Meet The Israeli VC Still Bullish On WeWork, Lemonade And The Old Testament

Before a startup has gained widespread popular appeal, you can count on its venture capitalists to promote it as the next big thing. Its rarer for those early investors to be talking up the company at the other end, months and years after it’s gone public.

But at Israel-based early-stage firm Aleph, cofounder Michael Eisenberg remains a bull about not one, but two controversial stocks. And one such investment, seemingly left for dead by some public market investors, is helping Eisenberg rise to a higher-than-ever spot on the 2021 Midas List Europe.

Eisenberg, 50, has built a career investing portfolio that includes two recently-public companies: coworking company WeWork and insurer Lemonade. The former went public in October via special purpose acquisition vehicle; the latter through a traditional IPO in July 2020. Both stocks trade below where they opened trading on their first day on the market, with WeWork’s market cap standing at about $6 billion today, a fraction of its peak $47 billion private valuation, and Lemonade’s market cap of $3 billion less than half of where it started the year.

As an early-stage investor, Eisenberg and his firm have made out well all the same. Those investments have returned tens of millions of dollars to Aleph’s backers over the years. But despite opportunities to cash out both positions altogether – either through expired restrictions on trading with Lemonade, or in a private placement with lead WeWork shareholder SoftBank –Eisenberg says his firm still owns about half of each position.

IF he’d unloaded his WeWork shares at first chance, Eisenberg wouldn’t sit at No. 8 on Midas Europe, up from No. 11 last year. The reason to hold, he says, has nothing to do with short-term stock prices, but a simple question: do you believe in a company’s long-term secular trends? “If you have a long-term believe in these businesses, you stick with them,” he says.

Alignment is a theme for Eisenberg, and a big part of Aleph’s pitch. With startups increasingly global in their aspirations, the chance of large-sized, multi-geography firms backing competitors is getting higher, the investor believes. Back competitors is no longer uniformly the forbidden tactic it was in the dotcom boom and bust. But committing to one company as the potentially global winner is better for a VC’s reputation with their “customer,” the entrepreneur, Eisenberg argues.

The investor cautions about firms that look to back the DoorDash of Pakistan alongside the DoorDash of Turkey, or look for multiple local versions of other successful U.S. unicorns like Plaid. To take another approach, however, means a local firm like Aleph must build its talent network not just in its hometown of Tel Aviv, but in other geographies, simultaneously. “We spend a ton of time automating our internal systems,” Eisenberg says. “How you attract and retain talent is becoming more challenging and more expensive.”

To help make sense of the world for his own children, but also his entrepreneurs and collaborators, Eisenberg has been working on a book series that draws lessons and modern-day extrapolations in economics and company-building from each book of the Old Testament of the Bible. He’s written three so far in Hebrew; one, “The Tree of Life and Prosperity,” has been translated into English so far. “The world is in search right now, because things are so upside-down, for timeless principles that can guide our decision-making,” he adds.

Asked what the lesson would be from WeWork and Lemonade’s journeys to the markets and their roller coaster rides since, Eisenberg warns that comparisons between startups don’t get founders very far. Of course, those investments alone aren’t why he’s on the Midas List Europe, either; he’s an early investor in Healthy.io, which tests for kidney disease, as well as Melio, a business-to-business payments solution valued by private investors at $4 billion. (Both started out in Israel before opening U.S. offices, as well.)

Still, he offers up one lesson loaded with subtext, depending on from where in the price chart you’re looking. “Disrupting traditional industries is really hard, really really hard,” he says. “It takes especially ambitious entrepreneurs to do it.”