Vesttoo raises Series D to $1.5-2 billion valuation
The fintech company Vesttoo has embarked on a series D financing round worth 1.5-2 billion dollars. This comes shortly after parting ways with one of its long-standing investors, R&D partnership Sure-Tech, which sold its remaining shares in the company in recent weeks.
In a letter sent earlier this week by CEO Yaniv Bertele to Vesttoo employees, he stated that “the company has already started a financing process at a significantly higher value than the previous round, which will be completed in the coming months.” This would represent a 75% increase in value compared to Vesttoo’s last funding round six months ago – a round that made it a unicorn, having raised $80 million at a $1 billion valuation. Calcalist also learned that the company has already hired two US investment banks to manage the funding round.
Vesttoo was established in 2018 by Yaniv Bertele, Ben Zickel and Alon Lifshitz. The company has developed a digital platform for assessing risk in insurance investments, which enables insurance companies to obtain reinsurance cover through the capital market.
Calcalist also learned that the company ended 2022 with revenue of approximately $110 million compared to $30 million the year before. The company’s EBITDA for 2022 is estimated at USD 60 million compared to USD 20 million in 2021. Vesttoo has offices in Tel Aviv, New York, London, Hong Kong, Seoul, Tokyo and Dubai, where it employs 200 people, of which 75% are with headquarters in Israel.
Sure-Tech recently sold its stake in Vesttoo (2%) for $15.7 million at a company valuation of $785 million. Sure-Tech sold its stake in Vesttoo at a price about 20% lower than the value set for it in the last round. In January 2022, the partnership sold half of its holdings for $7 million and according to an enterprise value of $300 million.
Bertele also explained in his letter to the employees that when a shareholder sells his shares in the secondary market, instead of as part of the company’s financing round or on the stock exchange, it is accepted that the sale is carried out at a discount price. .
“Last week, a secondary agreement was signed, where Sure-Tech sold the remaining shares in the company for 15 times the original investment,” wrote the CEO. “Sure-Tech, as a shareholder, sold its stake in the company at a 20% discount to the Series C valuation, which was $1 billion.” Bertele added, writing that “Sure-Tech were very difficult shareholders in their ongoing dealings with us. Their handling indicated motives that are not in line with the typical behavior of a public company in Israel. Following this, I personally acted to make sure the sale of their shares went through. The buyer is one of our existing shareholders, which further increases the market’s and shareholders’ confidence in us.”
The existing shareholder who bought the shares is the American fund BRV.
In response to Bertele’s letter, Sure-Tech said: “We wish Vesttoo success in its continued business development and are grateful for the opportunity we had to invest in it.”
Sure-Tech acquired approximately 4% of Vesttoo in April 2021 for $1 million and valued at $20 million up front. According to the partnership’s estimates, the sale of the remaining 2% will yield a profit of $9.2 million – less than the sale price. The profit stated by Sure-Tech’s management does not include transaction costs, commissions and taxes.
Sure-Tech is an investment partnership that went public on the Tel Aviv Stock Exchange in April 2021 after raising NIS 26 million ($7.1 million). The partnership was established by Yossi Tamar and Shai Yitzhak Lior, who also serve as joint CEOs of the public investment company Capital Point.
Sure-Tech has received criticism regarding its operation, which guarantees that partners will be allowed to collect 14% on any investment that triples in value, and 18% on any investment that grows beyond that. They collect the profits even if the number of bad investments exceeds the number of successful investments. In other words, Sure-Tech partners benefit from every successful investment, regardless of the failure of their investment portfolio. After selling all of its holdings in Vesttoo, Sure-Tech was left with holdings in three other fintech companies.
Sure-Tech ended 2022 with no revenue and a loss of NIS 2 million. Since the beginning of the year, the partnership’s share has increased by 2% and is valued at NIS 22 million ($6 million).
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