Israeli Public Venture Partnerships Burn Nearly NIS 600 Million Amid Investor Disputes
The ongoing conflict within the Israeli venture partnership Shor-Tech highlights the broader struggles of public research and development (R&D) partnerships, a model that emerged prominently during the 2020-2021 IPO wave on the Tel Aviv Stock Exchange but has since become a major disappointment. During this period, 14 such partnerships were listed, raising an initial total of NIS 602 million and later increasing to over NIS 800 million through additional fundraising rounds. These partnerships aimed to offer the public an alternative to private venture capital by enabling investments in early-stage technology firms.
Shor-Tech, listed in 2021, raised NIS 26 million initially and an additional NIS 3 million in 2022, focusing on fintech and insurtech companies. The general partner is controlled by Yossi Tamar and Shay Lior (41%), alongside Adi Tzim (22%) and former Health Minister Danny Naveh (17%). The partnership is managed by CEO Ran Tzur. Tensions between the general partner and limited partners (public investors) escalated in 2023, with 91% of unit holders rejecting a proposal to exempt the general partner from requiring shareholder approval for new investments, citing concerns over high management and success fees and accusing the general partner of depleting funds.
In January 2024, investors led by Yigal Damari (13.8%) proposed dissolving the partnership, but the effort failed due to opposition from the general partner. Disputes also arose over plans for further capital raising. In late 2023, some unit holders filed a derivative lawsuit demanding the return of NIS 25 million to the partnership, but the case was later dismissed. Recently, both sides sought court intervention to limit each other's powers, with investors aiming to restrict the general partner and the general partner seeking to prevent investors from blocking capital raises.
Financially, Shor-Tech ended 2023 with a NIS 23.4 million loss after a NIS 5.6 million profit in 2022. Its market value currently stands at just NIS 6.6 million, one of eight out of 14 public R&D partnerships trading below NIS 10 million. Only one partnership, Biomit Podtech, trades above its IPO price. Overall, these partnerships have suffered negative returns ranging from 25% to 92%. The combined market capitalization of all public R&D partnerships is approximately NIS 213 million, a 65% drop from their initial NIS 602 million IPO proceeds and a 74% loss relative to total funds raised of NIS 800 million, equating to nearly NIS 587 million in value destruction.
Two partnerships, Menara Ventures and Medipers Health, have begun asset liquidation processes ahead of closure. In May, Menara Ventures' unit holders approved a three-year postponement of its liquidation, citing the failure of the public R&D partnership model on the exchange. Challenges include difficulties in pricing private tech investments, low liquidity of partnership units, and adverse market conditions driven by a high-interest-rate environment.
