Man of the Year: He Came by Storm and Now Has a $650-million Headache

Yoram Oron is not that tall or that young, he has a Romanian accent and the cunning of a camel-dealer, his resume does not list Harvard - he's just Captain Oron.

Zuri Dar
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Zuri Dar

If you had speculated last week who would be the Man of the Year of Israel's venture capital community, would you have guessed Jacob Burak and Ofer Neeman of Evergreen, which made the most money for their investors? Or Shuki Gleitman perchance, who managed the miraculous feat of merging two management companies despite their snarling conflicts over ego and interests? Perhaps you would have guessed Arad Naveh and Nachman Shelef, who received another $40 million for investments out of the blue? Or (again) Chemi Peres, now chairman of the Israel Venture Association?

Wrong, wrong, wrong. At the last second, somebody took the industry by storm. A man not that tall or that young, a man with hints of a Romanian accent and the cunning of a camel-dealer, a man not wrapped in the glamour of an air force jet fighter past, a man whose resume does not list Harvard or Oxford, nor is he the brother-of or son-of - he's just Captain Oron of the Gunners.

Yoram Oron, that is, the president of Vertex Israel, who began his career as founder and manager of Reshef Technologies, which made fuses for bombs.

Much water has passed under the Yarkon Bridge since then.

Now, five years after launching Vertex Israel, Israel's venture capital industry is at one of its lowest points, and this, of all days, is Oron's. The management of Vertex in Singapore promoted him to manage Vertex Venture Holdings, Europe.

As inky blackness fell over the industry and former star funds like Concord turned into zombified living corpses because of investor flight, Vertex could boast an infusion of $300 million. Meaning, as president of Vertex Europe and Vertex Israel, Oron will have control over $650 million, a princely sum that makes it a premier league player alongside Star, Apax, Pitango, JVP and Evergreen.

And that isn't all. Sources say that Vertex, which UBS Capital recently appointed to manage its portfolio of 15 companies worth $100 million, is in talks to take over managing the portfolio of another major group with holdings worth $80 million.

Big money means big headaches. The market is in horrible condition, and fund managers are losing sleep, wondering how to return principal to investors. And nobody's even talking about profits.

M&A options

Vertex's strategy is a little different, though. While its two arms - Europe and Israel - keep their investment operations separate, the fund is looking at merging some of its Israeli and European portfolio companies.

Indeed, the qualities that bolstered investors' confidence in the fund were not due to its extraordinary investment activities. During 2002, Vertex Israel invested all of $14 million, of which $12 million were for first investments.

No: Vertex' management shone elsewhere - at cleaning out the stables.

At the start of the year, it merged Congruency, a company with intriguing technology but lacking market presence, with Telrad Connegy, a company without particularly revolutionary technology, but with widespread marketing deployment that was drumming up tens of millions of dollars a year. The merger created a company worth $70 million that looks pretty good as its next exit.

Vertex also amputated a lump called Helioss, which it sold to MNI for about $10 million, and had a finger in the exit of the year - selling Midbar Tech to Macrovision for $25 million in cold hard cash. Malicious tongues in the industry wag that Oron could not claim any kudos for that deal, in which he played no real part. But who cares what the truth is? The bottom line is that Oron could hang a third scalp from his belt, a fact that his chiefs in Singapore evidently found persuasive.

Vertex Europe's portfolio is largely cellular-oriented. Its business contacts are also communications-biased. European companies have spent tens of billions on 3G (third-generation) communications networks, and are stuck fast nonetheless, but experts smell a thaw coming in 2005. Meanwhile, Britain - where Vertex Europe's offices are located - is the most advanced in 3G, alongside Italy.

Oron's people, therefore, have about two years in which to create synergetic cooperative relations, and mergers, between the two portfolios of Vertex Europe and Vertex Israel. If they do a good job, their companies will wake up into a commercial paradise come 2005. Then, that $650 million will not be migraine money any more.

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