Israeli Startups: What's Next After Record Year?

Despite the challenges presented by the pandemic, Israel’s startup landscape experienced unprecedented growth in 2020, securing record levels of funding and achieving 19 initial public offerings. Numerous investors within the country anticipate an even more successful year for technology firms across various sectors.

While established fields such as cybersecurity remain significant, they are reaching a stage of increased maturity. Considerable enthusiasm surrounds developing areas like artificial intelligence, which has long been a priority for Israel’s military and is now fostering a new generation of entrepreneurial teams. Other investors believe that a wider spectrum of industries, including financial technology and biotechnology, will ultimately be the source of the nation’s most prominent companies.

Local investors consistently highlighted Israel’s early emphasis on international markets, consistent backing from the Israeli government, and strong connections with Silicon Valley and other leading global technology hubs as key drivers of its current momentum.

Below are direct insights from the investors themselves, intended for TechCrunch readers interested in recruitment, investment, or launching a business within the country. Additionally, we are pleased to announce the launch of Extra Crunch in Israel. A subscription provides access to our comprehensive investor surveys, detailed company profiles, and exclusive technology coverage for startups globally. Benefit from a 25% discount on a one- or two-year Extra Crunch membership using the code: THANKYOUISRAEL

The investors:

• Boaz Dinte, managing general partner, Qumra Capital
• Rafi Carmeli, partner, Viola Growth
• Yonatan Mandelbaum, principal, TLV Partners
• Natalie Refuah, partner, Viola Growth
• Daniel Cohen, partner, Viola Ventures
• Ben Wiener, partner, Jumpspeed Ventures
• Inbal Perlman, partner, TAU Ventures
• David (Dede) Goldschmidt, partner, Samsung Catalyst Fund
• Dror Nahumi, partner, Norwest Venture Partners
• Sharin Fisher, partner, Fort Ross Ventures
• Adi Levanon Chazan, partner, Flint Capital
• Chaim Meir Tessler, partner, OurCrowd
• Noam Kaiser, partner, Intel Capital
• Tal Slobodkin, partner, StageOne Ventures 
• Ayal Itzkoviz, managing partner, Pitango First
• Ittai Harel, managing partner, Pitango HealthTech

Boaz Dinte, Qumra Capital

What investment trends currently generate the most enthusiasm for you?
Qumra focuses on businesses that fundamentally change established industries while simultaneously contributing positively to society and enhancing people’s lives. Our investment portfolio showcases this, with companies like Fiverr, which has revolutionized the job market by unlocking a worldwide talent network, and Talkspace, which is expanding access to therapeutic services.

What is your firm’s most recent and compelling investment?
Our newest investment is At-bay, an insurance provider designed for the modern digital landscape. At-bay delivers a complete solution, encompassing thorough risk evaluation, a customized cyber insurance plan, and proactive risk-management services.

Conventional insurance companies lack the expertise to accurately and continuously evaluate risk, and they approach digital risk differently than physical assets, relying on statistical models that attempt to forecast the future based on historical data. This represents a prime example of a company that is transforming a traditional sector.

What types of startups are you hoping to encounter in the industry that are currently lacking? What opportunities are currently being underestimated?
As a growth-stage fund, we maintain a broad investment scope and diversify across numerous sectors. We would welcome the opportunity to include proptech and agritech startups within our portfolio.

Which areas are becoming overly competitive, or would present significant challenges for a new startup? What products or services cause you concern or caution?
We avoid investments in unregulated industries and do not participate in companies related to cryptocurrency, gambling, or similar ventures.

To what extent does your investment focus prioritize your local ecosystem versus other startup centers (or a global approach)? Is it more than 50%? Less?
Our investment strategy centers on Israeli companies and those with strong ties to Israel. Growth-stage companies may have established headquarters in locations like New York or California while continuing their research and development operations in Israel.

Which industries in your city and region appear best positioned for long-term success, and which face challenges? What companies, whether within your portfolio or not, and founders do you find particularly promising?
Israel’s strong military background fosters a wealth of talent, leading to innovation in areas like cybersecurity, artificial intelligence, and machine learning. The region also possesses substantial expertise in big data analytics. The adoption of SaaS models and cloud technologies has lowered barriers for Israeli companies, enabling rapid setup and proof-of-concept development.

Notable companies in our portfolio include AppsFlyer, JoyTunes, Riskified, Talkspace, and Guardicore.

AppsFlyer, a data-driven mobile-attribution company led by Oren Kaniel, is experiencing rapid growth, exceeding $200 million in ARR in 2020, while preserving a distinctive company culture. JoyTunes, under the leadership of Yuval Kaminka, has created a music-learning platform that has seen widespread adoption and is positively impacting countless individuals. Guardicore, headed by CEO Pavel Gurevich, is disrupting the traditional firewall market with its fine-grained segmentation for enhanced security and is achieving significant market traction. Riskified streamlines and secures e-commerce, fostering a thriving online marketplace, with founders Eido Gal and Assaf Feldman demonstrating exceptional vision and execution. Talkspace has not only become the leading online therapy provider but is also improving the lives of hundreds of thousands of Americans by providing access to therapy for the first time. Founders Oren and Roni Frank exemplify a powerful partnership, building a successful business with a meaningful impact.

What advice would you offer to investors in other cities regarding the investment landscape and opportunities in your city?
Tech investors should ensure that Israel is included in their investment strategies. Just as venture capital funds are well-versed in Silicon Valley, tech investors cannot overlook this hub of innovation, which has produced globally leading companies and experienced entrepreneurs.

What opportunities can startups capitalize on in the current unprecedented circumstances?
Businesses that rely on on-site visits, integration, lengthy sales cycles, in-person meetings, and extensive customer education are currently facing difficulties. Conversely, companies that can develop remote and simplified solutions stand to benefit. Augury, a portfolio company, exemplifies this by providing manufacturers with early, actionable, and comprehensive insights into machine health and performance, proving invaluable to the supply chain during the pandemic.

How has the COVID-19 pandemic influenced your investment approach?
We recently closed our third fund, Qumra III, with $260 million in commitments. This was accomplished quickly despite travel restrictions and the inability to conduct face-to-face meetings. The fund attracted increased investments from existing limited partners (LPs) and welcomed new LPs from various geographies, demonstrating confidence in the Israeli growth market and in Qumra’s capabilities. This achievement provides a significant source of optimism for the future.

Rafi Carmeli, Viola Growth

Generally speaking, what investment trends currently capture your attention?
We are particularly interested in platforms that are fundamentally changing the ways individuals and organizations function, conduct business, or maximize the value of their assets, through the implementation of exceptional products, insightful data analysis, and artificial intelligence.

What is your most recent and compelling investment?
Our latest exciting investment is in Zoomin Software.

Are there any types of startups you’d like to see emerge within the industry that are currently lacking? What currently undervalued opportunities exist?
We believe there is significant potential for innovation in the transformation of financial management and treasury toolsets.

What key characteristics do you seek in potential investments?
We prioritize an exceptional team, a demonstrably superior product with evidence of market acceptance and business progress, and a substantial addressable market.

Which sectors appear overly crowded or present significant competitive challenges for new startups? What kinds of products or services cause you concern?

Any field requiring competition with established industry leaders, as well as already successful, disruptive “new age” companies that have taken initial steps toward meaningful change, presents a challenge.

To what extent do you focus your investments on your local ecosystem versus other startup centers (or a broader geographic scope)? Is it more or less than 50%?
We dedicate more than 50% of our investment activity to our local ecosystem.

Which industries in your city and region appear poised for long-term success, or conversely, struggle? Which companies, whether within your portfolio or not, and founders do you find particularly promising?

