At a time when everyone is focused on the field of cyber, a massive venture capital firm is forming – the largest in Israel, and one of the largest in the world – and it’s focused on health care. The fund, named aMoon2, is being led by Marius Nacht and Dr. Yair Schindel, with $660 million to invest, making it Israel’s single largest fund. The fund intends to make late-stage investments in health tech and life sciences companies, in fields including medicine development and medical equipment.
The fund is wrapping up an intensive year of fundraising, and had its official launch on Wednesday. The founders said they are now ready to speak to the press.
Late-stage investments in health tech companies is one of the major things missing in Israel, said Schindel. “There are no growth funds like in classic high-tech,” he said. “There’s a good reason, and investors, on a global level, avoid health fields because the development process is very long, and can take 8-15 years; it takes a lot of money and has a lot of risks.”
Most companies in the field hit a glass ceiling, he said. “How do you build a big company, like Teva? The aMoon2 fund is being create for the 20% of good companies that have already been through the via dolorosa, and now need a $20-$50 million check for Phase 3, the clinical research phase, where their product is tested on a large number of patients,” he said. Clinical testing can include 1,000-3,000 patients, and this last phase is crucial to bring a product to the market.
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Nacht, who co-founded Check Point in 1993, notes that when he entered the cyber field, it wasn’t yet well defined. The same applies to health tech right now, he said.
“I see massive potential here,” he said.
Nacht founded his previous fund, aMoon1, two and a half years ago, with a $200 million investment from his own pocket. That fund has finished its investments, in 20 different companies.
He says he was approached by multiple investors a year and a half ago who liked his strategy.
“They told us: We love your strategy, and we agree the next tsunami is going to be in health tech and we want to invest,” he said.
The fund’s investors include Bank Credit Suisse, which has committed $250 million. This is the most anyone has raised from a global bank, and the bank carried out extensive checks first, said Nacht.
Other investors include a major Israeli institutional investor, a U.S. bank on par with Credit Suisse, and some 50 family investors “from Jakarta to Montreal,” he said.
aMoon2 will be looking for late-stage companies that are low risk but need large investments of $10-$40 million, he said. It has already invested in five companies, including Zebra Medical, which uses artificial intelligence to help radiologists read medical images; CartiHeal, which uses coral to help rebuild knee cartilage.
Regarding CartiHeal, Schindel notes that the company is addressing a common medical problem. He says the company has already conducted experiments on 400 people, and that the patients have been able to resume active lifestyles. At this point the company could have gone for a $100-$120 million Lexi, but instead it is seeking pre-market approval - a border testing stage for medical equipment akin to phase-3 testing for medication. “If the test succeeds, it’s a huge opportunity - because currently the alternative is a titanium knee implant that costs $50,000 plus a long, complicated recovery process.”
Schindel says Israel has become a cybersecurity powerhouse because around 2010, the government decided to make it a priority. Now, some 20% of cyber security investments globally are in Israeli companies, he says.
But while cybersecurity may be a $100 billion global market, healthcare is a $10.5 trillion market, he says. And while some argue that Israel has an advantage in cybersecurity, due to the Israel Defense Force’s exclusive 8200 sigint unit, among others, he says it’s not true. Of the country’s 6,600 startups, some 350-400 are in cybersecurity while another 1,600 are health-related, he says.
Another advantage in Israel as that the health system is advanced, and data has been computerized here for two decades already. Some 95% of the Israeli population has a computerized health record, in comparison to 50% in the United States - and 25% before Obamacare took effect, he says. “Thus Israel has one of the world’s biggest databases,” he says.
aMoon has its offices in Ra’anana, but plans to launch globally, says Schindel. The fund already has a representative in New York and Boston, he says. In total, it has 40 employees, a relatively large number for a venture capital fund.
“Maurius always says – Gil and I are smart, but we had luck, we rode the tsunami called Internet,” says Schindel. “The health-tech tsunami is going to be 10 times bigger – because the markets are bigger and health affects everyone.”