search

Russian investor brings $50m fund to ‘innovative’ Israel

Having turned his back on his home country after its activities in Ukraine, Titanium Investments CEO Alexander Ayvazov seeks safety for his portfolio

Russian President Vladimir Putin, left, greeting Israeli Prime Minister Benjamin Netanyahu in Moscow, September 21, 2015. (Israeli Embassy in Russia/Flash90/via JTA)
Russian President Vladimir Putin, left, greeting Israeli Prime Minister Benjamin Netanyahu in Moscow, September 21, 2015. (Israeli Embassy in Russia/Flash90/via JTA)

The Russians are coming – and they’re bringing as much as $50 million with them for early stage investments in promising Israeli Internet of Things, cyber-security, and other start-ups.

“We have a lot of experience in helping to develop early stage start-ups, and we’re good at helping companies overcome hurdles that other investors might not be able to help them with,” said Alexander Ayvazov, CEO of Titanium Investments, which unveiled the new fund Tuesday. “We have a top team on the ground in Israel, with people in IT, management, and personnel to help build teams and develop markets for start-ups.”

With $350 million under management – mostly in Russia and Europe – Titanium is now looking to invest in additional companies as well as to increase its existing investments in its portfolio companies, and Ayvazov has determined that Israel holds the best promise – and lowest risk – of his available options.

“We were heavily invested in Russia until 2013, when the Ukraine crisis began, and as soon as there was an uproar over Russia’s entry into Crimea, I realized that there were going to be a lot of problems there.” With Europe both overpriced and underperforming and the US difficult to break into, Ayvazov thought of the Start-Up Nation. “I knew a lot of people in Israel already and I figured they could help me find good investments. There are a lot of opportunities here, even though the deals here are usually not very large.”

Although the company publicly announced the fund this week, it and Ayvazov have been operating in Israel for over a year. “We came here at the beginning of 2014, and that year we invested in 14 different companies.” Last year, Titanium increased its portfolio to 18 firms, and this year Ayvazov would like to invest in as many as ten more firms.

Titanium Investments holds stakes from 3% to 17% in each company that it invests in. The firm not only supports its portfolio companies with the initial investment, but also continues to increases support in those companies over time, taking part in each and every funding round of performing portfolio companies, from seed to exit, Ayvazov said.

The company focuses on financial support while also offering guidance on management and growth. Titanium offers startups more than just an investment, said Ayvazov. With extensive technological, managerial and strategic experience in various industries, Titanium’s leaders are able to offer a bird’s eye view on the current business landscape, he added.

Although Ayvazov’s investment money came to Israel because of turmoil in his home country, the investor sees the Jewish state as more than just a temporary way station. “I don’t have all my assets in Israel, but I think this is a safe enough environment for long term investments. The start-ups here are very innovative, and if I get into the right one, I can do very well.”

Alexander Ayvazov (Courtesy)
Alexander Ayvazov (Courtesy)

Besides Israel, Titanium has invested in Southeast Asia, specifically Vietnam, Myanmar, and Singapore. “My experience there was good, but frankly it would be hard for Israeli start-ups to succeed there. It’s hard to do business, and there is not enough infrastructure or business in Myanmar or Vietnam to make it worth going over there. Singapore can be a hub, but working in its financial system can be challenging, and China offers more opportunity for those seeking to reach large numbers of people in Asia,” said Ayvazov.

As far as Russia is concerned, Ayvazov suggests that Israeli firms do as he did – stay away. “It’s easy for small start-ups to get into business, given the fact that the ruble is so cheap these days, but it’s very hard to get to large customers. Unfortunately there is more than a little truth to the perception many people have of corruption.” Ayvazov, who says that he is on the up and up, suffers from this perception personally. “I can’t deny that some Israelis look at me with suspicion when they hear I am from Russia, but once they get to know me they realize I am a legitimate person and they can do business with me.”

At least until things calm down elsewhere – and probably long afterwards – Ayvazov sees Israel as the place to be for tech investments.

“We see Titanium as an partner in addition to being an investor. We try to be very involved in the business process,” he said. “We have board members in many of our portfolio companies, and are very involved in all of them. Not many funds play such an active role. Titanium is a chemical element that brings completely new features to regular metals, making it possible for new materials to be crafted. That’s how we work at Titanium Investments, seeking out companies we can have a positive impact on, helping them make it to the next level. More than merely investing, we aim to help startups grow into full-blown successful companies.”

read more:
comments
Never miss breaking news on Israel
Get notifications to stay updated
You're subscribed