There are numerous interesting opportunities available, though competition for top-tier ventures is, as in many locations, quite intense.

Do you anticipate a rise in founders originating from areas outside of traditional major cities in the coming years, potentially driven by pandemic-related shifts and the increasing appeal of remote work?
We certainly foresee an evolution in the development of young startups as a result of the behavioral changes brought about by COVID-19.

Which of your investment areas appear most vulnerable or susceptible to changes in consumer and business behavior due to COVID-19? What opportunities might startups capitalize on during this unprecedented period?
Sectors heavily reliant on in-person interaction – including portions of the travel, food, and sports industries – face considerable risk. Conversely, remote engagement and productivity solutions have the potential to disrupt a wider range of industries, such as the corporate and virtual events space.

How has COVID-19 altered your investment approach? What are the primary concerns expressed by the founders in your portfolio? What guidance are you currently offering to those startups?
Founders have generally demonstrated resilience. They should assess their company’s position in a post-COVID landscape – whether they are poised to succeed or are at risk – and, based on that assessment and their available capital, determine an appropriate level of caution or aggressiveness.

Are you observing positive indicators – such as revenue growth, customer retention, or other positive momentum – within your portfolio as companies adapt to the pandemic?
Yes, we are seeing encouraging signs in many areas. Software, in general, has proven to be a strong performer, and the SaaS business model, in particular, has demonstrated its durability.

Can you share a recent experience that has inspired optimism, whether professionally, personally, or a combination of both?
The remarkable speed and decisiveness with which the global community responded to the effects of the pandemic, and importantly, proactively worked to resolve both the health and economic crises – exemplified by the rapid development of vaccines – has been truly inspiring.

Do you have any final thoughts to share with readers of TechCrunch?
If an issue is unlikely to be relevant in five years, it’s best not to spend more than five minutes worrying about it today – though that is often easier said than done!

Yonatan Mandelbaum, TLV Partners

What investment trends currently generate the most excitement for you?
We are particularly interested in Fintech, especially embedded finance solutions and financial Software-as-a-Service (SaaS), as well as synthetic biology. We also continue to focus on our established areas of interest, including cloud infrastructure, machine learning infrastructure, and cybersecurity.

What is your firm’s most recent and compelling investment?
Our recent investments include Unit.co and meshpayments.com.

What types of startups are you hoping to see emerge in the industry, and what opportunities are currently being underestimated?
Innovation within the Israeli Fintech sector isn’t keeping pace with its potential. Israel has successfully launched several leading insurtech companies – Next, Lemonade, and Hippo – and boasts a strong track record in Fintech with companies like Payoneer, Forter, and Riskified, alongside promising early-stage ventures such as Unit and Melio. However, Fintech companies represent only around 10% of our overall deal flow. We believe areas like vertical banking, embedded finance, compliance-as-a-service, and consumer finance are consistently overlooked by Israeli entrepreneurs.

What key characteristics do you seek in your next investment?
As is typical for venture capital firms, we prioritize a capable and dedicated team and a substantial market opportunity. These factors remain consistently important.

Which sectors are becoming overly competitive, or would present significant challenges for a new startup? What types of products or services cause you concern?
(1) Cybersecurity – although Israel will likely remain a leader in cyber innovation, creating ongoing opportunities. However, the market is currently saturated, with numerous technically proficient founders developing yet another SaaS security product. (2) Remote work collaboration – while a necessary area for improvement, we’ve observed a large number of companies entering this space. The companies poised to succeed in this market have largely already established themselves (Zoom, Slack, Miro, etc.).

What proportion of your investments are focused on your local ecosystem versus other startup hubs? Is it more or less than 50%?
More than 50% of our investments are made within our local ecosystem.

Which industries in your city and region appear best positioned for long-term success, and which are less promising? What companies and founders are you particularly enthusiastic about, whether within your portfolio or not?
Fintech and biotechnology are exceptionally well-positioned for growth in Israel. Within the next decade, Israel could become more recognized for its strengths in these two sectors than for its cybersecurity capabilities. Companies to watch include Next Insurance, Unit, Mesh Payments, Aidoc, Deepcure, and Immunai.

What advice would you give to investors considering the investment climate and opportunities in your city?
Israel is rightfully known as the “startup nation,” characterized by a vibrant and thriving entrepreneurial culture that consistently produces innovative companies. Interestingly, valuation trends in Israel typically lag behind those in the U.S. by approximately 12 to 18 months. This presents a potential opportunity for later-stage VCs globally to secure deals of comparable quality at a more favorable price point.

Do you anticipate a significant increase in founders originating from areas outside major cities in the coming years, driven by the pandemic, remote work trends, and concerns about urban centers?
Not particularly. Given Israel’s small size, even if there is a shift in residential patterns away from Tel Aviv, we don’t expect to see a corresponding relocation of commercial activity.

Which of your investment areas appear most vulnerable to shifts in consumer and business behavior resulting from COVID-19? What opportunities might startups be able to capitalize on during these challenging times?
The travel and property technology (proptech) sectors are more susceptible to the impacts of COVID-19.

How has COVID-19 influenced your investment approach? What are the primary concerns expressed by the founders in your portfolio? What guidance are you currently providing to startups in your portfolio?
COVID-19 has had a limited impact on our investment strategy. We continue to actively seek out promising early-stage software opportunities and maintain our commitment to substantial investments, even at the seed stage. The main concern voiced by our portfolio founders is the lengthening of enterprise sales cycles due to remote work and reduced budgets among potential customers. Initially, we advised founders to secure at least 18 months of runway to navigate the uncertainty. However, given the current favorable fundraising environment, we now encourage them to accelerate their progress, achieve key milestones, and raise additional capital.

Are you observing any positive indicators – such as revenue growth, customer retention, or other positive momentum – within your portfolio companies as they adapt to the pandemic?
It’s still too early to draw definitive conclusions. However, the initial enthusiasm surrounding remote work has diminished, and the majority of our portfolio companies are eager to return to in-office work.

Can you share a recent experience that has inspired optimism? This could be professional, personal, or a combination of both.
The recent passing of my grandparents due to COVID-19 was a deeply tragic experience for my family. However, a moment during this time provided me with hope. While visiting my grandmother in the hospital’s COVID ward (while wearing full protective gear), I encountered four other individuals who were visiting their own sick family members. I was struck by the diversity of the group – Jewish, Muslim, religious, and secular, young and old. We offered each other support and well wishes, and it instilled in me a belief that we can move towards becoming a more unified nation. The next phase of growth in the Israeli ecosystem will be driven by increased participation from minority groups (Arabs, ultra-Orthodox).

Natalie Refuah, Viola Growth

Regarding general investment interests, what current trends particularly capture your attention?
I am keenly interested in DevOps, marketing technology, and the digital health sector.

Could you describe your most recent and compelling investment?
Our latest exciting investment is in RapidAPI.

What key characteristics define the types of investments you are currently seeking?
We prioritize investments in companies with a dynamic team, experiencing rapid expansion, and demonstrating disruptive potential.

Are there any sectors that appear overly crowded or present significant competitive challenges for new ventures? Are there specific product or service categories that cause you concern?
We are cautious regarding opportunities in cybersecurity and the automotive industry.

To what extent does your investment focus center on your local ecosystem compared to other startup locations? Is it more or less than 50%?
Our investment focus is almost entirely—nearly 100%—on our local ecosystem.

Within your city and region, which industries appear best positioned for long-term success, and which may face difficulties? Are there any specific companies or founders that you find particularly promising, regardless of portfolio affiliation?
DevOps, cybersecurity, and enterprise software are industries that appear well-positioned for growth in our region.

