Axelmed Investment Group, led by Israeli Dr. Uri Geiger in the United States, has raised a second $ 400 million private equity fund. The fund set out to raise $ 300-400 million in 2019 and is now completing the fundraising with over-demand. Axelmed says the fund’s investors were pension funds, insurance companies, family funds and private investors. “Many Israeli institutions have invested in the fund,” Geiger told Globes. “We have given priority to those who have been with us for many years, including quite a few Israelis.”
Matches mature companies with innovative technologies
The Axelmed Fund grew as a venture capital fund, initially with Mori Arkin as an anchor investor and later developed into a fund that invests large sums in mature companies. The fund has a unique strategy developed by Geiger: the acquisition of medical device companies with an existing sales network but with little growth, and a combination of innovative content technologies, from around the world, that can drive their growth. Sometimes these added technologies are Israeli technologies, which suffer from the opposite problem: Israeli companies have innovation but it is difficult for them to build a sales network in the United States.
Axelmed’s first fund had several such investments: Cogenetics Medical, which was sold to $ 240 million in Laborie in 2018, Strata Skin, which is traded at $ 63 million on NASDAQ, after incorporating the technology and CEO of Photomedex, and the private companies Keystone Dental that acquired the Israeli laptop company and Endogastric solutions.
The current fund will operate to acquire control of companies with revenues of $ 20-70 million, in the same model, and will also invest – without acquiring control – in younger and promising companies in the fund’s areas of expertise, with revenues of $ 10 million and more.
“We will build on the experience and achievements of Axelmed to take advantage of opportunities at a time when the demand for technology-based medical solutions has never been greater,” Geiger said. “We built our business on the belief that combining medicine and technology significantly improves people’s lives and society’s needs, and ultimately also lowers the cost of health care.
“For the past decade we have been serving as a value-adding partner to medical companies and executives who want to take their business to the next level but do not yet have the resources and experience to do so. We have been able to create a portfolio of growing, coronation-resistant companies.”
“Ready to work for a smaller check than the competition”
According to Geiger, it was important for the fund to stop at $ 400 million to create a “small advantage.” “Our private equity competitors are $ 1 billion or more funds. If a fund’s management team can make 8-10 complex private equity transactions in the fund years and no more, then a $ 1 billion fund must make hundreds of millions of dollars in transactions, leaving the arena of Transactions of the size we are looking for are relatively vacant for us.As for the competitors, if they are already working hard then go for the biggest check possible, but that leaves us an advantage in the arena of companies that interest us.The previous fund was too small, $ 130 million. We have a lot of control transactions. $ 400 million is exactly the size we aimed for. “
The fund has already made two investments, in Tearlab which performs a dry eye diagnosis, in which Axelmed led a $ 25 million round of funding, and Neuroface, which develops technology for treating brain injuries, in which Axelmed has invested $ 67 million. Hundreds of millions of dollars have been invested in both companies in the past. Various conditions, including the corona, created an opportunity to acquire control of these companies for a lower amount. Geiger says Axelmed has been following these companies for years, waiting for the moment of truth.
With the development of Axelmed and the recruitment of the second larger fund, the team, which today includes partners Lior Shev, a former senior executive at Meitav Dash and two Israeli medical device companies, who ran a consulting company in the field of medical devices; Dr. Raphael Turgoviki, a former executive at international companies, including Eli Lilly; and Owen Norton, who previously managed the Abbott Labs International Corporate Fund and the Onset Ventures Fund, which has invested in medical device companies.
The lesson from the conflict with the Topaz family
In recent years, the venture capital activity has been managed by Dr. Irit Yaniv and Dr. Amir Blatt, but as the new business model, based on private equity transactions, became established, it was decided to give up the venture capital area. Yaniv and Blatt have moved to manage the listed investment company Alameda. Axelmed will invest in companies at the risk stage only in rare cases, and with priority given to cases where the company is already recording revenue of $ 10 million. It will continue to support companies in which it has already invested.
About two years ago, a dispute arose between the Topaz family, which sold the laptop to Axelmed, and the Axelmed and Geiger funds in person, over the leadership of the joint company that was formed – Keystone Dental. In the end, Axelmed acquired the balance of the Topaz family’s holdings in the company for NIS 100 million. Today, Geiger says that the conflict is a thing of the past, and that positive ties remain between him and Shmuel Topaz, the founder of Laptop. “But we realized we needed to be the leaders in the major companies we invest in,” he says.
The Biomed Fund, which specializes in medical device companies ● was founded in 2009 by Dr. Uri Geiger and the Arkin Holdings of Mori Arkin. Geiger currently serves as a partner ● The fund’s strategy: connecting mature companies to innovative technologies that will drive their growth ● Tearlab, which performs a diagnosis of dry eye, and Neuroface, which develops technology for the treatment of brain injuries