Matics: From Optional Upside to a Funding Risk

Where Matics changes the Menara read

The main article argued that Menara's problem is not only how much the portfolio is worth on paper, but how much of that value can actually reach unitholders, and at what cost along the way. Matics is where that question becomes especially sharp. It is no longer just one more optional holding in the portfolio. It is the holding where the valuation test and the funding test collapse into the same story.

The first number that explains why Matics deserves its own follow-up is the revaluation hit. Menara's carrying value in Matics fell to NIS 4.697 million at year-end 2025, down from NIS 8.278 million at year-end 2024, a hit of NIS 3.581 million. Menara's total fair-value decline across the portfolio in 2025 was NIS 3.960 million. In other words, Matics alone explained about 90% of the annual markdown.

The second number is time. Matics reported ARR, annual recurring revenue, of $3.033 million at the end of December 2025, but also negative ARR growth of 12.8% during the year, monthly cash burn of about $160 thousand, and cash of only about $70 thousand at year-end. Even after remembering that these are budget-tracking figures rather than audited numbers, the gap between $70 thousand of cash and a $160 thousand monthly burn rate says something simple: by the end of 2025, Matics did not have a comfortable negotiating runway. It had an immediate funding need.

What is still working matters as well. Matics is not a slide-deck company. According to the company, its platform already serves about 150 factories, monitors thousands of machines, operates mainly in Israel and Europe, has made first sales in North and South America, and has no dependency on a single customer. It also names customers such as SodaStream, Tetro, Tnuva, Tempo and Tirat Zvi. So this is not a case of a company without a product. It is a case of a company with a real product and market footprint, but with a funding structure that no longer allows investors to look only at the operating story.

That chart is the editorial reason to isolate Matics. If you want to understand why Menara in 2025 reads less like a basket of technology options and more like a timing-and-monetization story, Matics is where you start.

What the valuation now says, and what it refuses to assume

The valuation is no longer telling a generous story. Matics' enterprise value was estimated at $8.267 million, equity value at $7.767 million, and Menara's own holding at $1.472 million. The model used an ARR multiple of only 2.73 alongside $500 thousand of financial debt.

That matters because the multiple is no longer the kind of multiple that implies a software company still being paid for acceleration. It is a multiple for a company that first needs to stabilize recurring revenue. Once ARR is down 12.8%, even with a platform already installed at real customers, the valuation stops behaving like an open-ended growth option and starts behaving like a funding question.

There is a subtler point as well, but it matters a lot for Menara's unitholders. The valuation methodology states that close to the valuation date Matics completed an additional financing round that included SAFE instruments and warrants, with an external investor participating. As a result, value allocation among the existing instruments was performed after stripping out the newly issued instruments and the capital injected in that round. The meaning is not just technical. The new money bought Matics time, but it did not flow backward to restore the value of Menara's existing holding.

That is also where dilution risk shows up. By the valuation date, the Matics cap table already included A-4 preferred shares, SAFE conversion shares, other preferred layers, warrants and ESOP, with a total modeled unit count of 34.6 million. As companies like this need more financing layers, more of the future value gets trapped inside liquidation preferences, conversion rights and equity-linked incentives, and less remains as a clean upside surprise for existing holders.

The counter-thesis also needs to be stated clearly. Menara does not sit in common stock. It holds A-4 preferred shares, which have first liquidation preference up to the original investment amount plus 8% annual interest. That is real protection, not a footnote. But that protection is most useful only if the company can reach a liquidity event without accumulating more and more financing layers that push economic weight forward and delay what is left for current holders.

That chart captures the paradox. There is already a real recurring-revenue base, but it still sits against a crowded capital structure, almost no cash, and continued product investment. The discussion therefore shifts from whether there is a product to who will finance the bridge period, and on what terms.

The financing that arrived buys time, not a solution

Matics itself said it would require additional financing during the 12 months following the report date, and that it was working to obtain bank funding. That line matters because it turns the funding issue from analyst inference into the company's own stated need. Combined with only about $70 thousand of cash and roughly $160 thousand of monthly burn, this is a company looking for money not only to accelerate growth, but to get through the next year.

The good news is that bank funding did arrive. In February 2026, Matics signed a credit agreement with Bank Hapoalim for up to NIS 3.8 million. The less comfortable part is what it took to get that line. The bank received a floating charge and a lien over the company's intellectual property, and chairman Eldad Weiss provided a personal guarantee of up to $500 thousand.

This is where the story becomes especially important. The personal guarantee was not free. In return, Matics committed to grant Weiss a right to acquire the most senior class of shares for $400 thousand at the lower of $0.20 per share or the then-current price of the most senior shares, an additional right on similar terms for every 12-month period in which the guarantee remains outstanding, and a right to receive senior shares priced at $0.10 if the bank calls the guarantee and he is required to pay. In addition, the company committed to use its best efforts to remove the personal guarantee only if it completes an equity raise of at least $4 million.

That is the point at which Matics turns from a technology holding into a funding-risk file. The bank line solves the immediate problem, but it also reveals the cost of the immediate problem. Not only security interests, but also equity-linked compensation, and a dependence on another equity raise in order to de-risk the guarantee layer.

And this is not only about the bank line. Earlier, in 2023, Matics' shareholders extended loans totaling $900 thousand to the company, carrying 8% annual interest and maturing on April 1, 2027. At the same time, the equity-investment table shows SAFE rounds of $2.5 million between September 2023 and May 2024 and then $3.2 million between May 2024 and January 2026. In other words, Matics is no longer funded by one clean equity layer. It is funded by a sequence of bridge capital, SAFE, bank debt, guarantees and equity-linked incentives.

Why this is already a Menara risk, not only a Matics risk

In a private technology company, investors can still tell themselves that another funding round is just one more step. At Menara, the reading is different, because Matics sits inside a Run Off partnership that is ultimately supposed to turn portfolio value into proceeds for unitholders. Every additional financing round therefore has to be judged not only by whether Matics survives, but by how much future upside remains for Menara after all the layers that now stand ahead of it.

That is what turns Matics from a possible positive surprise into a funding-risk center. The value has already been marked down hard. ARR has already turned negative. The company itself already says it needs more financing. And the solution that arrived at the start of 2026 already relies on liens, a personal guarantee and equity-linked compensation. So Menara's problem is not that Matics is worth zero. The problem is that a meaningful part of the value that still exists may first be required to stabilize the company and feed the financing layers, and only then, if at all, turn into clean value for Menara's unitholders.

Still, the story is not one-directional. Matics has an active installed base, no single-customer dependence, and the company says that in 2026 it is focusing on expansion within existing customers, more machines and modules inside active plants, and continued cost reduction. That is the real counter-thesis. If the installed base can return ARR to growth and turn 2026 into a stabilization year, the financing that arrived at the start of the year may buy enough time without forcing another major hit to Menara.

But as of year-end 2025, that is not yet the picture. The picture is of a company with a real product, real customers, and a very open question around funding, dilution and the pace at which it can reach a liquidity event. For Menara, that is enough to say clearly: Matics is no longer a quiet upside option. It is the most sensitive funding file in the portfolio.

What has to happen next for the read to improve:

• ARR needs to return to growth, preferably through expansion within existing customers rather than only through commercial promises.
• Cash burn needs to fall materially relative to the revenue base, otherwise every financing round will buy only another bridge period.
• The next financing layer, if one is needed, will have to be simpler and less dilutive than the current mix.
• The Bank Hapoalim facility needs to remain a temporary bridge, not become another proof that the company is still far from a stable capital structure.