Fresh.fund, Israel’s new student-run venture fund will hold its first meeting in Jerusalem next week with its newly formed 16-person investment committee.
The aim is to get students to invest in early-stage companies and ventures run by students and others, said co-founder Zaki Djemal, a 29-year-old Jerusalem-based entrepreneur who studied Behavioral Economics at Harvard. When Djemal set up an online ecommerce company for independent fashion brands in Brazil, during his senior year at Harvard, he received funding from the student investment arm of First Round Capital, called Dorm Room Fund, a fund run by students for student ventures.
“The process was seamless, fast, friendly and empowering, and it gave us the confidence we needed to turn down the jobs we had lined up after graduation. We had the incentive to dedicate ourselves full-time to our startup and take that invaluable leap at a crucial moment of opportunity in our professional lives,” said Djemal in a phone interview. “When I returned to Israel nearly two years later looking to get involved in the local startup and investing ecosystem I was surprised to learn that no similar framework existed for student startups.”
While Israel has its fair share of campus innovation centers and student focused incubation programs, he said, funding for student ventures “remains scarce” — particularly at the amounts of $20,000 to $50,000. The US, in comparison, has 44 student-run and/or student-focused funds, he said.
Now, fresh.fund wants to create a new point of access for funding for Israeli student entrepreneurs, and also give students hands-on venture experience as investors, fostering a culture of innovation, Djemal said.
The new fund has raised $1 million from an angel investor in Jerusalem, Djemal said, and intends to invest fixed amounts of $20,000 to 50,000 per venture.
Students selected for the fresh.fund investment committee will undergo a two-month investor crash course designed to equip them with the basic tools they need to identify investment opportunities and evaluate early-stage companies. Student investors will spend roughly 10 hours a week running fresh.fund. They will participate in identifying projects, market research, due diligence, and choosing the companies in which fresh.fund will invest.
But why pick students who are basically amateur investors to invest in other students? It is apparently a question Djemal is asked a lot.
“Students are connected to innovation on a grassroots level; they’re surrounded by smart ambitious peers, professors, and potential co-founders; and they’re early adopters by nature,” he said. “They are willing to take that leap that others may not dare take, and that is conducive to the emergence of new and interesting ventures. They come with a different frame of mind.”
Students on the committee will be supported by a team of mentors including some of Jerusalem’s investors, angels and VCs, and the city’s tech ecosystem, said Djemal. These mentors will also participate in committee meetings in an advisory capacity, said Djemal. The student investors will receive no equity in fresh.fund portfolio companies. At this point, the fund is only accepting students enrolled in academic institutions based in Jerusalem.
The investment committee was carefully selected, composed of seven women and nine men students from across Jerusalem’s academic institutions chosen out of a pool of 83 applicants.They include undergrad, grad, and PhD students from a variety of backgrounds and schools: Hebrew University, the Jerusalem College of Technology, and the Bezalel Academy of Arts and Design and Hadassah College. Their areas of study are in computer science, economics, accounting, finance, engineering, law, marketing, biology, philosophy, and industrial design.
Kicking off the project on December 29
Djemal is joined by co-founder Hiday Goldsmit, and Siftech, a nonprofit organization that was founded five years ago by students from the Hebrew University Students Union as the first startup accelerator in Jerusalem. Siftech will help nurture the companies that are selected by the fresh.fund student investment committee, Djemal said, and has appointed Nitzan Adler as the fresh.fund project manager. Siftech is supported by the Jerusalem Development Authority, the Ministry of Jerusalem and Heritage, and the PRATT foundation among others.
“We will be kicking off the project next week,” Djemal said. ”We want to see how the model works before bringing in other investors.”
The fund hopes to raise additional capital by the end of 2017 and to support an expansion plan beyond Jerusalem to the entire country.
”Obviously, our goal is to see returns, but because early-stage venture investing is a long-run play, the ability of our portfolio companies to raise follow-on funding will offer some testament to our success,” he said.
Another measurable goal “is to see a diverse group of students stay involved in the startup ecosystem either as investors or as startup founders or employees,” he said.