What perspective should investors in other cities have regarding the investment environment and opportunities available in your city?
The overall investment climate in our city is exceptionally favorable.

Do you anticipate an increase in founders originating from areas outside of traditional major cities in the coming years, potentially driven by the pandemic, remote work trends, and shifts in population?
We expect to see some degree of change in the geographic distribution of founders.

Within the industry segments you invest in, which appear most vulnerable or susceptible to changes in consumer and business behavior as a result of COVID-19?

Companies focused on e-commerce technology are expected to perform well.

How has the COVID-19 pandemic influenced your investment approach? What are the primary concerns expressed by the founders within your portfolio companies? What guidance are you currently offering to those startups?
We have adjusted our investment amounts, reducing the average check size per company. My advice is to aggressively pursue opportunities if your business benefits from the current environment, and to prioritize cash preservation if it does not.

Can you share a recent experience or event that has inspired optimism, either professionally or personally?
I’ve appreciated having more time with my children. However, I do miss the ability to freely hug people upon meeting them, and I generally prefer in-person interactions.

Is there anything else you would like to share with the readers of TechCrunch?
I encourage widespread vaccine adoption!

Daniel Cohen, Viola Ventures

What general investment trends currently generate the most enthusiasm for you?
We are particularly interested in opportunities within the gaming sector, specialized or “vertical” artificial intelligence applications, and businesses focused on AI-driven services.

What is your most recent and compelling investment?
We recently invested in Hyperguest, a company building a direct connection system between hotels and Online Travel Agencies (OTAs). This represents a crucial, modern infrastructure solution for the travel industry as it recovers from the pandemic.

What types of startups are you hoping to encounter, and what currently undervalued opportunities exist?
We anticipate that the evolving work landscape following the COVID-19 pandemic will be a dominant trend. We are eager to see more startups developing corporate solutions designed for the future of work, whether that work takes place in a traditional office or remotely.

What key characteristics define your ideal investment prospect?
We prioritize startups with distinctive and inventive approaches to reaching the market. We look for the effective use of technology to connect with consumers in novel ways – essentially, innovation in growth strategies, extending beyond simply having a superior product.

Which areas appear overly crowded, or present significant competitive challenges for new entrants? What products or services cause you concern?
The cybersecurity space, while undeniably important, is becoming saturated with startups offering narrowly focused solutions.

To what extent does your investment focus center on your local ecosystem versus broader startup communities? Is it more or less than 50%?
More than 50% of our investments are focused within our local ecosystem.

Which industries in your city and region appear poised for long-term success, or conversely, face challenges? Which companies and founders are you particularly impressed by, regardless of portfolio affiliation?
Locally, we are most excited about advancements in artificial intelligence, particularly applications geared towards business-to-business (B2B) markets. This enthusiasm extends to digital health and consumer health applications as well.

How should investors in other locations perceive the investment environment and potential opportunities in your city?
Israel currently leads the world in the creation of unicorn companies and is arguably the most active startup hub globally.

Do you foresee an increase in founders originating from areas outside of major cities in the coming years, potentially as established hubs experience shifts due to the pandemic and the rise of remote work?
No, we do not anticipate this trend.

Within the industries you invest in, which segments appear most vulnerable to changes in consumer and business behavior resulting from COVID-19? What opportunities might startups capitalize on during this period?

The most significant impact has been on maintaining strong company culture in a distributed, work-from-home setting. Businesses must be resourceful and imaginative in preserving or building culture, a task that was considerably simpler before the pandemic.

Are you observing positive indicators – such as revenue growth, customer retention, or other momentum – within your portfolio companies as they adapt to the pandemic? Can you share a recent experience that has inspired optimism?

The announcements regarding the development and distribution of vaccines clearly signal that the pandemic is nearing its conclusion. We believe 2021 will be a very positive year.

Ben Wiener, Jumpspeed Ventures

Regarding general investment trends, what currently excites you?
Jumpspeed concentrates its investments solely on startups in the pre-seed and seed stages, specifically those originating from the Jerusalem startup community.

What is your most recent and promising investment?
Our latest investment is in MDGo.

Are there any types of startups you’d like to see emerge that are currently missing from the industry? What opportunities are currently being underestimated?
We don’t actively seek specific sectors; our investment approach is based on evaluating opportunities from the ground up rather than adhering to a predetermined thesis.

What qualities define your ideal investment prospect?
We look for solutions that are ten times better than existing options, representing a fundamental shift in how a significant, immediate, and pressing business challenge is addressed. These solutions should be developed and spearheaded by a well-rounded founding team—one that combines technical expertise, business acumen, and design sensibility.

Which sectors are becoming overly crowded, or are proving too competitive for new entrants? What kinds of products or services give you pause?
We are currently cautious regarding investments in cybersecurity, cryptocurrency, and telehealth.

To what extent do you prioritize investing within your local ecosystem compared to other startup hubs, or a broader geographic scope? Is it more than 50%? Less?
We invest EXCLUSIVELY within our local ecosystem, as previously mentioned.

Which industries in your city and region appear best positioned for long-term success, and which face challenges? Are there any companies, within or outside your portfolio, and founders that you find particularly inspiring?
Jerusalem demonstrates strength in areas like computer vision, broad-based enterprise SaaS, artificial intelligence/machine learning, and health technology.

What advice would you give to investors in other cities who are considering the investment landscape and opportunities in your city?
The startup ecosystem in our city remains largely untapped, offering a select number of exceptional, lesser-known opportunities each year.

Do you anticipate a growing number of founders emerging from areas outside of traditional major cities in the coming years, potentially driven by the pandemic, remote work trends, and concerns about established hubs?
Yes, we do.

How has the COVID-19 pandemic influenced your investment strategy? What are the primary concerns expressed by the founders in your portfolio? What guidance are you currently providing to those startups?
The pandemic has had minimal direct impact on our strategy, as we focus on investments that are expected to mature over several years.

The biggest concerns voiced by founders center around the well-being of their employees, followed by maintaining access to international customers and markets.

Our advice to founders is to remain composed and prioritize their health, adopt a long-term perspective, and focus on self-care, family, and employee support—avoiding hasty reactions or staff reductions.

Are you observing positive indicators—such as revenue growth, customer retention, or other positive momentum—within your portfolio companies as they navigate the pandemic?
Yes, we are seeing encouraging signs, although it’s difficult to directly attribute them to the pandemic itself.

Can you share a recent experience or observation that has instilled optimism in you? This could be professional, personal, or a combination of both.
There hasn’t been a single defining moment, but we are consistently impressed by the resilience and adaptability demonstrated by the founders within our portfolio as they respond to these rapidly evolving circumstances.

Do you have any final thoughts you’d like to share with readers of TechCrunch?
As W. Brian Arthur stated in “The Nature of Technology,” “Entrepreneurship in advanced technology, is not merely a matter of decision-making; it is a matter of imposing cognitive order on situations that are repeatedly ill-defined.”

We haven’t seen a situation this ambiguous in over a century. Remain calm and persevere :-)

Inbal Perlman, TAU Ventures

What trends are you most excited about investing in, generally?
At TAU, our investment approach involves careful consideration of various sectors, with each potential opportunity assessed on its individual merits. Regarding broader trends, we approach them with a degree of caution, recognizing their potential for both rapid emergence and decline. Our focus is on determining whether a trend addresses a genuine underlying need and looking beyond any initial enthusiasm. We prioritize startups that are effectively solving real-world problems within the market. We particularly favor technologies that can be brought to market relatively quickly and without excessive capital expenditure.

