After more than 3 great years, the LightSpeed Gemini Internet Lab is ending its operations. The joint venture from LightSpeed Venture Partners and Gemini Israel funds has been a great opportunity to fund and support some of the most interesting web startups in Israel.

Both funds are still actively looking for new opportunities for fund new internet projects at early stage. If you are working on project requiring funding please contact

• Gemini Israel funds, Einat Metzer einat @ gemini dot co dot il
• LightSpeed Venture Partners, Yoni Cheifetz

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This is the first Lab company to "graduate" to the A round stage after have been funded in seed stage. The purpose of the internet lab is precisely to fund companies until they reach a critical milestone and require more funding provided by Gemini and LightSpeed.

The news has also been covered onTechCrunch

StyleShake, one of our Portfolio company, is continuously getting some PR exposure (translated in nice web metrics). But lately it got spotted in 2 major sites

BusinessWeek

At the site of British startup StyleShake, users design and work together online on their own cocktail dresses, which they can send to the company to have turned into clothing for them

Tim O'Reilly (Yes the one who created the late "Web2.0" expression). Here is the bit that i preferred

That effort to get people thinking about the next generation of internet applications, and what I came to call "the internet operating system" eventually bore fruit when Dale came up with a new name, Web 2.0...

But to return to the "maker" movement, the big tent includes not just "DIY," as the mainstream media is thinking of it, but the way in which computing is re-engaging with the physical world. For the last few decades, we have associated technology with a world that is increasingly virtual. What the makers are telling us is that the physical world is the next frontier for technology.

Well done Iris. Keep up

TheCoils has a good post (in hebrew) that gives an overview on what happened in Israel regarding internet seed investments. 2007 was a very active year. Way more than 2006. I expect 2008 to be also an active one but many of those early investment will have to prove (including for our own portfolio companies) that a sustainable model is in place.

The interesting part of 2007 was that different models of investment were established in Israel and as TheCoils say, there is no Israeli VC that has not (tried to) put in place a special seed program to address correctly the internet companies.

If you can't read Hebrew there is a great table recapitulating the investment operations made over 2007 (click above to enlarge). The Internet Lab proves out to be one of the most active internet seed programs there. We are working very hard to make it also efficient and 2008 will be important for us in that respect.

Another trend i notices is that appetite from foreign investors (with no representation in Israel) for israeli startups: Mayfield, Spark, Mangrove (Zlio), Accel but also power angels Peter Thiel. And probably soon more (i heard about a deal or two coming up)

An important thing to spot is that many startups did not receive funding and probably won't. This is not necessarily a bad news: you do not always need VC money to succeed and you can build a very nice company without that (for example with angel money only). You can find some of those startups here

Finally 2007 was quiet in terms of M&A activity in Israel: all the attention was of course on Quigo (disclosure we invested in the new company of the founder of Quigo, Outbrain) that sold to AOL for 300+ m USD. Yedda was also acquired by AOL.

TheCoils should probably add also dPolls that was acquired by Toluna. 

2008 will reserve many opportunities for M&A as many startups will hit some nice milestones and some won't be able to pursue but still offer some nice assets to be acquired. The question will remain: Are we able to build giant internet players in Israel? I am not sure we will have the answer in 2008. Actually i think we won't. We'll need more patience for that.

2007 was a good year for the Israeli internet ecosystem and i think we are on a good learning curve. I am a bit concerned by the lack of developers and good wed design guys. But i am sure this will change soon. Really look forward for 2008

We are announcing today a new investment in French startup Bahu.com promoting a European social network for young students across Europe (special south and eastern)focusing on promoting talents.

Bahu is a French startup created by two students and backed by Oleg Tscheltzoff a serial and successful internet entrepreneur i have known for some time now.

We know, the space is not virgin but we were impressed with Bahu achievements only a few months after they launched (already 2 million unique visitors and present in more than 6 countries in 4 months).

Investing in non Israeli related startup is not the first purpose of the Lab, but this was an opportunity that was not easy to ignore. We are committed to support israeli entrepreneurship. We already financed 5 israeli related projects and hopefully more soon.

I am happy to serve on the board of Bahu and face some very tough challenges that we have in front of us.

Btw why "Bahu"? In cool young slang french it means "High School"

We recommend you this read from VentureBeat "When seed funding is better than Series A".

We could have written exactly the same this since this is precisely why we created the internet lab. A few quotes here

...So why do entrepreneurs think they need so much money right out of the gate? Some seem to be attempting to finance their way to profitability, but more often than not they think they need to ask for several million to get the attention of VCs. It’s become a bit of an urban legend: VCs won’t take an entrepreneur seriously if they ask for less than $5 million. That tall tale belongs in the archives with the one about how alligators live in the sewer system...

...By securing only as much capital as they initially need in a form of a seed round, entrepreneurs do themselves a big favor. First, assuming they take the seed funding as a bridge round which will convert into an eventual A round, they suffer no dilution. Second, they ensure themselves a much better valuation when they do eventually secure an A round because they have reduced one or more key risks during the seed period. Third, with this small amount of money, the entrepreneurs can get more insight and information on whether their idea is worth investing their own valuable time in before they have to make the multi-year commitment that comes with larger investments.

Vestopia, one of our portfolio companies still in private beta is getting some good PR lately. Below a video by Reuters where they are mentioned in the new generation of financial services

We are happy to announce our fifth LGiLab investment in StyleShake today.

For now we can't say much about the company but StyleShake is best described as an e-commerce bespoke fashion brand that operates in the UK and Israel. Apart from garment design the service has strong community identity.

The project is lead by Iris Ben David, CEO & founder who worked with top international clients on varied award winning Internet projects. She has over 10 year of international experience in various fields of new media and online advertising.

The team is also composed of

• Romina Karamanea – Creative Director, award winning bright fashion designer, who was recently selected as one of the 100 most promising worldwide fashion designers. Her work has been covered on many prestigious magazines and her recent collection has been shown on London and Milan fashion weeks.
• David Yanovsky – CTO, Chief software architect and Innovator. Formally founder and CTO of Jetro Platform. Before that, he was the CTO of RunOnWEb, San Diego. David Brings to StyleShake 15 years of comprehensive software industry experience.

The company is in stealth mode but will be soon offering a great innovative service. The idea is quite powerful and we look forward to see how it is going to be adopted by consumers.

In addition to StyleShake, LGilab has invested in Bp Tech Interactive Technologies, Vestopia, OutBrain and TimelessCities

More things are on the way. Stay tuned.

VesTopia, one of our portfolio companies (named until now Increditrade) , just launched their private beta, and we are very excited about it.

We have said much so far about it, on purpose. Their service actually lets you follow, in real-time, the real transactions and holdings within the personal portfolios of professional investors. All is done in a completely transparent mode, and while you get the pure transactions, you can also read about the strategies and opinions in the Investment Directors' blogs, and get alerts in RSS, SMS, email etc.

In the screenshot below you can see the real profile of one of the Investment Directors, Mike Gooson. You can see more pics and previews here

VesTopia are currently in a private, invitation mode only, but they still have some beta invitations left. So if you're interested, Click here or use invitation code LGI1ST in registration page

Many more exciting features are in the pipeline so stay tuned for the public beta and for great announcement VERY soon!