December 22, 2003

Zeljka Matutinovic
General Partner, Jerusalem Venture Partners

JVP is an international venture capital firm that focuses on early-stage investments in the areas of enterprise software, semiconductor and components, and communications, among other industries. The firm has over $670 million under management and maintains offices in New York, London and Jerusalem. JVP prides itself on being one of the pioneer firms in the Israeli venture capital community.

"Our attitude is that we try to understand the technology trends. We're not necessarily technologists, but we like to have at least a basic understanding of the technology that enables applications."

Education

Ph.D. Electrical Engineering and M.S.E.E., Princeton University and the University of Zagreb; B.S.E.E, the University of Zagreb

Prior Experience

Managing Director, International Real Returns; Investment Banking, Credit Suisse First Boston; Consultant, McKinsey Company

Board Seats

Mahi Networks, Quarry Technologies, Kovio and Adimos.

VR: How do you identify potential investments?

Matutinovic: Primarily through our network. We have offices in Israel, New York, London and Tokyo. We have a 10-year history in investing: we are currently on our fourth fund. Personally and as a firm, I think we've developed a very strong network of partners, entrepreneurs, co-investors and advisors, and that is the primary source of the investments that we do.

What propels you to invest in the wireless industry?

There are a lot of opportunities. If you look at the world and where it is going, there's a lot of development going on [in wireless] and a lot of exciting technology. [There's] especially [growth] in the consumer market if you look at PDAs, cell phones, digital home and the explosion of gaming. In the digital home, there are opportunities for wireless connectivity as well as video delivery.

Why did you invest in Adimos?

We had initiated an effort to identify specific opportunities in our investment sectors. We felt that wireless media was an area of opportunity because the existing technology didn't deliver what we thought consumer electronics manufacturers needed today. [Adimos Co-Founder and CEO] Sandeep Kumar was an advisor to the fund for the last two years and has been intimately involved with our projects. We have known him since his TI days in Israel. Sandeep made an acquisition on behalf of Texas Instruments in Israel and subsequently ran the business unit. After he left TI, he became an advisor to us. We've done a lot of work with him both exploring [investment] areas and through due diligence with specific deals. In the process, he came up with the idea for Adimos and identified a team in Israel that helped him execute it. Our venture partner in Japan [Hiroshi Ikegaya] assisted with due diligence and business development. It was a joint effort in putting the company together. That's a good example of how we do deals.

Are there any approaches to investing in the wireless space that differ from investing in other industries?

In wireless, in addition to Adimos, we are typically an early stage investor, so we try to understand the dynamics of the market and the existing or emerging technologies. I would say that that is our approach across the broad set of sectors. Communications infrastructure is no different than wireless. Our attitude is that we try to understand the technology trends. We're not necessarily technologists, but we like to have at least a basic understanding of the technology that enables applications.

Which of your portfolio companies are you most bullish on?

In wireless, in addition to Adimos, we have a couple of companies. CellGlide, [a provider of cell-level traffic shaping solutions for mobile data networks, such GPRS, EDGE, and UMTS] and Celltick Software Technologies, [a provider of media streaming and broadcast solutions for mobile networks] are two companies that come to mind.

Do you prefer to lead investments?

We either lead or co-lead in basically all of our deals. We're typically a hands-on, early-stage investor. We always take a board seat. This is just the way we work; we like to work very closely with our entrepreneurs. We are very happy to co-lead because we like to compile strong syndicates with smart and dedicated people to help us build the business on a board level as well as create [a larger] pool of capital to strengthen the company. We bring the Israeli angle and we often invite other firms [to join us].

Is the wireless industry where you thought it would be in 2003?

There are various ways to answer that question. I still don't have a single multi-functional device that's small enough and easy to use such that I can travel with it both in Europe and the U.S., and it has good coverage wherever I go. I don't have that yet, so as a consumer, I'm not completely happy with where we are. However, we see opportunities in terms of investments and technology. There are some interesting things in the market and we're on the right track. I can't say I'm disappointed in that respect.

Do you think a Tablet PC will gain any market traction?

I don't know. The market is going to remain fragmented in many ways, but I don't have the crystal ball. I would prefer to have a light [device]. There's a lot of work to be done with batteries and screens to make the device much lighter and cheaper, but with a big enough screen so that I can do anything with it that I want. There will be a proliferation of different devices and there will be different markets [and target customers] for them based on what their needs and priorities are. [There's a need] to make various devices work with each other. This is a challenge and there are some entrenched players that won't like it, but it will happen over time.

Do you predominately focus on the hardware?

We're a broad-based fund. We focus across the IT infrastructure. Three of our core sectors are enterprise and carrier software, communications and wireless infrastructure and semiconductor and components. We have ongoing initiatives within each of these sectors, as well as across sectors. Digital media is one that spans many different sectors. We'll get involved in anything from hardware to systems to software for the enterprise, carrier and consumer.

Do you think consumers are well-versed in the ongoing technological developments?

They don't care about the technology; they just want a user-friendly device with adequate performance. Consumers also care about aesthetics. For example, when the flat-screen TV market hits the market cross-point [price inflection] of the traditional screen, I can imagine people hanging flat-screen TVs in their houses like art, and wireless video connectivity becoming increasingly important.