We invest in early-stage capital-efficient software companies in and around the Internet, primarily in these focus areas: Cybersecurity, Cloud Computing, SaaS (Software-as-a-Service), Big Data, Internet of Things, DevOps, Analytics, Performance, Business Intelligence, e-Commerce Infrastructure and Mobile Technologies. We are currently investing out of our $27.5 million second fund.
Deep Proprietary Technology
We get excited when we meet passionate teams of excellent technologists and entrepreneurs who are building sophisticated engineering-driven businesses. In our experience, unique core intellectual property tends to provide portfolio companies a sustainable long-term competitive advantage, and often it is a catalyst of lucrative partnerships and exits. We team up with highly talented, motivated entrepreneurs and assist them in transforming their brilliant technological innovations into successful ventures. We do so by drawing on our substantial accumulated SaaS expertise and by leveraging our strong Silicon Valley network for business development, top-tier sources of later-stage capital and exit opportunities.
We do not typically invest in consumer-facing and advertising-supported startups. We believe in straightforward, sustainable business models whereby customers pay actual currency for access to outstanding products and services. The emergence of SaaS introduced new possibilities to reach enterprise customers cost-effectively, and we go to work with our founders to apply those to their particular businesses. We are experts in selling software to enterprises over the web as well as traditional field sales. We know online marketing, inside-sales, and direct & channel sales of SaaS, enterprise software and cybersecurity to business customers worldwide.
SaaS is a relatively new business model, and few investors have true domain expertise in it. We believe SaaS is the perfect model for selling software to enterprises while maintaining capital efficiency. We have succeeded with it repeatedly, and plan to continue to deploy it for the foreseeable future. We know SaaS inside out – product development, service packaging, plans & pricing, key performance indicators, effective online marketing, sales funnels, achieving recurring revenues and customer retention. We roll up our sleeves and passionately enjoy the intense work with our portfolio companies. We have been there before and can therefore dramatically accelerate SaaS business execution.
Achieving maximum traction at minimal investment is an especially important concept at YL Ventures. We strongly believe that raising too much capital early on is a critical, often overlooked mistake – it renders almost any outcome but a homerun-type exit a failure, thereby considerably limiting founders’ options for achieving liquidity. Capital efficiency helps create full alignment between early stage investors and company founders, and therefore we prefer to invest $1MM - $3MM in startups initially and reserve additional capital for later rounds (as necessary). We prefer to be the first institutional investor in our portfolio companies and like to work hard with exceptional entrepreneurs in building lean and mean rapidly growing SaaS businesses.
We invest primarily in Israeli startups, as those tend to exhibit a rare combination of true entrepreneurship, strong engineering and capital efficiency. We consider investments in other geographies in startups that impeccably meet our investment criteria.
We are consistently laser-focused, preferring to miss out on good opportunities outside of our expertise than invest in uncharted territories. Within our chosen sectors, we know the challenges and how to overcome them. We have learned from mistakes and have helped create big successes. Early stage companies that partner with us grow faster and better by drawing on our established cybersecurity, SaaS and other knowhow and our extensive Silicon Valley business network. We see ourselves as our founders’ closest allies as they build and grow their enterprises.