Insight Venture Partners has doubled down on tech investments with an unusual transaction: The PE firm bought an aging VC fund in Israel.
Insight bought Genesis Partners’ fourth fund, which invests in software startups in Israel.
The secondary transaction, announced Feb. 26, was unusual since Insight traditionally invests in established tech companies through its own funds.
Currently, the firm invests out of Fund X, which closed on $6.3 billion in July 2018.
Genesis closed Fund IV on $85 million in 2008, according to Palico, and has since invested in 11 companies. Three years ago, the firm decided it would not raise any new funds.
The two firms became acquainted as co-investors in monday.com, Sisense and JoyTunes. Insight and Genesis hold minority positions in those businesses.
With the portfolio acquisition, Insight will increase its stake in the companies by taking on Genesis’s shares.
Although Genesis invests in companies in their early stages, those businesses have grown over time and now align better with Insight’s growth investment criteria.
The deal was opportunistic and attractive to both parties, Teddie Wardi, managing director at Insight Venture, told Buyouts.
“This is not something we typically do,” Wardi said. But “we had an opportunity to double down on these three key positions and refresh the portfolio [given] the timeline on exit of Genesis.”
Insight is looking to continue investing in tech companies in Israel with a focus on cybersecurity, AI, machine learning, and software for development and operations and for optimization.
“There are a lot of exciting, deeper tech opportunities in Israel. … Israel has been a very exciting region for us in the past couple of years,” Wardi said.
Currently the firm’s portfolio has 18 Israel-based tech companies, including 10 from the Genesis acquisition.
The firms didn’t involve any secondary, legal or financial adviser on the transaction.
Correction: A previous version of this story included an incorrect total for Insight Venture Partners X. The correct total is $6.3 billion. The story also listed the wrong date of the deal announcement, which was Feb. 26, and the number of Israeli companies in IVP’s portfolio, which is 18. The report has been updated.
Action Item: Contact Insight Venture Partners in New York at +1 212-230-9200.