Since I’ve started writing about Israeli startups in 2004, there has never been any event like October 7 and the war that followed. Now, 150 days after October 7th, the Israeli startup ecosystem is once again in a tough spot. In February 2024, Israeli startups raised $293 million in 16 deals, a 60% decline from the $731 million raised in the same period a year before. In the last 3 months of 2024, Israel’s GDP shrank by 20% in annualised terms and Israel’s credit rating was downgraded by Moodys. All of this is in addition to the macro challenges that Israeli startups had to deal with in 2023 even before October 7th, including international investor unease due to the proposed judicial reform (that has since been taken off the table), Ukraine war, global venture slowdown (US VC investments were down 60% in 2023), etc.
But here comes the narrative violation: despite the challenges, Israeli tech continues to power on. Creating companies, raising funding, completing multi million M&A deals. Despite the challenges, I’m very bullish on the future of the Israeli tech ecosystem and am honoured to directly invest in Israeli startups with Remagine Ventures.
Sophisticated investors and tech leaders are bullish on Israel
But don’t take it from me. Juan Delgado-Moreira, co-CEO of Hamilton Lane, a $900 billion asset management company, said in an interview last week:
“Now is the best time to invest in Israel. The only real essential market for venture capital, apart from the USA, is in Israel, and those who do not invest in it should be ashamed”
Juan Delgado-Moreira, Hamilton Lane co-CEO
Or the words of Justin Borus, the founder and chief investment officer of Ibex Investors that just raised $106M to invest in early stage Israeli startups
“The U.S. credit rating forecast dropped in November, and since then the S&P 500 index has jumped by 15%. Investors do not give the credit rating the same attention as before. What is important for them now in the context of Israel is a permanent ceasefire. This could accelerate a new rally in the domestic market, so we are also becoming more aggressive here. We recruited two more people to the office in Tel Aviv, and in terms of investments, the current situation in Israel is the best in the 12 years I have been working here. Today it’s hard to see that, and we also felt that way after 9/11, but since then the markets in the U.S. have quadrupled.”
Justin Borus, Ibex Investors
Another company that largely benefited from Israel’s innovation is Nvidia, which became the third largest tech company in market cap:
“Israel is home to world-leading AI researchers and developers creating applications for the next wave of AI. With NVIDIA’s Israel-1 AI supercomputer, a broad range of innovative companies in Israel will create AI that can transform the productivity and business models of enterprises around the world.”
Jensen Huang, the founder and CEO of Nvidia (source)
Michael Eisenberg, co-founder of Aleph, an Israeli venture firm, said in a recent post:
“What is the elevator pitch for investing in Israel for the next decade? Israelis are the most resilient, optimistic, responsible, battle-tested and innovative civilian population in the world. In an era where political leadership is waning, invest where creativity is already tested against the challenges of the future. Invest where multidisciplinary innovation will lead to exponential breakthroughs and profits.”
Michael Eisenberg, Managing Partner, Aleph (source)
Israeli tech by the numbers
According to the 2023 annual report by Startup Nation Central, there are 7272 tech companies in Israel and 353 active investors. 2023 was a tough year for Israeli startups, but despite the challenges the Israeli tech ecosystem remained robust.
In addition, according to the IVC-LeumiTech Israeli Tech Review 2023 showed that while total capital raising declined, the capital raising median has shown stability over the year and is normalising with 2020 levels.
10 Israeli innovation accomplishments in 2023
In the spirit of celebrating the success and potential of Israeli startups, I thought I’d mention 10 achievements of Israeli entrepreneurs in the first two months of 2024 (in no specific order).
1. AI– Israel-1, a super computer developed by Nvidia in Israel, is now available for use by the company’s research and development teams and “selected partners,” and is housed in Nvidia’s Israel data center.
2. FINTECH – 6 Israeli startups included in the Fintech 50 ranking by Forbes – AtBay, FireBlocks, Melio, Navan, Next Insurance and Sunbit
3. CYBER – Israeli startup Wiz reaches $350M in ARR (Annual Recurring Revenue) just four years from inception, making it the fastest growing cybersecurity company in the world. Wiz is valued at over $10 billion.
