Initial Capital

Initial Capital Launches to Invest in Seed Deals in Israel and Brazil

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In February, we wrote about Lool Ventures a new Israeli seed fund looking to fill the country’s surprising void for true seed-stage funding and mentorship. Today, another one is launching. It’s called Initial Capital, but it has a strange twist: The firm will also be investing in seed deals in Brazil.

There aren’t many obvious synergies between those two markets. Israel has a deep entrepreneurial culture; while Brazil is only recently associating entrepreneurs with something other than the villains in telenovelas. Meanwhile, Brazil has a massive market full of domestic opportunities, while Israel typically has to build companies for other markets.

So what gives? Simply put, the team that’s come together around the firm happens to be located in Israel and Brazil, and they saw holes in both markets at the seed level. Initial Capital’s Israeli managing partner Roi Carthy will be a familiar name to readers. Carthy has been a long time contributor to TechCrunch and was most recently working at past Disrupt-winner Soluto as head of products. The Brazilian partner is Daniel Carneiro da Cunha, previously a partner at DealMaker, a Sao Paulo-based boutique M&A and advisory firm.

The structure of the firm is a bit different too. It doesn’t have a traditional, 10-year fund with limited partners; one single backer is putting up the capital, and there’s no set limit on how much the firm will invest. That backer is Elad Cohen, a low-key Israeli entrepreneur who founded Playtech, a publicly-traded software platform for online casinos.

The typical investment size will be in the $100,000 to $300,000 range, but the firm will have the capacity to write bigger checks if a company is doing well, Carthy says.

While Initial is only now officially launching the firm has already done three investments: iPad point-of-sale company Pose, video player plugin company Wibbitz, and iPhone baby monitor company Evoz.

The fund is good news for both countries. Brazil has a dearth of local early stage investors, particularly relative to the market opportunity. And while Israel has 30 times the venture capital per capita of Western Europe, several foreign investors have started to pull back on the market, as returns have waned over the last ten years. Israelis filling the void with new firms is great news for the market.