Doubling down on Israel
In the startup world, if you haven’t noticed the impressive history and ongoing pattern of successful innovation coming out of Israel, you haven’t been paying attention. The small country’s famed entrepreneurial ecosystem consistently ranks among the premier environments globally for building new ventures. Its companies have been listed numerous times on the NYSE, and the world’s largest companies have set up local offices to connect with, partner with and foster many of the world’s premier innovators and startups.
In recent years, the ecosystem has benefited even further from a newer phenomenon: the influx of global investment firms establishing offices in Israel, which have on-the-ground deal sourcing, administrative and portfolio development teams aimed squarely at these funds’ Israeli investments and prospects. The entrenchment of multinational firms has added yet another layer of legitimacy and prestige to Israel’s startup and tech-oriented culture. In some cases Israel represents the first international location for these firms. The presence of these investors at industry events and office parks in the Tel Aviv area and elsewhere, along with the listing of Israel on company websites, has brought even more notoriety and recognition to the “Start-Up Nation.”
Yet the tone has seemingly changed recently, as one prominent VC firm, with an office in Tel Aviv and a number of Israeli companies in its portfolio, advised its Israeli investments to transfer their funds to bank accounts outside the country, and to avoid long-term exposure to the shekel. The motivation behind this decision is rooted in the ongoing debate over judicial reform in the country - which has now trickled into the economic lexicon of global investors.
While passions remain high, Israeli startups continue to flourish - and we believe this trend will continue. In the face of foreign hostile aggression, pandemics, natural disasters, terrorism and political crisis - Israel’s innovation ecosystem has continued its upward climb in the global innovation rankings.
Our team at Erez Capital has long held a deep respect and appreciation for the unlikely success story behind Israel’s tech industry, and has made investing in Israeli entrepreneurs — and Israel itself — a priority. Based on historical patterns, it is clear that this is a winning strategy to generate strong returns. We feel that doubling down on Israel, rather than pulling back, will be fruitful for our fund and its investors.
With a rich network in Israel and the U.S., our firm can help companies to grow and thrive, whether they want to immediately move and expand to the American market, or remain initially in Israel as they scale up. In venture capital, it has often been proven that the maxim “fortune favors the bold,” holds weight. However, we believe that despite current challenges, it is not truly bold to invest in Israelis and Israel. It is a bet that has paid off for decades, and we see no signs that the Start-Up Nation won’t remain a strong bet for years to come.