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Tel Aviv’s Burgeoning Skyline

Doubling Down On Israel — One Year Later

On July 5th, 2015, I published a blog post “Why I’m Doubling Down On Israel”. The post was about my first visit to Israel in 20 years to celebrate the closing of the first investment from our Israeli Founders Syndicate on AngelList. In the post, I wrote about how I was totally blown away by the people I met and the vibrancy of the Israeli tech ecosystem. I ended the post by writing “… I think it’s still VERY early days for Start-Up Nation. So I’m all in.”

This post is a reflection on my first year of being “all in” on Start-Up Nation. A year in which I visited Israel four more times. A year in which I made three more investments (Phrasetech, SQream, and Via). A year in which I made countless Israeli friends. A year in which my belief in the vitality of the tech ecosystem strengthened. A year in which my love for Israel deepened.

In the first 24 hours after publishing “Why I’m Doubling Down on Israel”, the post became the most read piece I had ever written. Remarkably, more people read the piece on the second day after people with much bigger Israel followings than me, e.g. Counsel General Ido Aharoni, shared the piece on Facebook and elsewhere.

I was inundated with emails from people thanking me for the post and others wanting to follow up on Israeli initiatives they were involved with. I was invited to keynote E&Y’s Journey Conference in Tel Aviv.

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Speaking at The E&Y Journey Conference, October 2015

I was asked to partner in the new Barclays Accelerator in Tel Aviv Powered by Techstars. I could go on. It’s amazing the impact that a single blog post can have when it strikes a chord.

After a few weeks, the hubbub from the post died down, and I set forth to follow through on my commitment to double down on Israel. Below I share thoughts on lessons learned over the last year, how my immersion in Israel has changed me, a few of the highlights from my Israel visits, and plans for the coming year.

The lifeblood of any tech ecosystem are exits, and exits of VC backed Israeli companies reached $4.98 billion in 2015, according to IVC, up more than 60% vs. 2014. Some of that growing bounty, as well as the knowledge of how it was created, will be cycling back in to the ecosystem.

Many of the fastest growing tech sectors including imaging technology (e.g. photo tech, video tech, AR/VR tech, autonomous car tech…), cyber security, drones, and AI/Machine learning, all play to Israel strengths.

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Employees watch a demonstration of Airobotics’ Optimus-01 autonomous drone at headquarters in Petach Tikva.

China has a growing love affair with Israeli tech, helping drive a 29% increase in Israeli tech funding in 2015, with foreign investors accounting for 85% of the total invested (up from 83% in 2014), according to IVC.

Like other tech ecosystems, Israel is not immune to challenges, with a shortage of 10,000 engineers (according the IATI) topping the list of issues hampering growth of the tech ecosystem. On a recent trip to Israel, Google’s Chairman Eric Schmidt warned that Northern Europe and Beijing are becoming worthy contenders for the crown of Start-Up Nation. According to the OECD, South Korea surpassed Israel to lead the world in terms of the % of GDP spent on R&D.

Statistics aside, what I know, is that with each trip to Israel my confidence in the remarkable talent of Israeli entrepreneurs is enhanced. My respect for the insights of Israeli VCs is increased. My esteem for the lawyers, accountants, and accelerators grows. But most importantly, I better appreciate how supportive the tech community is, and how critical that support is to the success of the ecosystem. On my most recent trip to Israel in May, I had the pleasure of speaking at a meeting of 25 members of the the Young Venture Capital Form which “serves the professional needs of the Israeli venture capital community”. The deep interest in supporting each other, supporting their companies, and supporting the ecosystem, was palpable.

One individual in particular personified, for me, how supportive the Israeli tech ecosystem is, my friend Alan Weinkrantz, who recently passed away in a freak accident in Tel Aviv. For most of the time I knew Alan, he was a brand ambassador for Rackspace in Israel, where he split his time between Israel and his home in San Antonio where Rackspace is located. Alan loved nothing more than helping and mentoring those in the Israeli tech community, asking nothing in return. Alan remains an inspiration.

I continue to believe that it is the community itself which is the most unique and enduring aspect of Start-Up Nation, extending far beyond Israel to the Israeli tech ecosystems in New York (where 276 Israeli tech companies are located according to Israel Mapped in New York), San Francisco, and elsewhere around the world.

The statistics, the strengths, and the visceral sense I get on each visit, all lead me to beleive it’s still VERY early in the developemnt of the Isaeli tech ecosystem, and the best days lie ahead.

The book “Start-Up Nation” highlighted many positive attributes of Israeli entrepreneurs. The solid military training. The risk-taking immigrant mind-set (more than 80% are immigrants or children of immigrants).

After reading the book, but before I started investing in Israel, I talked with a number of U.S. VCs about investing in Israel. I heard lots of positive things. I also heard several common negative refrains that, for the most part, I have not found not to be true.

Israelis Can’t Do B2C- This is obviously the biggest joke of all. From Waze, to Wix, to Via, to Viber, to Lightricks, the number of successful Israeli B2C companies continues to grow.

Israelis Are Un-Coachable — I’ve made 42 investments in the last four years, including six started by Israelis. My personal experience is that Israelis seek more help then my average non-Israeli CEOs. Do they listen to my advice more then non-Israelis? No they don’t. But they don’t listen to my advice less.

