Tel Aviv’s Liquidity Capital announced it plans to invest $500 million of growth capital in technology startups throughout this year. The firm is backed by Mitsubishi UFJ Fund Services and is part of Meitav Dash, an Israeli institutional investment house. Much of the money is likely to go to companies in the US, where Liquidity Capital has offices in New York City and Miami. Liquidity allows portfolio companies to raise funding without giving up equity, by offering “unlimited unsecured, non-recourse, no dilution” capital in exchange for a predetermined share of the companies' future revenues. The fund also charges a management fee of 1.25 percent of the assets and a 25 percent success fee when the annual return exceeds 8 percent.
Furthermore the firm uses a proprietary tool, Liquidity Dynamics, which applies machine learning and predictive analysis to identify the best bets for investment. “Liquidity Capital is overturning the traditional credit analysis and credit management model that incumbent financial institutions around the world have been committed to for over 100 years,” said Akihiko Okamoto, the managing director of Mitsubishi UFJ Fund Services Managing Director and its Chief Investment Officer. “Even in Japan where the financial culture leans more conservative, we are extremely excited to be involved with Liquidity Capital as they upend the equity financing model for growth stage startups,” he added. Liquidity Capital CEO and Co-Founder Ron Daniel said: “We‘ve established ourselves as the industry’s go-to firm for non-dilutive growth capital thanks to tremendous results in 2019."
Last year, the Israeli firm invested $200 million in the cloud, e-commerce, and SaaS sectors, including two unicorn startups, Infinidat and Le Tote. Typically the firm funds startups that demonstrate over $3 million in ARR and 30 percent year-over-year growth, with an average cheque size of $10-30 million.
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