American venture capital firm Merlin Ventures has set up a dedicated investment fund in Israel called Merlin TLV, Globes has learned. The new fund will invest $ 50 million in Israeli cyber security start-ups in the next 3-4 years.
Merlin Ventures is a venture capital arm of Merlin Cyber, a company specializing in cyber solutions for U.S. government agencies. Merlin Ventures has invested in three Israeli companies in the past – Sepio, Cynet and Cyber Observer – but is now forming a special fund for Israel to be managed by Shay Michels and an Israeli VC fund for Day Ventures, of which Michels is a founder.
toDay Ventures has made ten pre-seed and pre-seed investments in Israeli companies over the past three years. Michels told Globes that the new fund, Merlin TLV, will invest in rounds A and B with an average investment per company of $ 1-5 million. The goal is to invest in 10-15 companies over 3-4 years. The fund is willing to lead investment rounds and also participate in circles led by others.
Michels says the big advantage of Merlin TLV is its ability to help Israeli cyber companies sell to U.S. government agencies. “Merlin was founded by David Phelps, who served in the U.S. Navy and has extensive experience working with the U.S. government and military agencies and connecting civilian technology with the federal administration,” he says. “Phelps is one of our investors in toDay Ventures and that’s how our relationship with him was created.”
Merlin TLV says it will help Israeli startups negotiate the authorization of the Federal Risk Management and Authorization Program (FedRAMP) and thus gain access to U.S. public sector projects and customers. “Israeli companies tend to focus on the commercial market and tend to work mostly with Fortune 500 companies. The U.S. public market alone is just as big, and there’s a $ 200 billion budget on the table,” Michels adds. “So far, Israeli startups have been afraid to enter this world, but we can really take them by the hand and help them. The way Israeli cyber companies can meet their sales goals lies in working with the US public sector.”
Posted by Globes, business news in Israel – en.globes.co.il – April 1, 2021
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