Merav Galili

Brace for impact: How best to invest in Israel during war

Illustrative photo of 200 new Israeli shekel bills, February 7, 2016. (Nati Shohat/Flash90)

In the midst of the ongoing challenges faced by the State of Israel, compounded by global economic uncertainty, investors find themselves charting unfamiliar waters. The inherent risk of startup investments becomes more pronounced in times of crisis. Yet, against this backdrop of uncertainty, a distinctive group of investors stands resilient—Israeli impact funds, serving as anchors for startups navigating the complexities of both conflict and economic instability.

Imagine the landscape of Israeli startups, grappling not only with the typical hurdles of early-stage development but also with the disruptive consequences of war. The rhythm of investment falters as key personnel, from employees to CEOs and founders, are summoned for reserve duty. The air is thick with hesitancy, as investors, both local and foreign, weigh the implications of the storm on their portfolios. It’s in this turbulence that impact funds emerge as steadfast captains, steering their startups through uncharted territories with an unwavering commitment to purpose-driven investing.

Impact funds demonstrate a commitment that extends beyond short term ups and downs. With a keen understanding that the intricate dance of economic growth takes time, these investors provide steady support when profitability remains on the horizon. In contrast to conventional funding sources that may hastily withdraw support during challenging times, impact funds offer not just capital but a steadfast hand, reinforcing their startups with the belief in long-term success even when others may be pulling anchor.

For impact investors, success goes beyond immediate financial returns—it’s also about fostering societal transformation. When economic storms hit, these investors don’t merely perceive a setback on a balance sheet; they recognize a delay in the positive change their startups strive to bring. This expansive perspective instills a unique level of patience, setting impact investors apart from counterparts who may solely gauge success through monetary gains. Embracing a broader vision that encompasses both financial prosperity and positive societal impact, impact investors position themselves as stewards of a future that extends beyond profit margins.

Motivated by a commitment to a higher mission— impact funds become active supporters during economic storms. In addition to conventional support mechanisms, they go above and beyond, facilitating access to international grants, fostering extensive networks, and connecting startups with seasoned consultants. This multifaceted support system, grounded in a larger mission, equips Israeli startups with the tools and resources to weather economic uncertainties, ensuring that their societal impact potential remains resilient even in challenging times.

In the face of economic uncertainty, impact funds also stand out for their adaptability and departure from rigid financial structures. Unlike traditional financing models that may constrict startups during turbulent periods, impact funds offer flexibility. This freedom allows startups to explore alternative revenue streams, pivot their business models, or implement strategic cost-saving measures. The adaptability embedded in impact funds’ financing models becomes a strategic advantage, enabling startups to navigate economic tempests with creative solutions, reinforcing their resilience in an ever-changing business landscape.

The ethos of impact funds extends beyond individual success stories, fostering a sense of community among their portfolio companies. This collaborative environment becomes a hub where startups share resources, insights, and support, transcending individual setbacks. The collective resilience cultivated through community collaboration emerges as a vital asset, proving instrumental when facing the challenges posed by economic storms. In these shared waters, Israeli startups can find strength not just in their individual capacities but in the collective support of a community dedicated to both economic success and positive societal impact.

About the Author
Dr. Merav Galili is the CEO of the Menomadin Foundation, an international Israeli-based impact fund that promotes innovative solutions to sustainable development challenges in Israel and Africa, in a model that combines strategic philanthropy and impact investments. Over two decades in senior management positions in academia and non-profit organizations, Dr. Galili has specialized in establishing local and international partnerships to promote business and social initiatives. In her last position, she served as Vice President for Development at Bar-Ilan University.
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