The micro venture firm UpWest Labs was founded nearly six years ago in Palo Alto with one mission in mind: to bring Israeli founders to the U.S. when their companies are still nascent and provide them with enough financial and other resources to get going.
Why do this? UpWest’s founders, Shuly Galili and Gil Ben-Artzy, say it’s because startups can lose their shot at greatness if they aren’t exposed fast enough to U.S. customers — and U.S. investors.
The two came to this conclusion in their past lives, before they became investors. Galili had spent the previous 12 years as executive director at the California Israel Chamber of Commerce, often working to drum up the interest of U.S. companies and VCs in Israel-based companies.
She says she saw plenty of money in the ecosystem but a lack of understanding about the customers that Israeli companies were hoping to target, including in the U.S. “I always asked myself why founders weren’t spending more time here,” says Galili. “And the answer for a lot of them was that they couldn’t.” Ben-Artzy, who’d moved from Israel to the U.S. to attend Wharton and later worked in corporate development and operations at Yahoo, saw the same in his job, he says.
A growing number of limited partners seems to buy into their vision, which includes writing early checks of $250,000 to fledgling startups that want to head to California, as well as giving them a place to crash for a while. (The firm rents out a home in Menlo Park where founders can live until they’re able to get and running.)
Indeed, after putting together a proof-of-concept fund, then raising a $7 million fund, the pair says they’ve just closed on $18 million in capital commitments from a syndicate that includes institutional funds, family offices, corporations and some tech execs, both in the U.S. and in Israel.
Some smart-looking bets helped during fundraising. UpWest was among the earlier investors in the 4.5-year-old, endpoint security company SentinelOne, for example. SentinelOne has since gone on to raise roughly $110 million altogether from investors, providing what we’d imagine is a nice mark-up for Upwest. SentinelOne’s other backers include Redpoint Ventures and Tiger Global Management.
UpWest was also the first investor in Honeybook, a nearly five-year-old startup that makes event planning software and that has raised nearly $50 million to date, including from Aleph and Norwest Venture Partners.
Yet another portfolio company is the autonomous drone maker Airobotics, which closed on $32.5 million in Series C funding last fall, led by BlueRun Ventures China, with participation from Microsoft Ventures.
Galili and Ben-Artzy say they target at least eight percent ownership at the outset and that some of the startups they’ve backed have had little more than a prototype when UpWest gets involved in bringing them to the Bay Area.
Asked how they decide which teams to work with (after all, only so many founders can share the same rented house), they say it’s between six and eight teams each year and that they work closely with them for several years, including helping them land customers through the connections they’ve established over the years. (They say they helped SentinelOne land Netflix as a customer, for example, and “when Netflix is one of your first customers,” says Ben-Artzy, “it helps!”
The pair also readily acknowledges they’ve backed numerous founders who are on their second or third company and so know some of the ropes already. It has come as a bit of a surprise to them, in fact.
“When we started UpWest,” says Galili, “we thought the age [of the founders we’d back] would skew very young. But the average age is early 30s. I think by the second or third startup, a lot of founders are focused on coming to the U.S. They fully appreciate the need to find U.S. customers as early as possible in order to make their mark.”