Fintech
Insight Partners and JVP Acquire $120 Million in Earnix Shares at a Valuation of Approximately $1 Billion
A large secondary equity deal recently took place in Israeli fintech unicorn Earnix, with Calcalist learning that two Israeli venture capital funds, Vintage Investment Partners and Israel Growth Partners (IGP), selling their entire stakes to two major shareholders of the companies: the Israeli venture capital fund JVP, led by Erel Margalit, and the American venture capital fund Insight Partners, represented in Israel by Liad Agmon, as well as the company itself.
According to estimates, the deal would be worth around 120-130 million dollars. IGP sold approximately $70 million worth of shares, marking a significant exit with a return of seven times the initial investment, while Vintage sold approximately $50-60 million worth of shares. The exact valuation at which the deal was made is unknown, but it was not higher than the value of the last fundraising in 2021, when the company raised $75 million at a valuation of $1 billion, making it the the first time a unicorn. time.
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Earnix CEO Robin Gilthorpe (from left), JVP President Erel Margalit and IGP co-founder Moshe Lichtman.
(Photo: Elad Gershgoren, Eli Dasa, Amit Shaal)
Vintage and IGP, early investors in Earnix, sold their shares because the funds through which they had invested in the company had reached the end of their life cycle, prompting the realization of the investments to return money to their investors. Private investment funds typically have a term of around seven years, with an option to extend up to 10 years. In the first 3-4 years investments are made, then the companies are improved, and in the last years of the fund’s life the managers make the investments and distribute the money to investors, aiming to return multiples of the invested capital.
IGP, run by former NICE Systems CEO Haim Shani and former Microsoft Israel CEO Moshe Lichtman, invested in Earnix in January 2017, during a $13.5 million fundraising round. This means that for IGP the investment in Earnix is already more than seven years old. Up until that point, Earnix had raised $25 million from investors including JVP and Vintage, making it an even older investment for them. Insight and JVP, as well as Earnix itself, saw this as an opportunity to increase their stakes in the company.
Secondary transactions – the sale of shares by existing investors in a private company – have become more common in the past two years, mainly due to rising interest rates aimed at cooling inflation but also cooling investor appetite. investors for risky assets such as private technology companies. This has reduced the possibility of exits via public offerings. It has also had an impact on the mergers and acquisitions market, decreasing the frequency of companies being sold entirely to other entities. This has given impetus to secondary transactions, allowing existing investors to realize stakes, new investors to enter the company, or existing investors to increase their holdings, as seen with Earnix.
JVP is an early investor in the company, having made its initial investment in 2005 during Earnix’s second fundraising round. Insight first invested in Earnix in 2021, in the fundraising round that turned it into a unicorn.
Earnix is a rather unusual company in the Israeli tech landscape. Founded in 2001, it is already a fairly old company but remains private. Unlike many other tech companies, it is profitable. Last year, in 2023, Earnix presented its first operating profit (EBITDA). This year, Earnix’s revenue surpassed the $100 million mark for the first time, and the company aims to reach hundreds of millions of dollars in annual revenue in the coming years.
Earnix, registered in Delaware, USA, headquartered in Ramat Gan, develops technology solutions for insurance and financial companies. Its products, which currently use artificial intelligence (AI) technology, enable insurance companies to underwrite better and faster, personalize insurance and financial products for customers, adjust product prices and maintain continuous contact with customers. customers and various databases optimally. Earnix’s technology enables insurance companies to reduce customer acquisition costs, increase profitability per customer, and optimize pricing to increase profitability. Financial companies using Earnix can gain insights into consumption patterns, consumer preferences and changes in customer tastes, helping to bridge the gap between market trends and pricing based on supply and demand considerations.
Earnix has customers in 35 countries around the world, including the United States, Europe, East Asia, and Australia. Its clients include Italian finance company Generali, the financing arm of automotive giant Toyota, Tesco Bank and US Bank. Customers pay annual usage fees to Earnix, with agreements typically lasting 3-5 years.
Earnix’s CEO is British citizen Robin Gilthorpe, who joined the company about a year and a half ago after 20 years in the finance and insurance industry. Earnix currently employs 300 people in Israel, the United States, the United Kingdom and Germany. It was founded by Sammy Krikler and Yoni Cheifetz, the founder of the American-Israeli software company Demantra, which was sold to the American giant Oracle in 2006.