What’s your latest, most exciting investment?
We recently invested in Xtend, a company pioneering human-machine telepresence. Their technology allows operators to remotely inhabit and control machines across the globe, effectively transcending the limitations of physical presence. Specifically, Xtend develops solutions for interacting with drones and other unmanned systems. The company’s innovation empowers individuals to extend their capabilities by virtually operating within a drone for diverse operational tasks. The versatility of Xtend’s technology is particularly compelling, with potential applications spanning defense, homeland security, and innovative areas like entertainment, gaming, and filmmaking.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
We are keen to identify startups that are fundamentally reshaping established industries by addressing core challenges and needs through inventive solutions. Certain sectors have remained largely unchanged for extended periods. A technology that can be seamlessly integrated into existing markets has the potential to achieve substantial adoption and drive significant industry transformation. Therefore, we are eager to see more startups focusing on foundational improvements, questioning common pain points, and developing innovative solutions to alleviate them.

What are you looking for in your next investment, in general?
We seek entrepreneurs who demonstrate professionalism, a readiness for the challenges of building a company, the appropriate mindset and skillset, and a determined ambition to succeed. Recognizing that early-stage startups often undergo product or service evolution, we place significant emphasis on the qualities of the founding team as a key indicator of future success.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Technology areas subject to fleeting trends can quickly become overcrowded with startups. The drone industry, for example, experienced a period of intense hype, but ultimately only the most robust companies have endured. Currently, many startups are responding to needs amplified by the COVID-19 pandemic, such as remote education and remote work solutions. It’s crucial to assess whether these solutions represent lasting changes or are merely temporary responses.

We exercise greater caution with certain industries. In the edtech space, successful exits have generally been at relatively modest valuations ($200 million-$300 million). We are targeting larger potential returns. Blockchain technology presents challenges due to the lack of a well-defined regulatory framework, which introduces considerable uncertainty. Similarly, the cannabis industry is hampered by inconsistent regulations across different countries, where even minor regulatory changes can significantly impact a company’s prospects. These are areas where we proceed with increased diligence.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
We exclusively invest in startups based in Israel, but with a focus on companies targeting the global market. TAU Ventures maintains a 1,000 square meter coworking space that serves as a central hub for the majority of our portfolio companies and accelerator program participants. We actively engage with these startups on a daily basis through informal interactions and spontaneous conversations, fostering a collaborative environment and directly supporting our local ecosystem.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Israel boasts a strong pool of entrepreneurial talent, particularly in areas like cyber security and artificial intelligence, often stemming from technical training received during military service. This expertise is readily transferable to commercial applications, resulting in a high concentration of successful startups in these fields. For instance, the founders of our portfolio company, SWIMM, all completed elite tech training programs within the Israeli military (Aram, Talpiot) and previously established ITC (Israel Tech Challenge), a non-profit organization providing in-demand tech training.

Furthermore, Tel Aviv University (TAU), our affiliated institution, is a leading research university and academic center in AI, engineering, and related sciences, consistently producing highly skilled entrepreneurs. Approximately 50% of Israeli entrepreneurs are alumni of TAU. Notably, TAU was ranked eighth globally as a top university for producing venture capital-backed entrepreneurs, and is the highest-ranked university outside of the United States. We greatly value our close affiliation with the university and the exceptional talent it cultivates.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Israel’s compact size is a significant advantage. The limited domestic market compels startups to adopt a global mindset from the outset in their marketing and growth strategies. To fully appreciate Israel and its entrepreneurs, it’s important to understand the influence of military service and the realities of operating in a complex political environment in the Middle East. Mandatory military service shapes the socialization, education, skill development, and social networks of Israelis. Many professional connections originate from shared military experiences. As Israelis, we are accustomed to a culture of constant innovation and proactive problem-solving, which is deeply ingrained in our national character.

Israel also possesses world-class academic institutions across a wide range of disciplines. Multinational corporations maintain research and development centers or innovation hubs in Israel to access the local talent pool, creating valuable exposure for both startups and established companies.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
At TAU Ventures, the majority of our portfolio and accelerator companies are located alongside us in our 1,000 square meter coworking space. We prioritize regular in-person interaction with our founders and their teams, which has been instrumental in fostering a strong sense of community within our venture capital firm. Even throughout the COVID-19 pandemic, companies continued to utilize the office space, reinforcing our belief that face-to-face engagement is irreplaceable. As early-stage investors, we recognize that the strength of a startup lies in its people, and the experience of sharing a conversation or a handshake cannot be replicated remotely.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19?
The impact of COVID-19 varied across different companies. While some experienced increased business, others were compelled to reassess their strategies. Companies serving the travel industry or airports were particularly affected. In response, these companies re-evaluated their technology and identified new applications in sectors like logistics and supply chain management. COVID-19 is creating opportunities for companies to re-examine their target markets and discover novel uses for their technology.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
COVID-19 has highlighted the fact that processes such as fundraising and achieving milestones are taking longer than anticipated. We are committed to being patient and understanding with our startups.

The primary concern for our startups is their ability to secure sufficient funding before reaching their next milestone, and the potential need to close operations if they cannot demonstrate progress in a timely manner. Consequently, our startups are actively raising larger funding rounds to extend their runway. They are also acutely aware of the need to adapt to changing circumstances and are prepared to pivot if necessary, adjusting budgets, evaluating customer relevance, and anticipating long-term trends.

We are advising our portfolio companies to raise additional funds in subsequent rounds to ensure a runway of at least 1.5 years and to embrace bold changes, including pivots and budget adjustments. As a fund, we assure our entrepreneurs that adapting their strategies is acceptable. Our coworking space facilitates close interaction with our founders, enabling us to stay informed, foster a strong internal ecosystem, and provide ongoing psychological support, which is particularly valuable during these unprecedented times.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Two of our portfolio companies have demonstrated impressive growth and are thriving in 2020.

1. Gaviti, a SaaS company specializing in receivable collections acceleration, helps clients optimize their collection processes and improve cash flow. The economic challenges created by COVID-19 drove increased demand for Gaviti’s solution, resulting in rapid client growth and success in 2020.

2. Medorion leverages AI and behavioral science to encourage proactive health management by enhancing engagement and communication between insurance companies and patients. During the COVID-19 pandemic, they applied their technology to create personalized engagement plans for individuals at high risk of contracting the virus.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
Recently, it has been inspiring to witness the resilience of our entrepreneurs as they navigate the uncertain economic and global landscape. Many of our companies are continuing to recruit and hire, demonstrating their commitment to growth. Our founders are resourceful and are finding innovative ways to succeed. The presence of our founders and their teams in our large coworking space, working alongside each other on a daily basis, is a constant source of encouragement.

Any other thoughts you want to share with TechCrunch readers?
TAU Ventures is a venture capital fund affiliated with Tel Aviv University, dedicated to investing in early-stage, cutting-edge technologies based in Israel. We are the first and only university-affiliated VC in Israel.

Our fund operates on a unique triangular model, fostering connections between industry, academia, and entrepreneurs. We leverage resources from Tel Aviv University, cultivate strong partnerships within the high-tech industry, and support entrepreneurs through our coworking space located on the university campus.

TAU Ventures also runs incubation programs in various tech fields and offers a vibrant hub for entrepreneurs with opportunities for design partnerships with leading international companies: AlphaC program (in partnership with NEC, Checkpoint, Innogy, Team8 and Cybereason) and The Xcelerator (an acceleration program with the Israeli Security Agency). In 2018, IVC recognized TAU Ventures as one of the most active VCs in Israel, and in 2019, Geektime ranked us among the top five best VCs in Israel.

