Why is this Israeli media giant getting into tech?

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Israel’s Keshet Media Group, the Israeli company behind shows like “Homeland” and “Beauty and the Baker,” is deepening its ties with high-tech. It is launching a venture capital fund called Stardom Ventures that has raised $65 million.

The fund will invest in startups in the media sector like ad-tech (online advertising firms), content, video and more. It will invest in very new startups that need seed money or first-round funding of between 1 million shekels ($312,000) to 5 million shekels per company. Keshet is also starting a website dedicated to the high-tech industry that will deal solely with news from the sector.

Stardom Ventures will be headed by Danny Peled, who had previously run Keshet’s KDC investment fund, and Uri Rosen, the CEO of the Mako news and entertainment website, will serve on the investment committee. Peled is a longtime entrepreneur. Among other companies, he founded Vidmind, which developed a cloud platform for uploading and consuming video content from any device; it was acquired by Israeli-Cypriot billionaire Teddy Sagi.

Stardom is an independent fund in which Keshet is an investor. The other partners are Mivtach Shamir, Dick Clark Productions, Rick Rosen, WME, one of the largest acting agencies in the world, and Orly Adelson, the former CEO of Dick Clark, along with institutional investors. The goal is to grow media startups, nurture them and develop cooperative ventures with those that will be relevant to Keshet.

The companies that had invested in KDC are moving to the new fund. “At first it was just Keshet and Dick Clark. The idea was to find Israeli startups and look to the American market, the biggest media market in the world. In the end, that’s where Israeli startups want to go,” says Peled.

“We made nine investments,” he says. “We are investing in seed and pre-seed, as early investors. Something unusual came out of it and three companies were sold in the past year, which was insane because of the coronavirus. There was a huge increase in media consumption and screen time. Adults over the age of 18 were consuming media more than 13 hours a day. We saw there were a lot of opportunities and it was worth expanding the fund and bringing in more investors to Stardom.”

Peled says that they are “investing solely in media startups, and looking to do pilots and joint initiatives in Mako and Keshet. We are involved in startups on the board-of-directors level. We will be their first customer or open doors for them using our connections. We will be a strategic investor who also brings the check with them,” Peled says.

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The plan is to invest in four to five new startups a year and support the existing ones. The fund was closed at the end of the second quarter of 2021 and has already invested in two startups. The fund plans to announce additional investments shortly.

Keshet is making a great effort to develop sources of income other than TV and online advertising. Growth in television advertising is slowing, as more and more digital advertising budgets are shifting to the American internet giants Facebook and Google, which basically dominate Israelis’ screen time. Thus, in the past year, Keshet has started producing high-tech conferences, after Channel 12 broadcast a series of reports on the subject.

In recent months, the company has sought out high-tech companies to advertise during prime-time broadcasts on Channel 12. High-tech companies are becoming more significant to the Israeli economy, and in Israel, most advertising by startups is to recruit workers. Keshet identified the problem and offered the high-tech sector an interesting business plan: prestigious advertising space targeted at their preferred recruitment pool. This is how companies like Papaya Global and Palo Alto Networks get exposure on prime-time shows like “Married at First Sight,” which draws viewers from the age 30 to 45 demographic.

The KDC fund was also started with Dick Clark Productions, and raised $7 million. The fund invested in companies like SYTE, which developed technologies in the fashion field. Another investment was in the company Uponit, which developed a technology that neutralizes online ad blockers – one of the great challenges facing digital advertisers, because it cuts into their revenue. Yet another was in the Israeli startup IMGN Media, which the music giant Warner Music acquired a year ago. It produces, programs and curates social media content aimed at Gen Z audiences.

Keshet is also setting up a website that will deal solely with high-tech and is meant to compete with large economic websites that deal extensively with high-tech. It will be a professional website that isn’t aimed at the company’s usual audience, and has no connection to its other websites, Mako and N12. The target audience is the hundreds of thousands of high-tech workers, entrepreneurs, investors, lawyers and anyone else connected to the high-tech world. Keshet hopes to get the website online in a few months.