Natalie Refuah is a Partner at Viola Growth who has been with the fund since its inception in 2008. In this interview she talks about what it’s like to work in Private Equity, what she spends most of her time on, how the work has changed over the years, challenges, highlights, and more.

Q. Natalie, how has your work changed during your time at Viola Growth?
A. I have been with Viola Growth since its inception in 2008 which means that I’ve had the privilege to witness the evolution of the fund in parallel with the evolution of the technology private equity market in Israel.

When the first fund was raised in 2008, there were a few skeptics who wondered whether we’d have anywhere to deploy the capital and whether there are enough late stage technology companies to justify the creation of a dedicated private equity fund. But if you fast forward to 2015, with all the new technology PE funds and late stage VC funds raised in Israel over the past couple of years, together with US PE funds that are scouting around, it’s clear that those initial concerns have long been proved false by today’s thriving market. I’m proud about the fact that we were pioneers in this instance, first to identify the potential of the technology PE market in Israel.

It’s always good to be a pioneer; we know the market inside out, we’ve learned lessons from the first fund that we will implement in the second fund (recently raised), and we have the first mover advantage (something that we also look for in the companies we invest in).

Many other things have changed, but I find it particularly fascinating that when we started to invest from the first fund, it was immediately after the collapse of the Lehman Brothers bank and the economic recession. At the time, it was very difficult to make investments because people were cautious and tended to hold back on everything, waiting to see what each day will bring. But a few months later, attitudes changed, the market became very amenable for investments, and valuations were attractive. This is when we made quite a few of our investments from the first fund.

These days, when making investments from the second fund, it’s not easy either, but for the opposite reasons: Valuations are high, competition is stronger and the amount of ‘dry powder’ in the market waiting to be deployed is enormous. It will be interesting to see what happens a few months from now and whether valuations remain high. However, we’re not waiting to see the outcome, we’re continuing to pursue investments in great companies and adjust – albeit conservatively – to market standards.

Q. What do you spend most of your time on?
A. As an investment team, we generally try to split our time and effort more or less evenly between sourcing deal-flow, performing due diligence, and creating value for the portfolio companies. The split changes according to the status of the fund, current deals on the table and other conditions. Creating value for our companies is the most challenging part, simply because deal-flow and due diligence seem to get prioritized higher on our ‘To Do’ lists, but we know that it’s a major part of what we do in the fund (and also a way for us to develop professionally) so we’re always making an effort to put “creation of value” front and center.

We’re always making an effort to put “creation of value” front and center.

Personally, since my background is in Investor Relations, I’m also involved in the fundraising efforts and the IR relations. I spend a lot of time screening and choosing companies, so I like being on ‘the other side’ too, where we get to be screened and assessed by others. It also presents an opportunity to look at the PE industry from a macro level rather than on the micro level only.

Q. How do you source deal-flow?
A. Looking for new potential investments and meeting with them is a great part of the role. We try to be very proactive in reaching out to companies – through conferences, press, our CRM database and more. We try to be very creative in discovering potential investments, so we keep an eye out for ‘hot’ themes in the market and review their main players.

On more than one occasion we actually approached a company and basically inspired its team to think about raising additional money.

One time, for example, I saw photos of amazing offices of a Tel Aviv company that nobody heard of. I approached them and met with them, and discovered a real ‘pearl’ that had eluded everyone’s radar. Unfortunately no deal came out of it, but the experience convinced me even more that we should be thinking outside the box and reaching out to unique companies.

Another very important source of deal-flow is the pool of advisors we work with, including investment bankers, consultants, but mainly accountants and lawyers, who constantly introduce us to very good potential deals.

And of course, being part of the Viola Group affords us access to many attractive opportunities that arise from within our “sister-funds” portfolios, or from their deal-flow access and the Group’s ecosystem.

Q. How do you screen companies?
A. Our investment team consists of 5 people. Usually for the first meeting, a couple of us will go and check if the company meets our basic criteria: a technology company, at a growth stage (i.e. growing double digit year over year) with substantial revenues (approx. $10m per annum), a global company, and feasibility for a meaningful investment of $20-$30m. On the deal structure we are pretty flexible; we can either put money-in or buy out existing shareholders or both.

Once we qualify it as a potential investment, one or two partners will join the process, create a “deal team” and eventually bring it to our investment team, until it reaches our investment committee for a final approval – after a thorough due diligence process.

Q. What is the most exciting part of your job?
A. This is a very subjective answer, but for me it’s always a thrill when a process leads to an investment. The phase of sourcing a company and studying its market, competitors, potential growth plans and getting to know its management team, is fascinating in itself, but the most thrilling part is when you see this company turn into a portfolio company. From this moment on, the process accelerates rapidly and it’s very exciting. The lawyer side of me even enjoys the negotiations part on the deal terms, though I’m pretty sure that most people find it the most annoying part!

Q. What was the most challenging issue you’ve had to deal with?
A. Sometimes there are situations where I find it challenging to decide whether I support a certain investment or not. In some cases I have a fairly clear view on whether it’s a “yes” or “no” in my opinion, but sometimes it’s more of a grey area and the question is whether it’s just good enough for us and fits our strategy.

The most challenging scenario I can think of is when you, as an investment team member, lead a deal that you do not support. Over the years I have learned to try to avoid playing a role in the team on such deals. Luckily, we’re encouraged to state our vote and opinions openly at Viola Growth anyway and I have always appreciated the opportunity to do so.

Q. What are the requirements for working in the PE field?
A. A background in finance or technology is usually required to work in a fund like Viola Growth, but there’s no set ‘checklist’. Also, you don’t need to have connections to get in, as some people think. One of the best people in our fund actually sent his CV to us via our website’s “contact us” page, so you just never know where the next great team member might come from.

I personally think that an ideal investment team comprises people from different backgrounds who have complementary skills in areas like accounting, economic, legal, technology and operational, and I believe that our investment team pretty much fits this description, which is one of our strengths and a major advantage.

Also, in order to progress within a fund, you have to be a real people-person, very out-facing, and a team player. Investing is all about people – whether you want to raise money, or deploy it.

Q. What’s your background and how did you come to join Viola Growth?
A. My B.A. is in Law and International Relations from the Hebrew University in Jerusalem and I have an MBA from Tel Aviv University. I spent a few years with the Legal Department of the Ministry of Foreign Affairs where I did my laws internship and worked as a lawyer thereafter. It was a fascinating position, the macro view on the state level is amazing. However, since my then boyfriend (now my husband) clearly told me that he would never move to any third world country with me, I had to abandon my dream of becoming an “ambassador”! A friend introduced me to Evergreen Venture Partners, a (then) leading VC fund, and they took a huge bet on me by recruiting me as an Investor Relations Manager. Then a few years later another friend – Hila Shitrit Nissim, who was VP Marketing at Viola from 2005-2017 – introduced me to Harel, who had just founded Viola Growth (formerly known as Viola Private Equity), and I have been here ever since…