David (Dede) Goldschmidt, Samsung Catalyst Fund

What general investment trends currently generate the most enthusiasm for you?
The areas of digital transformation and artificial intelligence are particularly compelling.

What is your most recent and exciting investment?
We recently invested in Solarisbank, a company based in Germany.

Are there any sectors that appear overly crowded, or where new startups would face significant competitive challenges? Are there specific product or service categories that cause you concern?
The field of AI-acceleration technologies currently appears to be quite saturated with competitors.

To what extent do you prioritize investments within your local ecosystem compared to other startup centers, or a broader global scope? Is it more or less than 50%?
Less than 50% of our investments are focused on our local ecosystem.

Which industries in your city and region appear best positioned for long-term success, and which may struggle? Are there any specific companies, within or outside your portfolio, or founders that you find particularly promising?
We see strong potential in the areas of artificial intelligence and cybersecurity. We are particularly impressed with Innoviz, a LiDAR company within our portfolio. Additionally, we admire Avigdor Willenz, a serial entrepreneur, and are pleased to have invested in Habana Labs, which was acquired for $2 billion.

How should investors in other locations view the investment environment and opportunities present in your city?
The environment here is highly dynamic and competitive, characterized by entrepreneurs with a global outlook and a proactive, risk-taking mindset.

Do you anticipate a rise in founders originating from areas outside of traditional major cities in the coming years, potentially driven by the pandemic, remote work trends, and shifts in startup hub dynamics?
I do not foresee this occurring, as the development of a robust ecosystem encompassing entrepreneurs, investors, and service providers requires substantial time and effort.

Which of the industry segments you invest in appear most vulnerable or susceptible to changes in consumer and business behavior as a result of COVID-19?
Businesses that primarily serve traditional brick-and-mortar retail are likely to be negatively impacted by the accelerating shift towards online commerce.

How has COVID-19 influenced your investment approach? What are the primary concerns expressed by the founders in your portfolio? What guidance are you currently offering to startups in your portfolio?
Our primary advice is to exercise caution with cash flow. There is a noticeable discrepancy between the robust activity in tech financing and the broader economic challenges, such as unemployment and government deficits. We have yet to fully understand the long-term effects of COVID-19 on tech startups and recommend preparing for potential difficulties.

Are you observing any positive indicators, such as revenue growth, customer retention, or other positive momentum, within your portfolio companies as they adapt to the pandemic?
Yes, we are seeing encouraging signs from companies that operate exclusively in the digital space.

Can you share a recent experience or observation that has instilled a sense of optimism? This could be related to your professional life, personal experiences, or a combination of both.
I remain cautious due to the disconnect previously mentioned. While vaccine development offers some hope, it is still too early to assess its full impact.

Do you have any additional insights you would like to share with readers of TechCrunch?
I am concerned about a potential funding shortage for early-stage companies. While overall financing figures are increasing across many regions, investments are heavily concentrated in later-stage companies and unicorns, with fewer new companies being funded. If this trend does not reverse in 2021, it could have significant consequences for the tech ecosystem in the years ahead.

Dror Nahumi, Norwest Venture Partners

What investment trends currently generate the most enthusiasm for you?
As a substantial fund, we allocate capital to companies at various stages, from early-stage to late-stage, across diverse sectors, with a particular emphasis on consumer-facing businesses, enterprise solutions, and healthcare. My personal focus centers on Israeli companies, and I’m observing a wealth of promising startups in areas like cybersecurity, Software-as-a-Service (SaaS), enterprise technology, cloud infrastructure, robotics, and the semiconductor industry.

Could you share details about your most recent and compelling investment?
We are consistently enthusiastic about all of our recent investments. I’ve recently participated in seed funding rounds for three companies currently operating in stealth mode: a provider of open-source cloud infrastructure, a SaaS platform focused on people analytics for Human Resources, and a next-generation business intelligence solution.

What types of startups are you hoping to see emerge in the industry, and what opportunities are currently being overlooked?
I believe a significant opportunity exists for startups to create innovative solutions that support the digital transformation of next-generation businesses. We are witnessing innovation and activity in this area, but there is considerable room for further development, particularly considering the challenges and vulnerabilities highlighted by the COVID-19 pandemic. The most promising areas for growth will be within human resources, manufacturing, security, infrastructure, sales, and remote work solutions.

What key attributes do you seek in potential investments?
We prioritize exceptional teams, robust intellectual property, and a demonstrated ability to execute effectively. The proposed product can either serve as a replacement for existing, outdated, or underperforming solutions, or it can establish a completely new market category. Gong.io serves as a prime example of the latter, as we invested early in the creation of the “revenue intelligence” category, offering businesses automated, real-time insights into customer interactions and sales deals. This empowers businesses to refine their go-to-market strategies.

Are there any areas that appear oversaturated, or where competition would be excessively challenging for a new startup? What types of products or services cause you concern?
The cybersecurity sector is currently quite crowded. The sheer number of companies offering similar solutions can make it difficult for new entrants to gain traction. Furthermore, many emerging security startups are emphasizing the use of machine learning and artificial intelligence to address evolving threats. While these are important areas of focus, it’s becoming increasingly difficult for companies to differentiate themselves. Despite this, we have made numerous successful investments in security over the years and will continue to consider strong teams.

To what extent do you concentrate your investments within your local ecosystem versus exploring opportunities in other startup hubs? Is it more than 50%? Less?
Our team based in Israel is entirely dedicated to identifying and investing in opportunities within our local market.

Which industries in your city and region appear best positioned for long-term success, and which may face challenges? Can you highlight any companies, within or outside your portfolio, and founders that you find particularly exciting?
A number of industries within the Israeli market are well-positioned for continued growth and are currently thriving. This includes startups specializing in cybersecurity, SaaS, enterprise technology, cloud infrastructure, and even consumer services. We are particularly encouraged by the continued growth and success of Gong, VAST Data, WekaIO, Cynet, Wiliot, ActiveFence, Ermetic, and SundaySky, as well as the progress of new companies still operating in stealth mode.

What advice would you offer to investors in other cities regarding the investment climate and opportunities in your city?
At Norwest, and particularly within our Israel-based portfolio companies, we have allowed our companies the necessary time and support to mature fully. This represents a different approach compared to what is observed in other investment environments.

Currently, rapid growth often precedes mergers and acquisitions, and companies are achieving valuations more quickly. Raising capital, which was once challenging, is now more accessible. In Israel, advancements in sales and marketing analytics are enabling companies to sell more effectively than in the past decade. This provides entrepreneurs with greater flexibility, the ability to expand into new markets, and access to a global talent pool.

Do you anticipate an increase in founders originating from areas outside major cities in the coming years, potentially driven by the pandemic, remote work trends, and the challenges faced by traditional startup hubs?
Given Israel’s small geographic size, individuals are rarely located very far from a major city. We anticipate that our startup hub will remain intact, even if some individuals and businesses choose to relocate slightly outside of the central business district.

Which industry segments in which you invest appear weaker or more vulnerable to shifts in consumer and business behavior as a result of COVID-19? What opportunities might startups be able to capitalize on during these unprecedented times?
The travel industry has experienced a significant global impact due to the COVID-19 pandemic. However, this creates a substantial opportunity to address emerging needs in both the business and consumer sectors as we transition towards a post-pandemic environment.

Solutions focused on hybrid workforces, as businesses reassess the future of work, hold particularly strong potential and are likely to benefit significantly in both the short and long term.

How has COVID-19 influenced your investment strategy? What are the primary concerns expressed by the founders in your portfolio? What guidance are you currently providing to startups in your portfolio?
COVID-19 has not altered our fundamental investment strategy. However, our recent discussions with portfolio companies indicate that brands can emerge stronger than ever by adopting an adaptable strategy, adjusting expectations, prioritizing strong marketing and direct-to-consumer communications, and demonstrating compassionate leadership.

