the 1000 a year from these 10,000, the and in terms of CEOs, I think we discussed this the previous conversation, and we try to assess who is the best CEO, which is the most critical things in each company. And we looked at our own experience and also we try to learn from experience of others about first-time CEO versus let’s say serial entrepreneur, someone who was very successful stay on the path. And I must admit that I was even surprised because we always looking for the experienced CEO and not the first-time CEO but we still no correlation and maybe…

Jeremy Weisz  9:53 

No correlation at all.

Yoav Sebba  9:55 

No correlation like 50% of the variable that it was first time CEOs simplistic examples where it’s very experienced one will strive to have someone enough to, let’s say, to run the business thing on our beard saying, but we found that because in this business, would you be changing business sometimes need someone to take a very tough decision. And as you said, it’s a risky decision. So and experience do and sometimes and we repeat the reluctance from taking these risks. A lot of time with health all the good reasons to do that. But then in order to contain time, a lot of you need to take these risk.