US venture capital firm Merlin Ventures has set up a dedicated fund for investment in Israel called Merlin TLV, “Globes” has learned. The new fund will invest $50 million in Israeli cybersecurity startups over the next 3-4 years.
Merlin Ventures is the venture capital arm of Merlin Cyber, which specializes in cyber solutions for US government agencies. Merlin Ventures has in the past invested in three Israeli companies – Sepio, Cynet, and Cyber Observer – but it is now forming a special fund for Israel to be managed by Shay Michels and the Israeli VC fund toDay Ventures, of which Michels is a founder.
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toDay Ventures has made ten seed- and pre-seed stage investments in Israeli companies in the past three years. Michels told “Globes” that the new fund, Merlin TLV, would invest in A and B rounds with an average investment per company of $1-5 million. The aim is to invest in 10-15 companies over 3-4 years. The fund is prepared to lead investment rounds and also to participate in rounds led by others.
Michels says that the great advantage of Merlin TLV is its ability to help Israeli cyber companies sell to US government agencies. “Merlin was founded by David Phelps, who served in the US Navy and has a great deal of experience in working with US government and military agencies and in connecting civilian technology to the federal administration,” he says. “Phelps is one of our investors in toDay Ventures, and that’s how our connection with him was formed.”
Merlin TLV declares that it will help Israeli startups to negotiate the authorization track of the Federal Risk and Authorization Management Program (FedRAMP), and thus obtain access to US public sector projects and customers. “Israeli companies tend to focus on the commercial market and seek to work mainly with Fortune 500 companies. Only the public market in the US is just as large, and there’s $200 billion in budgets on the table,” Michels adds. “Up to now, Israeli startups have been afraid of entering this world, but we can really take them by the hand and help them. The way for Israeli cyber companies to meet sales targets lies through working with the US public sector.”
Published by Globes, Israel business news – en.globes.co.il – on April 1, 2021
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