We have advised companies in our portfolio to prioritize building their businesses while ensuring the safety of their workforce, which may involve extending work-from-home policies or making remote work a permanent option for new hires. Companies that can innovate and adapt to the new normal will be best positioned for success in a post-COVID landscape.

Are you observing positive indicators, such as revenue growth, customer retention, or other momentum, within your portfolio as companies adapt to the pandemic?
While there hasn’t been a single defining moment, our portfolio companies have consistently demonstrated resilience throughout the past year, successfully navigating challenges posed by the pandemic while continuing to expand their businesses. Each successful sales quarter provides encouragement.

Sharin Fisher, Fort Ross Ventures

What investment trends currently generate the most enthusiasm for you?
I am particularly excited by opportunities in artificial intelligence and machine learning technologies, as well as companies focused on cybersecurity. Furthermore, I see significant global potential in B2B SaaS businesses – those that streamline operations and enhance productivity. For example, Kryon, a company within our investment portfolio, specializes in robotic process automation, analyzing workflows and identifying areas suitable for automation to optimize the use of human resources.

What is your most recent and compelling investment?
My latest investment centers on a B2B SaaS company poised to revolutionize a substantial market. I am especially impressed with the leadership team, comprised of experienced executives and repeat entrepreneurs possessing deep industry knowledge.

What types of startups are you hoping to encounter, and what opportunities are currently being underestimated?

We seek companies targeting large markets, presenting a persuasive narrative, and demonstrating a clear strategy for substantial growth. When considering an investment, we look for companies that have already achieved demonstrable traction, cultivated a diverse customer base, and established a reliable and repeatable sales process with measurable results. A thorough analysis of a company’s metrics is crucial to confirm its underlying assumptions and potential for successful scaling.

Which sectors are becoming overly competitive, or would present significant challenges for a new startup? What products or services cause you concern?
We observe saturation in the market for work-from-home enablement solutions, encompassing both security and communication tools.

To what extent does your investment focus lie within your local ecosystem versus broader startup hubs? Is it more than 50%? Less?
We operate as a global venture capital firm with a geographically dispersed team. Our primary focus is on investing in mid-stage companies located in the U.S. and Israel, with the potential to become global leaders. I specifically oversee our investments in Israeli companies on a global scale.

Which industries in your city and region appear best positioned for long-term success, and which may struggle? What companies or founders are you particularly impressed by, regardless of whether they are in your portfolio?
Israel is exceptionally well-suited to foster and expand large companies capable of achieving market leadership. We are witnessing numerous prominent companies emerge across various sectors, including mobility (Moovit, Mobileye), cybersecurity (Armis, Cybereason, SentinelOne), fintech (Lemonade, Payoneer, eToro), and information technology (Jfrog, Snyk).

How should investors in other locations assess the investment landscape and opportunities within your city?
The Israeli ecosystem has experienced considerable maturation over the past decade, largely due to the presence of experienced entrepreneurs who bring valuable knowledge and expertise. These individuals are driven to build impactful companies. Furthermore, increased availability of late-stage capital allows companies to remain private for longer periods, facilitating larger acquisitions or initial public offerings.

Do you anticipate a growing number of founders originating from areas outside major cities in the coming years, potentially driven by the pandemic, remote work trends, and the decline of traditional startup hubs?
The COVID-19 pandemic has altered the working patterns of Israeli founders and their geographic locations. Given that many Israeli startups target the U.S. market, they often establish a presence there early on, primarily to cultivate relationships with prospective clients. The shift to remote sales necessitated by the pandemic has diminished the importance of physical location. In the short term, I expect to see more Israeli founders operating from within Israel, particularly considering the cost of living advantages compared to cities like New York or San Francisco. Looking ahead, founders who can maintain sales effectiveness remotely are likely to continue working from their home country.

Which investment segments appear weaker or more vulnerable to changes in consumer and business behavior due to COVID-19? What opportunities might startups be able to capitalize on during these unprecedented times?
All of the sectors we focus on are currently performing well or have not been significantly impacted. I am particularly interested in startups that can effectively sell remotely and have a well-established inside sales team, coupled with straightforward integration and deployment processes, as I believe these companies are best positioned for rapid scaling even in the current environment.

How has COVID-19 influenced your investment approach? What are the primary concerns of the founders within your portfolio? What guidance are you providing to startups in your portfolio at this time?
Our investment strategy remains consistent; we continue to seek companies with the potential to become global leaders and disrupt large markets. Regarding our work with portfolio companies, our founders have already implemented the necessary adjustments and are now prioritizing capital efficiency and extending their financial runway.

Are you observing positive indicators, such as revenue growth, customer retention, or other momentum, within your portfolio as they adapt to the pandemic?
The majority of our portfolio companies have adapted quickly to the crisis and possess sufficient resources to achieve their next milestones. For some, particularly those supporting digital transformation, the pandemic has created new business opportunities and accelerated the adoption of their technologies. Consequently, we have provided additional capital to enable them to leverage this momentum.

What recent development has instilled optimism in you? This could be professional, personal, or a combination of both.
Despite the uncertainty created by the pandemic, we have observed a significant increase – (+14) – in the number of Israeli companies achieving unicorn status or going public in recent months.

Adi Levanon Chazan, Flint Capital

Regarding your firm’s most recent and compelling investment, could you share details?
We recently invested in Sensi.ai.

To what extent does your investment strategy prioritize companies within your immediate geographic area compared to those in other startup centers globally? Does this represent a majority – over 50% – or a minority of your portfolio?
Just over half of our investments are in startups based in Israel, with the remaining half distributed between companies in Europe and the United States.

Considering the long-term outlook, which sectors within your city and region appear poised for success, and which may face challenges? Are there any specific companies, whether within your portfolio or not, and founders that particularly impress you?
The financial technology sector continues to demonstrate strong growth and is expected to flourish in the future. I am particularly enthusiastic about companies such as Melio, Unit, Acrocharge, and Rapyd.

What advice would you offer to investors located in other cities who are considering the investment landscape and potential opportunities within your city?
Establishing strong relationships with local partners and actively building a local network are crucial. Ideally, having a dedicated individual based in Israel to focus on investment activities would be highly beneficial.

Chaim Meir Tessler, partner, OurCrowd

Regarding general investment interests, what current trends particularly capture your attention?
We are keenly interested in opportunities within the financial technology sector, cloud-based services, quantum computing software, and cybersecurity.

Could you share details about your most recent and compelling investment?
We recently finalized an investment in D-ID, as of the time this was written.
Are there any specific types of startups you are hoping to encounter in the industry, and what currently undervalued areas present promising possibilities?
We believe there is significant potential in educational platforms designed and developed specifically for remote learning environments.

What key characteristics do you prioritize when considering a new investment opportunity?
We place a high value on identifying founders with whom we can build a strong working relationship and in whose vision we have confidence.

In what sectors do you see excessive competition or significant barriers to entry for new startups? Are there any particular products or services that give you pause?
We are cautious regarding micromobility solutions and the development of sensors for self-driving vehicles.

To what extent does your investment focus center on your local ecosystem compared to other startup locations? Is it more or less than 50%?
Approximately 60-70% of our investments are made within our local area.

Which industries in your city and region appear best positioned for sustained growth, and which companies or founders are you particularly enthusiastic about, regardless of portfolio affiliation?
The cybersecurity, computer vision, semiconductor, and quantum computing industries are all demonstrating strong potential for long-term success.