Israelis Sell To Early — This is a tricky one. A couple years ago, the CEO of one of my biggest U.S. investments called me with the good news of a buyout offer and asked for my thoughts. I had first started working with this CEO 10 years earlier on a different venture, so we’re friends. I told him, as his friend, I think he should take the offer, as he’d never have to work again. I then told him that as one of his VCs, I think he should tell the acquirer to F*** off, because I thought the offer was way too low. There’s an inherent mis-alignment between between VCs and the entrepreneurs they invest in. What’s too early for VCs might not be too early for the CEO. What I know for sure is that as Israel has more second and third time CEOs, with successful past exits, Israel will see more CEOs holding out for bigger wins. It might not always be the right move, but it’s certainly what most VCs want to see.

Israelis Need More Help — I find this to be true, as the U.S. is generally the market the Israelis are trying to crack, and cultural differences between Israelis and Americans are greater than I initially perceived. While the Israelis I work with speak english remarkably well, and are smart and educated, they’re challenged to appreciate some of the nuances of American culture. For instance, Americans rarely say no. Israelis say no all the time. So when Israelis don’t hear no, they take it as a positive sign. Israelis that stay headquartered in Israel are also presented with unique challenges that need to be addressed. This is why I’ve partnered with firms like Excellerate and Iterate Studios that can be profoundly helpful to Israeli companies.

Philanthropy is a way of life in Israel. Last December I wrote about “The Kamatech Miracle”, a philanthropic organization of the Israeli tech community that provides opportunities for Ultra Orthodox entrepreneurs. The more time I spent in Israel with Israelis, or with American’s involved in the Israeli tech ecosystem, the more I became aware that relative to most, I was more focused on how I could help myself, and less focused on helping others.

It turns out, Israeli’s leads the world in the percentage of it’s workforce employed or volunteering at non-profits:

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Source: Johns Hopkins University, Center For Civil Society Studies, March 2013

Being immersed in Israel has compelled to do more. In addition to my work at AIPAC which I discussed in my earlier piece, I’m now an advisor at Runway, the amazing Incubator at Cornell Tech in NYC. I’m an advisor at Birthright Excel, a great program that extends the traditional 10 day Birthright trip to Israel to a 10 week internship/program for talented college students. I’m looking forward to leading the next UJA Tech Mission to Israel in September. Involvement with these groups has greatly enriched my life.

Another way Israel has profoundly changed me is my greater appreciation for each individual life.

I grew up believing that Americans valued life as much, or more, than any other people. But being in Israel during the Jerusalem stabbings last October, and watching the entire nation mourn each death, was eye opening. While Israel is a secular country, spending time there has really made me embrace the Talmudic quote “Whoever destroys a soul, it is considered as if he destroyed an entire world. And whoever saves a life, it is considered as if he saved an entire world.” That great appreciation for each and every life also makes life richer. And again, I thank Israel for that.

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David Ben-Gurion declaring independence beneath a portrait of Theodor Herzl, founder of modern Zionism, May 14 1948

Favorite Moment: After a meeting at one of the gleaming new high rises on Rothschild, in Tel Aviv, I met a friend for lunch in the lobby and walked down Rothschild. As we walked by a building, my friend suggested we go in. It was Independence Hall. The place where Ben Gurion declared Israel to be a State. To be in that place was a highlight. To see a picture of the site of Independence Hall from 1912, which was just sand dunes, juxtaposed with the high rise I was just in, made the moment all the more impactful.

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Independence Hall (on the right) juxtaposed with the gleaming highrise down the block at 22 Rothschild

Favorite Evening: While I’ve had some amazing meals in Israel, most notably at The Salon, where dancing on the tables is a night occurrence, my most enjoyable evening was a dinner I co-hosted with my friends at Kasowitz for Senator Joe Lieberman for 15 of Israel’s leading VCs. First, Senator Lieberman shared some great insight in to the coming U.S. election. And to be hosting him and 15 VCs I have tremendous respect for, less than a year after my first trip to Israel in 20 years, was truly a humbling and amazing evening.

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A Selfie With Senator Joe Libereman

I look forward to visiting Israel at least four times again in the next 12 months, making new friends, and deepening the friendships already made.

I look forward to investing in at least four more tech companies founded by Israelis.

Last year I started The Israel Syndicate Meetup, and held three Meetups in Tel Aviv. This year I look forward to holding quarterly Meetups in both Israel and the United States celebrating Israeli tech. My first U.S. Meetup is on July 12th in NYC, with Assaf Grazer of computer vision company Nanit.

Last year I worked hard to become a contributing member of the Israeli tech community. In addition to my Meetups I mentored and advised companies. I wrote blog posts about my Israeli companies (e.g. Phrasetech). I wrote blogposts about companies I wanted to invest in (e.g. Via). I held conference calls highlighting Israeli companies in various sectors (e.g. AR/VR, AI/Bots, data processing/GPU chips). But like Oscar Schindler says in the clip above, I could have done more. This year, I pledge to do more to help the Israeli tech ecosystem achieve even greater success. I’ll try and make Alan Weinkrantz proud.

Believe Crypto is the biggest thing to happen in the history of mankind. Focused on stablecoins (founded JustStable.com) & communities (founded. CryptoMondays)

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