Responding to a popular request, we are now sharing transcripts of our investor podcast interviews in this new series. The following interview with Shuly Galili was recorded in October 2018.
Shuly Galili, Founding Partner, UpWest Labs, talks to us about pre-seed and seed investments in the Israel – Silicon Valley corridor.
Sramana Mitra: Tell us a little bit about yourself as well as UpWest Labs. Introduce our audience to your work.
Shuly Galili: I co-founded UpWest Labs in 2012. It’s been almost seven years. We’ve been building a platform and a fund to invest and support very early stage pre-seed and seed founders, primarily out of Israel. We are based in Palo Alto and are invested in over 70 companies. We’re on our third fund where we are heavily focused on several industries.
Because of the stage we invest, we are very, very founder-focused and market-focused. It helps that we are here in Silicon Valley but we also spend a lot of time in Israel. We’ve been the bridge for a lot of entrepreneurs who are looking to access the US market as soon as possible. Before UpWest Labs, I ran the California-Israel Chamber of Commerce for 11 years. I started that in 2000.
That was an industry icon association that served big companies that were looking for innovation outside of the US. Israel was one of the places where they found a lot of that as well as entrepreneur programs that were really focused on accessing their US market as soon as possible.
Sramana Mitra: Great. How big is the third fund of UpWest now?
Shuly Galili: We’re managing about $30 million. The third fund is almost $20 million. We started pretty small. Our first fund was $2 million. It was primarily an opportunity for us to test and see how we can really build a very robust platform for founders who have tremendous technical abilities and skills and huge vision, but their distance from the market hinders them from taking it to the next stage. We started very small. This is what we’ve been doing for the last seven years. It’s been a great journey and a great privilege to be part of it.
Sramana Mitra: How do you define pre-seed and how do you define seed? As you know, we’re seeing very big change in the early stage ecosystem these days whereby there’s a lot of fragmentation and segmentation going on in the pre-Series A stages. There is now pre-seed, seed, post-seed, pre Series A, small Series A. In your world view, what is seed and pre-seed?
Shuly Galili: You’re absolutely right. When I look at when we started and what was a normal seed round, founders in 2012 raised half a million dollars as seed. Later on, they raised institutional rounds from Silicon Valley VCs. That was an A round. Today, the seed has ballooned to as high as $5 million. It’s really a different landscape.
In 90% of the cases, we are the first check. When we find entrepreneurs, a lot of times the company consists of just the two founders or three founders. They have literally a demo or a prototype of a product. They are seeking validation at that point from a first customer in order to understand how and which direction they should be going about building this. That’s the pre-seed stage. Our average check is about $250,000. It’s really enough for them to be able to leap across the world and come here to understand what customers will want to work with them in order to get to a proper seed round.