The emerging companies focused on modernizing banking infrastructure are particularly impressive.

What advice would you offer to investors in other cities who are evaluating the investment landscape and opportunities in your city?
Our city offers a robust market, a readily accessible network, and a generally collaborative environment conducive to co-investment.

Do you anticipate a growing number of founders originating from areas outside of traditional major cities in the coming years, potentially driven by the pandemic, remote work trends, and related factors?
As the world becomes increasingly interconnected, we expect to see innovation flourish in previously untapped regions.

How has the COVID-19 pandemic influenced your investment approach?
The pandemic has not fundamentally altered our overall investment strategy, although it did cause a temporary slowdown in activity during March and April. Our primary concern remains the potential for insufficient funding or limited runway for portfolio companies.

Can you share a recent experience that has instilled a sense of optimism, whether professionally, personally, or a combination of both?
It is encouraging to recognize that we entered this pandemic at a point in time where the necessary tools were available to enable a substantial portion of the global workforce to continue operating effectively from remote locations.

Noam Kaiser, Intel Capital

Generally, what investment trends currently generate the most enthusiasm for you?
We are particularly interested in the increasing adoption of cloud technologies driven by digital transformation initiatives, especially those leading to hybrid cloud solutions, the expansion of 5G networks, and the development of vertical, AI-powered Software-as-a-Service applications.

What is your most recent and compelling investment?
Our recent investment in Cellwize is particularly exciting. The company is effectively democratizing Radio Access Network (RAN) technology – both 4G and 5G – by making it accessible through any API and ensuring compatibility with various cloud environments.

Are there any types of startups you are hoping to encounter that are currently lacking in the industry? What opportunities are currently being underestimated?
We are seeking solutions that enable applications to function seamlessly across diverse data sources and multiple storage locations within hybrid and multi-cloud environments.

What key characteristics do you look for when considering a new investment?
We prioritize a thorough understanding of the target market and the specific needs of customers, alignment with a significant market trend, and the potential for substantial revenue generation within a five-year timeframe.

Which sectors appear overly crowded or present significant competitive challenges for new startups? What products or services cause you concern?
The Machine Learning Operations (MLOps) space is becoming saturated with a rapid influx of companies. We are also cautious regarding large-scale storage solutions.

To what extent do you focus your investments on your local ecosystem compared to other startup hubs? Is it more than 50%? Less?
We focus more on our local ecosystem.

Which industries in your city and region appear best positioned for long-term success, and which do not? Are there any companies, within or outside your portfolio, and founders that you find particularly promising?
Safebreach – which provides Red Team automation for cybersecurity teams – and Verbit – a company specializing in vertical AI and transcription services – are both companies we are excited about.

What advice would you give to investors in other cities regarding the investment climate and opportunities in your city?
The investment landscape remains dynamic and full of potential. However, it’s essential to act quickly to capitalize on opportunities.

Do you anticipate a future increase in founders originating from areas outside of traditional major cities, potentially as a result of the pandemic, remote work trends, and the shifting dynamics of startup hubs?
We do not believe the pandemic will lead to a significant shift away from established startup hubs.

Which of the industry segments you invest in appear most vulnerable or susceptible to changes in consumer and business behavior due to COVID-19?
Businesses heavily reliant on on-premise infrastructure experienced slowdowns, including some within the semiconductor and retail sectors, though these are now showing signs of recovery.

How has COVID-19 influenced your investment approach? What are the primary concerns expressed by the founders in your portfolio? What guidance are you currently offering to startups in your portfolio?
Our investment strategy has remained consistent; we continue to invest in the same number of companies at the same stages as before.

Are you observing positive indicators – such as revenue growth, customer retention, or increased momentum – within your portfolio companies as they adapt to the pandemic?
Yes, we are seeing successful deal closures, ongoing financing rounds, and mergers and acquisitions activity.

Can you share a recent event that has inspired optimism? This could be related to your professional life, personal experiences, or a combination of both.
The current investment environment is remarkably active, with numerous new funding rounds and several merger and acquisition processes underway.

Do you have any final thoughts to share with readers of TechCrunch?
Maintain a cautiously optimistic outlook, aggressively pursue fundraising and build up cash reserves when possible, continuously refine your sales pipeline, and remember that corporate entities are actively resuming deal-making.

Tal Slobodkin, StageOne Ventures

What general investment trends currently generate the most enthusiasm for you?
We are particularly interested in cloud computing and the associated software infrastructure, including cybersecurity, DevOps, the expanding network of connected devices, and advanced computing capabilities. Furthermore, we focus on big data and artificial intelligence, as well as next-generation storage and data center technologies.

What is your most recent and compelling investment?
R-Go Robotics is developing groundbreaking artificial perception technology. This innovation allows mobile robots to perceive and understand their environments with a level of complexity that enables fully autonomous operation, mirroring human capabilities.

What types of startups would you like to see emerge in the industry, and what opportunities are currently being underestimated?
We are seeking more advanced cybersecurity offerings, further development in MLOps technologies, and innovative AI-driven solutions.

What key characteristics define your ideal investment prospect?
We prioritize deep-tech technologies that address and resolve intricate challenges faced by enterprise-level organizations.

Which sectors appear overly crowded, or present significant competitive hurdles for new startups? What product or service categories cause you concern?
We observe a high concentration of cloud monitoring services and SaaS cloud startups, many of which offer remarkably similar technologies and compete directly with one another.

To what extent does your investment focus center on your local ecosystem versus other startup locations? Is it more than 50%, or less?
Our investments are allocated 85% to Israel and 15% to the USA. We are consistently exploring opportunities to broaden our presence within the U.S. market.

Which industries in your city and region appear poised for long-term success, or conversely, face challenges? Which companies, within or outside your portfolio, and which founders do you find particularly promising?
Within the StageOne portfolio, we are excited about Coralogix, Silverfort, Epsagon, Avanan, and Neuroblade. Additionally, we follow OwnBackup, RunAI, Verbit, and Indegy – all companies based in Israel.

Do you anticipate a rise in founders originating from areas outside of traditional startup hubs in the coming years, potentially driven by pandemic-related shifts and the increasing appeal of remote work?
This trend is less pronounced in Israel but more relevant to the U.S. We likely will see an increase in founders from diverse geographic locations, which is a positive development, creating opportunities for individuals who may not have previously considered entrepreneurship.

What opportunities are available for startups to capitalize on during this unique period?
The cybersecurity sector has demonstrated resilience during the COVID-19 pandemic, as organizations actively seek new solutions to mitigate the increased risk of cyberattacks resulting from remote work and the growing reliance on digital platforms.

How has COVID-19 influenced your investment approach? What are the primary concerns expressed by the founders in your portfolio? What guidance are you currently providing to your portfolio companies?
Our portfolio companies have demonstrated adaptability, implementing necessary adjustments and developing plans for the immediate future. The majority have maintained a work-from-home policy.

Are you observing positive indicators – such as revenue growth, customer retention, or increased momentum – within your portfolio as companies adjust to the pandemic?
We are witnessing continued growth and expansion in both personnel and product development across our portfolio companies. They have successfully adapted to the situation, both in the short and long term, continued to secure funding, and some have even introduced new products to address issues related to COVID-19.

Ayal Itzkoviz, managing partner, Pitango First

What trends are you most excited about investing in, generally?
We are particularly interested in opportunities arising from disruption within established industries that are actively seeking innovation, such as the retail sector, insurance technology, and logistics.