4. FOODTECH – Israeli startup Imagindairy receives FDA approval for animal-free milk proteins. Imagindairy creates animal-free milk proteins from microorganisms via proprietary precision-fermentation technology. And Israeli food tech startup Remilk, a developer of cultured milk and dairy, was granted regulatory approval for the use of its cow-free milk protein in dairy products in Canada. Israel’s Steakholder Foods created a 3D printed ready to cook fish fillet.
5. HEALTHTECH – Techsomed, a medical imaging startup, allows physicians for the first time to see exactly what’s happening in real time while they destroy (or ablate) a tumor using targeted heat through a needle. The company’s tech breakthrough, Thermal ablation therapy, a minimally invasive procedure for small tumours, has huge benefits over surgery or chemotherapy for the patients.
6. CLIMATE TECH – Seven Israeli climate startups were recently awarded the Climate Solutions Prize (CSP), an initiative that incentivizes innovations that address the climate crisis. Filo Systems, Electriq, TIGI, Nemo Nanomaterials, Envomed, Biotic and BaTTeRi (EV charging as a service).
7. SPORTSTECH – Playermaker, an Israeli sports-tech company that develops small devices that attach to and track soccer players’ performances on the pitch, has been awarded the Electronic Performance and Tracking Systems (EPTS) FIFA Quality Programme certification. It can now be used to track players in official games.
8. GAMING – Israeli game Lost in Play (by Snapbreak games) won the iPad game of the year in 2023 (source). Kooply, a game development engine in stealth, was of the 20 winners of the 2024 Game Changers list by Lightspeed Ventures.
9. AGTECH – Tel Aviv-based Bluewhite has developed autonomous tractors and other farm vehicles that can spray, mow, and disc farm fields while collecting data on crops. Israeli startup Beewise has created a solution in the form of an autonomous beehive that uses AI-powered precision robotics to manage all beekeeping activities. Its automated BeeHomes are solar-powered, climate- and humidity-controlled, allow for automated harvesting, and can even alert apiculturists when their hive is likely preparing to swarm, preventing injuries to both humans and bees.]
10. HARDWARE – Intel announced plans to set up a $25 billion chip plant in Israel. Israeli startup Sightful unveiled Spacetop, the first AR-powered laptop. DustPhotonics created 800G silicon photonics chip, a key enabler for AI. Israeli battery Addionics which develops technology to improve the performance of batteries, announced on Monday a planned $400 million investment into its U.S. manufacturing facilities as part of a multi-year roadmap to support domestic EV battery production.
The list goes on and on.
Israeli startups deliver #NoMatterWhat
I’ve started VC Cafe in December of 2004. It was a tough time for Israeli startups, as the dot com bust wiped out much of the budding venture capital ecosystem, funds were licking their wounds, and the conflict with the Palestinians dominated the news in 2005, so I wanted to share a spotlight on the incredible innovation and entrepreneurship going on in Israel, in English.
Fast forward to mid 2020, at the peak of Covid. Israel was under strict lockdowns, investments plummeted and the future looked bleak. To celebrate the success of the Israeli startup ecosystem, I started “#Firgun“, a weekly newsletter shining a spotlight on the founders and investors who made an impact, including new fundraising rounds, exits, new funds launched and other things. The newsletter has since grown to almost 5,000 subscribers and I invite you to sign up here.
All I can say is that every crisis is an opportunity. What goes down often comes back up, and every dip could be a hidden opportunity in disguise. Rather than adopt a victim mentality, Israeli entrepreneurs do what they do best – build, invent, overcome obstacles and continue to develop a healthy disregard to the impossible. In the words of David Ben Gurion, Israel’s first Prime Minister “In Israel, in order to be a realist, you must believe in miracles.”
I’m a former general partner at google ventures, head of Google for Entrepreneurs in Europe and founding head of Campus London, Google’s first physical hub for startups.
I’m also the founder of Techbikers, a non-profit bringing together the startup ecosystem on cycling challenges in support of Room to Read. Since inception in 2012 we’ve built 11 schools and 50 libraries in the developing world.
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