Israel's venture capital community works through wartime
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Illustration: Sarah Grillo/Axios
Israel's venture capital industry appears to be running on parallel planes, based on conversations with investors on the ground and some of their U.S. colleagues.
First and foremost is war. The real one, rather than the metaphorical "battles" over deals.
- For some, that means lost lives of friends, family or colleagues. For almost everyone, it means knowing those being called up into military service.
- Many others, including some venture capitalists and founders, have traveled to the front lines on humanitarian missions — seeking to provide everything from groceries to gas to those in need.
Second is some semblance of business as usual, no matter how incongruous that sounds.
- Israelis have become accustomed to some level of inbound violence, typically via rocket attacks, and reservist duties.
- The past several days are obviously a horrific escalation, likely with much further-reaching consequences for the country and the world, but I heard repeatedly about how foot and street traffic returned to many areas on Tuesday, and how startups are continuing to go about their work — albeit in most cases with fewer employees due to the aforementioned callups.
By the numbers: Israeli startups have raised around $3.3 billion in VC funding so far in 2023, according to PitchBook, with the majority of deals including U.S. investor participation.
- Deals already were tracking below 50% of 2022 volume, when Israeli startups raised $9.3 billion, and the war is likely to bake in that decrease. Not so much because foreign investors will get cold feet, but because fundraisers will be focused more on business continuity.
What they're saying: "We have four people from our portfolio companies who were murdered or killed in action, and several more whose siblings were, and those numbers are expected to grow," says Adam Fisher, an Israel-based partner with Bessemer Venture Partners.
- He adds: "The scale is difficult to comprehend, and everyone around the country right now is attending funerals .... But we're not going from zero to one, having been through occasional minor wars before, and this is something we've prepared for .... It's not possible to say things are normal, but when you're busy with external matters, you find ways to be more productive with the time you have."