We observe a growing trend of B2B2B solutions: businesses increasingly prefer to acquire essential components rather than develop them internally. This allows them to concentrate resources on innovation. Frontegg exemplifies this approach – the company delivers a suite of pre-built, fundamental SaaS product features that integrate easily into both new and existing SaaS applications. This empowers development teams to concentrate on refining the core, differentiating aspects of their SaaS offerings. Stripe and its contributions to the payments landscape offer another compelling illustration of this model.

The cybersecurity landscape is also a key area of focus. The events of 2020 underscored the accelerating pace of technological advancement alongside digital transformation, and highlighted the emergence of new cyber threats. This dynamic creates ongoing opportunities for innovation and disruption within the cybersecurity domain.

What’s your latest, most exciting investment?
Our most recent investment is Frontegg – a company redefining SaaS development by enabling developers to bypass the creation of non-essential code and features. Frontegg provides a cutting-edge SaaS-as-a-service platform that seamlessly integrates with a company’s existing infrastructure, allowing it to focus on its core strengths: building its unique product. Frontegg represents the first comprehensive, pre-built suite of universal SaaS capabilities, empowering teams to accelerate time-to-market, enhance user adoption, and concentrate on essential features. Frontegg’s goal is to expedite the delivery of robust, enterprise-grade SaaS applications while ensuring a secure and optimal user experience.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
We would like to see more ventures built around open-source projects. While these projects do exist, they often operate discreetly and emerge from stealth mode once they have reached a level of maturity beyond the seed and early stages that Pitango First typically focuses on.

We believe quantum computing has reached a critical juncture. We are eager to see Israeli entrepreneurs, scientists, and business leaders capitalize on this opportunity and establish companies now, anticipating the substantial growth that the quantum market is poised to experience.

Finally, we are interested in startups pursuing a “double bottom line” – those that address a market need while simultaneously contributing to a positive social or environmental impact. Pitango was the first venture capital firm to fully integrate ESG (Environmental, Social, and Governance) principles into its core operations. As a first step, we are actively collaborating with our portfolio companies to embed ESG practices into their fundamental operations through a structured transition process.

Pitango is committed to driving change within the venture capital industry through a philosophy of “AND”: profit AND purpose, capital AND impact. We are introducing a new approach to impact investing by targeting “impact migrants” – startups that, while not initially founded with an explicit SDG (Sustainable Development Goals) focus, demonstrate the potential and desire to embrace and measure their impact. These companies will define an impact mission, integrate SDG targets into their business performance metrics, and track impact alongside financial results, all while maintaining their primary focus on delivering strong financial returns.

Furthermore, Pitango extends this “AND” philosophy to its future investment evaluations, effectively “mainstreaming” impact investing.

What are you looking for in your next investment, in general?
The Israeli market has undergone significant development in recent years. The possibility of an IPO is no longer beyond the reach of Israeli companies. We are seeking visionary leaders, innovators, and unconventional thinkers who are dedicated to tackling significant challenges and building businesses with the potential for an IPO, rather than solely focusing on acquisition.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Pitango First primarily concentrates on Israeli and Israeli-related startups. Occasionally, we identify investment opportunities in strategic areas where the Israeli market is not yet sufficiently developed, and where we believe we can provide substantial value. In such cases, we may invest in companies based outside of Israel.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Israel is a remarkably strong hub for innovation. A key trend in recent years is the breakdown of traditional barriers faced by Israeli startups. Global companies now recognize that they can achieve comparable returns to those from Silicon Valley-based companies, often with more favorable terms and less competition.

Interestingly, despite the challenging circumstances, we are witnessing a highly active and competitive investment climate. High-performing teams are securing substantial funding rounds at record valuations, reinforcing the belief that COVID-19 has not hindered, but rather accelerated, digital transformation.

What are the opportunities startups may be able to tap into during these unprecedented times?
For many seed and early-stage startups that have already secured funding, COVID-19 has not significantly disrupted their plans, as they are generally further removed from the market than more established companies. However, these companies, with the support of strong investors, are leveraging this period to strengthen their positions by acquiring companies within their ecosystems and preparing for the eventual economic recovery.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
The continued commitment to long-term investing throughout the pandemic has been encouraging. Our experience navigating previous crises allowed us to share valuable insights and support our portfolio companies. Furthermore, the rapid development and deployment of COVID-19 vaccines serve as a powerful example of what can be achieved when technology, medical companies, and governments collaborate effectively.

Ittai Harel, managing partner, Pitango HealthTech

Regarding general investment trends, what currently excites you the most?
We are particularly enthusiastic about the increasing focus on bringing healthcare directly to consumers.

Could you share details about your most recent and compelling investment?
Our latest investment is HomeThrive, a technology-driven healthcare services company dedicated to addressing the challenges of aging in place and supporting families in caring for their aging loved ones.

What key characteristics do you seek in potential investment opportunities?
We prioritize exceptional teams that are developing companies poised to either define a new market category or become leaders within an existing one, and that can demonstrate both positive clinical results and strong financial performance.

Are there any areas that appear overly crowded or particularly challenging for new startups to enter? What types of products or services give you pause?
We are cautious about narrowly focused wearable devices that aren't effectively integrated into established clinical or daily life routines.

To what extent does your investment focus remain within your local ecosystem versus expanding to other startup hubs? Is it more than 50% local? Less?
Pitango HealthTech primarily concentrates on startups based in Israel or with strong ties to Israel. Occasionally, we will consider investments in companies outside of Israel when we identify opportunities aligned with our strategic priorities and believe we can provide substantial value, particularly in areas where the Israeli market is not yet fully developed.

Within your city and region, which industries appear best positioned for long-term success, and which may face challenges? Are there any specific companies or founders that you find particularly promising, whether within your portfolio or not?
Israel boasts a robust healthcare sector, encompassing remote patient monitoring and computer vision in digital health, cardiovascular technologies in medical devices, and drug discovery within biotechnology and pharmaceuticals. We are very impressed with our portfolio companies Variantyx, which offers a unique platform for whole genome sequencing and analytics, and Alike, a patient-centered platform enabling individuals to access, understand, and share their medical data. We are proud to be an active participant in this thriving ecosystem and contribute to its thought leadership.

What advice would you give to investors in other cities who are considering the investment climate and opportunities in your city?
Israel’s healthcare innovation ecosystem is exceptionally dynamic. Global investors should be aware of the remarkable entrepreneurs and opportunities with significant global potential that exist here.

Do you anticipate a growing number of founders emerging from locations outside of traditional major cities in the coming years, potentially as startup hubs experience shifts due to the pandemic and the increasing appeal of remote work?
We are observing some degree of geographic distribution within Israel, but the major hubs still exert a strong pull. We expect Tel Aviv and the central region of Israel to remain highly attractive to top-tier teams.

Which of the industry segments you invest in appear most vulnerable or susceptible to changes in consumer and business behavior as a result of COVID-19?

Hospitals have experienced a substantial decrease in elective procedures and significant disruptions to their operations and financial plans. Companies that can develop new technologies to streamline these changes and improve efficiency are well-positioned to benefit from the current environment.

How has COVID-19 influenced your investment approach? What are the primary concerns expressed by the founders in your portfolio? What guidance are you currently providing to your portfolio companies?
COVID-19 has presented both obstacles and opportunities for the healthcare industry. We believe that, on balance, our companies – and the industry as a whole – will benefit from the accelerated adoption of changes that previously took much longer to implement. We are advising our portfolio companies – and all startups – to proactively prepare for the post-COVID landscape and carefully consider which changes in their respective segments will be permanent.

Can you share a recent moment that has inspired optimism, either professionally, personally, or both?
The administration of the first vaccine dose in the U.K. to a 90-year-old woman was a profoundly hopeful moment, potentially marking a turning point for the entire world.